■■'A  .'.'>   I.  :.;■!>■  ,:,;■•.;'       ■  ■  • 


k$  if 


n,-. 


il30NViOV 


':Ji3AINrt-3WV 


^ 


o 


-x^llBRARY 


^     -s 


y- 


MJFOP/.v 


'^ 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

LAW  LIBRARY 


fe 


.5^ 


<^: 


Pi  1!^ 


ia3Wv 


vr. 


'El 


>- 


^v\t  UNi'vc 


■  U  U  3  M  »  -/   3  ^ 


"^J1]:)NV^>: 


ViaJAliNilJi^^ 


mi  IfVD- JO^  <rji3DNVS01^'^        %a3  AINn-3WV 


^<!/0JnV3JO'f^ 


^OFCALIFOP;^' 


.^WE■UNIVER% 


<ril33NVS01^ 


^lOSANCElfj> 
o 


%a3AiNna\v^ 


^^Aavaaii^- 


^ 


vlOSANCElfj>  ^VvlLIBRARYOc.       -o^lllBRARYQ/r.  ^^WE■UNIVERX//) 


'^-tfojnvjjo^     ^ftfojnvjjo"^ 


^OfCALIFO/?,^       ^OFCALIFO/?;]^ 


•<ril3DNVS01^ 
^WEUNIVER% 


3AiNn]WV^        ^^OAavaaii-#    "^^Awaaii-^      "^-TiHONVsoi^ 


^    ^ 


o 

3 


^HIBRARY6>^ 


JIIVOJO^' 


\WEUNIVERS/A 


<ril30NVS01^ 


^lOSANCElfj> 


■%a3AINn3WV^ 


A^NlLIBRARYQ^ 

h3 


^«!/0dnVDJO>^ 


CA1IF0% 


^WEUNIVERS/A 


^TilJDNVSOl^ 


^lOSANCELfx^ 
5 


-< 
%J13AINfl-3\\V^ 


^^,OFCALIF0%. 


^<?AHVagill^ 


^ 


^\lOSANGELfj> 


'^•"'i]AINa-3WV^ 


^^^t•llBRARYQ^^        ^^^t■LIBRARYac 


^Wt  UNIVER% 


^<i/ojnv3jo^     ^<!/ojnv3jo^       '^j:?i]onvsoi^'^ 


O 


=        .-< 


aSANCElfj-. 


lAINnjWV 


^OFCAUFO;?^       ^OFCAL]FO/?;^ 


^OAwaaiH'^^    "^waaiH^ 


,^MEUNIVERS/A 
< 


■^f'iiaDNVSOl^ 


AN   EXPOSITION 


OF  THE 


PRINCIPLES   of    PARTNERSHIP. 


BY 

JAMES    PARSONS,   A.M. 

Member  of  the  Philadelphia  Bar,  and 

Professor  in  the  Department  of  Law,  and  of  Philosophy,  at  the 

University  of  Pennsylvania. 


BOSTON: 

LITTLE,   BROWN  &  CO. 


? 


Fntcn-il.  ;i..i.rrtliiKtn  Act  of  Congress,  in  the  year  1889,  by 

.JAMKS    I'AKSONS.   A.  M., 

lu  till-  Vttwf  iif  the  I.lbniriau  of  Congress,  at  Washiugtou,  D.  C. 


REFACB. 


I  wish  to  express  my  acknowledgement  to  DwiGHT 
M.  LowREY,  Esq.,  for  the  aid  he  has  cordially  given 
me  in  preparing  for  publication  the  materials  I  had 
collected,  and  the  manuscript  I  had  draughted,  dur- 
ing the  alternate  years  since  1873,  for  the  double 
purpose  of  my  ledlures  upon  the  subject  of  partner- 
ship and  of  this  present  work.  The  suggestions 
and  the  criticisms  which  he  made  in  the  course  of 
the  final  revision  have  contributed  to  clear  up  some 
of  the  principles  of  Partnership  law,  and  to  clinch 
the  argument  advanced  for  several   propositions. 

JAMES    PARSONS, 

1430  So.  Penn  Square, 

Philadelphia. 
January^  jSSg. 


Table  of  C 


ABLE  OF  CONTENTS. 


ASSUMING   THE  POSITION  OF  A  PARTNER,  OR    WHAl 
CONSTITUTES  A  PARTNER. 

CHAPTER  I. 

ORIGIN  AND  GROWTH  OF  PARTNERSHIP. 

At  Roman  law,  a  bargain  between  the  partners ;  at  Common  law,  a  basis 
for  dealing  with  third  persons.  ^  i.  A  status,  not  a  contracft-relatiou. 
^  I.  Property  the  foundation  of  partnership,  and  sufficient  to  charge 
the  proprietor.  ^  3.  The  contribution  shows  a  proprietor,  and  meas- 
ures his  capacity.  I4.  Law  Merchant  gave  power  to  buy  and  sell.  §  5. 
Commercial  paper,  when  confined  to  trade  transactions,  made  payees 
partners.  |6.  Relation  extended  from  trade  to  "business."  ^7. 
Land  became  merchandise.  ?  8.  Title  controlled  by  firm.  I  9.  Stat- 
ute of  Frauds  prevents  oral  partnership  for  trading  in  land.  §  10. 
Building  operation.  ^11.  Landlord  and  tenant.  ?  12.  Parties  convert 
land  into  article  of  traffic,  'i  13.  Non-commercial  partnership.  ^  14. 
Mining  partnership.   ^  15. 

CHAPTER  H. 

THE  ANTECEDENTS  OF  PARTNERSHIP. 

Objedl,  gain,  not  merely  a  benefit.  ?  16.  Parties  fix  commencement  of 
partnership.  ?  17.  Postponement  at  option.  §18.  Contribution  part- 
ner's separate  obligation.  i<  19.  Incoming  partner  makes  no  contribu- 
tion. <i  20.  Terms  for  jurv,  effedt  for  court.  §21.  No  contracT.  unless 
terms  settled.  ^22.  Intention  insufficient.  I  23.  Defa5lo  corporation 
a  partnership.  \  24.  Contribution,  for  duration  of  partnership,  and 
carries  temporary  ownership.  \  25.  Special  partnership,  type  of  com- 
mercial partnership.  ?  26.  No  partnership  in  profits,  unless  in  the 
stock.  \  27.  Increase  or  decrease  of  contribution,  for  or  against  firm. 
§  28.  Title  to  contribution  between  partners.  ?  29.  Partnership  con- 
verts its  subjedl-matter  into  merchandise.    \  30.     Property  rights  de- 


Table  of  Contents. 

pcn.l  on  theory  of  contribution.  >,  3'-  l^ebt  theory  of  contribution. 
\X2  True  theory.  J  33-  Loss,  total  or  partial,  shared  accordmg  to 
contribution,  i  34,  835-  Ratio  of  profits,  for  jury.  ^6.  Special  part- 
ner's conUibution.  <!  37-  Contribution  by  non-owner.  J  38.  By 
trustee.  «39.  CfSlHV  que  trust's  right  to  follow  fund.  Uo.  May 
waive  tort' and  sue  in  assumpsit,  Uh  to  recover  fund  and  profits. 
{42.  1  )iniculty  of  ascertaining  profits  uo  answer  to  cesiuy  que  trust's 
claim,  'i  43. 


:e>j^:rt  II. 

/•///:•   rk'IXC/PUCS   WHICH  REGULATE  PARTNERSHIP 
DURING   ITS  EXISTENCE.      ■ 

CHAPTER  I. 

THE  CONSTITUENTS  OF  PARTNERSHIP. 

As  to  liability,  partners  only  joint  contradtors.  >^  44.  Adl  sufl&cient  to 
charge;  intention  not  necessary.  \\^.  In  joint  transadlions  parties 
held  on  implied  contract,  'i  46.  Withholding  property  charges  par- 
ties in  contract,  'i  47.  Partnership  as  to  third  persons,  the  legal  con- 
ception of  partnership  at  the  present  day.  'i  48.  The  business  gives 
commercial  privileges.  i<49.  The  intention  of  partners  creates  relation 
between  them,  and  charges  them  as  to  third  persons.  ^50.  Property 
the  medium  of  partnership,  and  partners  proprietors.  ^51.  Sharing 
profits  by  proprietors,  'i  52.  Title  to  profits  depends  on  ownership. 
J  53.  Indicia  of  ownership  establish  partnership.  ?  54.  Title  to 
profits  a  property  right.  ^  55.  Roman  type  survives  in  Common  law. 
J  56.  Property  the  link  between  profits  and  contribution.  ?  57. 
Compensation  out  of  profits  confounded  with  title  to  profits.  ?  58. 
'Sharing'  ambiguous,  and  law  re-established  by  limiting  term  to  shar- 
ing as  proprietor.  \  59.  Distindlion  between  profits  and  sum  equal 
to  profits  founded  on  twofold  meaning  of  'sharing.'  ?  60.  Parties 
sharing  profit  and  loss  are  not  partners  unless  proprietors.  ?,6i. 
Parties  sharing  gross  profits  not  partners.  ?62.  Commission  on 
sales  like  share  of  gross  profits.  ?  63.  Lender  taking  profits  not  a 
partner.  \  64.  Amount  of  interest  or  profits  not  a  test.  ?  65.  Usuri- 
ous rate  does  not  change  the  loan  into  a  partnership.  |  66.  Inference 
against  a  partnership.  <;  67. 

CHAPTER  n. 

SUB-PARTNERSHIP. 
feleRus  prrsoncr  confined  to  relation  between  the  partners.   ?  68. 

vi. 


Table  of  Contents. 
CHAPTER  III. 

HOLDING   OUT. 
Holding  out  charges  the  party  held  out.   ■?  69.     Nominal  partner  liable  in 
joint  adlion  with  partner  in  fact,   i^  70. 

CHAPTER  IV. 

EXECUTORS  AND  ADMINISTRATORS  AS  PARTNERS. 
Executor  may  succeed  partner,  ^71,  or  distributees  become  special  part- 
ners. §  72.  Unless  executor,  or  administrator,  renounces,  charged  as 
partner,  i  73.  May  limit  contribution  of  deceased  partner's  estate. 
?  74.  Whether  executor  or  administrator  a  partner,  determined  by 
his  a(fts.  §  75. 

CHAPTER  V. 

NATURE  OF  THE  CONTRACT  MADE  BY  THE  FIRM  IN  TRANS- 
ACTING ITS   BUSINESS  WITH  THIRD  PERSONS. 

Partners  may  have  collective  name,  except  in  legal  proceedings.  ^,  76. 
Procedure  of  Law  Merchant  not  adopted  by  Common  law.  ^  77.  Con- 
tradl  by  partners,  though  joint  in  form,  several  in  substance.  ^  78. 
No  formula  prepared  for  partners'  obligation,  i/  79.  As  Court  did 
not  re-model  process.  Legislature  recflified  it.  </.  80.  Joint  process  ex- 
tinguished the  several  liability  of  partners.  ^81.  Pennsylvania  Leg- 
islature corrected  abuse  of  legal  process  by  preventing  merger  in  joint 
adlions.  '^82.  Courts  did  not  extend  remedy  beyond  joint  adtions. 
^  83.  Merger,  though  plaintiff  did  not  know  of  partner's  membership, 
and  kept  from  knowing  it  by  the  partner.  ^.  84.  Right  against  each 
partner  frustrated  by  the  process.  §  85.  Death  of  partner  released 
his  estate.  §  86.  Death  pending  suit  deprived  plaintiff  of  recourse 
against  the  estate.  ^  87.  Pennsylvania  AAs  prevented  failure  of  pro- 
cess by  partner's  death  pending  suit,  'i  88,  also  severed  a  judgment, 
so  that  it  bound  deceased  partner's  representative  as  well  as  surviv- 
ing partner.  ^  89.  The  Statutes  recognize  several  liabilities.  §  90. 
Creditor  entitled  to  both  joint  and  several  remedies  for  satisfadlion. 
§  91.  Lord  M.\NSFIELD  showed  that  joint  contra(5l  was  an  aggregate 
of  separate  contraAs.  ^  92.  Marshall  carried  out  the  severance. 
§93.  Modern  pracflice  admits  the  several  cause  of  acftion.  '^.g^. 
There  is  no  joint  liability  apart  from  the  several  liabilities  of  the 
partners.  ?  95.  As  the  firm  is  nothing  but  a  phrase,  the  contraAs 
must  be  separate.   ?  96. 

CHAPTER   VI. 

THE  TITLE  TO  FIRM  PROPERTY. 
Co-ownership  mutual  restri(5lion  upon  the  owners.   |  97.     Joint  tenancy 
the  transition] from  communal  to  individual  ownership,    'i  98.     Joint 


Takle  of  Contents. 

u:i;.iu-y  ad  iplcd  to  coinmc-rcial  purposes  for  partuership.  ^  99.  The 
joint  cslule  creates  the  creditors'  rights.  ^^  100.  Parrtnership,  a  status, 
i  101.  It  iloes  uol  derive  its  distinctive  features  from  contracl:.  g  102. 
rartuers"  estate,  a  joiut  tenancy.  '/.  103.  Tenancy  in  coumion  incon- 
sistent with  relation,  i.  104.  Marshalling  assets  excludes  tenancy  in 
common.  5.  105.  I'artner's  equity  protects  his  separate  estate,  and 
founds  firm  creditors'  rights.  ^  106.  Destination,  outgrowth  of  joint 
tenajicv  i.  107.  Finn  creditors'  preference  not  based  on  any  theory 
of  credit,   i  loS. 

CHAPTER  VII. 

THE  TITLE  TO  PARTNERvSHIP  LAND. 

Conversion  and  lien,  expedients  for  overcoming  tenure.  ^  109.  Land  may 
be  treated  as  firm  assets,  without  any  fidlion.  g  no.  Purchaser  with- 
out notice,  but  not  creditors,  rely  on  legal  title.  ^  in.  Except  under 
Pennsylvania  record-system,  creditors  show  that  firm  has  beneficial 
ownership.  <!  112.  In  Pennsylvania  legal  title  protedls  not  only  judg- 
ment, butgeueral,  creditors.   <iii3. 

CHAPTER  VIII. 

THE   IMPLIED    POWER   OF  A  PARTNER. 

Partner,  authority  to  sell  firm  stock,  ^  114,  to  buy  for  the  business,  §  115. 
Implied  authority  restricfted  to  simple  contradls.  §  116.  Not  by  spe- 
cialty. !;ii7.  Seal,  surplusage  only  if  express  authority.  gii8. 
Partner  cannot  appear  for  firm,  'i  119,  or  submit  to  arbitration,  ^  120, 
but  represents  firm,  and  may  bind  it  by  admission,  i  121.  Partner 
cannot  bind  co-partner  by  confessing  judgment  against  firm.  <;  122. 
Partner  may  borrow  amount  usual  in  the  given  business.  ^  123.  May 
issue  or  use  commercial  paper,  ^  124,  but  not  accommodation  paper. 
i.  125.  Partner's  authority  by  commercial  paper  defined,  not  by  part- 
nership principles,  but  by  those  peculiar  to  commercial  paper.  ^  126. 
The  form  of  commercial  paper  conveys  no  notice  of  the  characfter  of 
the  transa(5lion.  ?  127.  Firm's  receipt  of  consideration  will  not  change 
chara<5ler  of  individual  transaction.  ^128.  Partner  cannot  guarantee 
debt  of  another,  i.  1 29.  Set-offa  medium  of  equity.  ?  130.  Partner  can- 
not assign  for  firm  creditors,  i  131.  Assignment/'«w«/ar/'?,  a  dissolu- 
tion. ?  T32.  Partners  cannot  restricl  co-partner's  authority,  ?  133, 
except  by  agreement,  and  as  to  themselves.  ?  134.  Partners  may 
ratify  co-partner's  ac^  in  excess  of  his  authoritv.  i.  135.  Infant  partner 
must  disaffirm  at  majority,  or  be  liable  for  past  and  future  afts.  ?  136. 
Infant  partner's  position  determined  not  by  contraA  with  partners,  or 
third  persons,  but  entirely  by  his  property  rights.  ?  137.  Married 
■woman  not  a  partner  unless  permitted  to  be  by  statute.   ?  138. 


Table  of  Contents. 
CHAPTER  IX. 

THE  LIABILITIES  OF  A  PARTNER. 

Partner  answers  for  co-partner's  tort,  'i  139,  unless  firm  but  the  occasion 
for  his  tort,  'i  140.  Trustee-partner's  use  of  fund  in  the  firm  charges 
his  co-partners.  ^  141.  Special  made  general  partner  by  neglecT;,  lia- 
ble for  co-partner's  tort.  ?  142.  Partner  criminally  liable  for  misap- 
propriation of  firm  property.    ^  143. 

CHAPTER  X. 

CHANGE  OF  PARTNERS. 

Incoming  partner  cannot  be  charged,  nor  can  he  ratify  previous  acft  of 
firm,  'i  144.  The  theory  of  trust  and  consideration  is  superceding 
the  necessity  of  novation.  |  145.  Retiring  partner  remains  liable  un- 
til released.  §  146.  His  liability,  foundation  of  his  equity.  |  147. 
Continuing  firm  not  an  assignee  for  creditors.  ?  148.  Novation  re- 
quires a  new  partner.  §  149.  Incoming  partner  personally  liable  to 
firm  creditors  on  his  agreement  to  assume  the  debts.   ^  150. 

CHAPTER  XI. 

THE  RELATION  OF  PARTNERS. 

Requires  utmost  good  faith.  ^  151.  Equal  power  among  partners  in  deal- 
ing with  outsiders;  in  domestic  administration,  majority  controls. 
^  152.  During  partnership  no  litigation  between  partners,  'i  153. 
Partner  cannot  pay  firm  debt  and  substitute  himself  for  the  creditors. 
?  154.  Partner  cannot  sue  co-partner  for  mismanagement,  i  155.  No 
set-off  between  partners,  except  in  the  account.  §156.  Account-stated 
equivalent  to  decree  in  account.  I  157.  As  trausadlion  independent 
of  firm  account,  partners  are  strangers.  ^  138.  Also  account  for  isolated 
transadtions  lies  during  partnership.  1 159.  Procedure  prevents  suits 
between  the  partner  and  his  firm.  ?  160.  Obstacle  of  procedure  re- 
moved by  statute  in  Pennsylvania.  ^  161.  Equitable  remedy  not 
taken  away,  'i  162.  But  difiiculty  inherent.  ?  163.  Common  partner 
means  different  capacities,  'i  164.  Partner  as  proprietor  and  creditor 
has  priority  for  his  advances.  ■?  165.  Partners  may  recover  amount 
converted  by  co-partner  from  his  separate  estate.  ^  t66.  They  may 
avoid  a6t  which  is  in  excess  of  his  authority.  ^  167.  Thev  need  not 
dissent  from  his  use  of  firm  credit,  or  firm  funds,  for  his  individual 
account.  |  168.  Apartner  may  re-assert  the  joint  title,  or  the  partners 
may  ratify  a  co-partner's  misappropriation,  'i  169.  But  the  fraud  must 
be  committed  against  the  firm.  ^  170.  Partner  may  dispose  of  his 
share  as  he  likes.   ^171.     May  mortgage,  or  alien  it  absolutely.  ^  172. 


Table  of  Contents. 

X^.A.I^T    III- 

THE  PRISCIl'I.ES   ACCURDINC    TO    WHICH    THE    BUSI- 
.\ESS  IS   WOUND    UP. 

CHAPTER  1. 

THE  REA:,0NS  for  A  DISSOLUTION. 

Dissolution  only  for  adequate  cause.  \  173.  Partner's  remedy  for  prema- 
ture dissolution,  an  action  for  the  breach  of  contradl.   \  174. 

CHAPTER    H. 

HOW  DISSOLUTION  IS  BROUGHT  ABOUT. 

Notice  necessary  to  revoke  partner's  implied  authority.  ^  175.  Different 
kinds  of  notice.  ?  176.     Customers  must  have  adlual  notice.   ?  177. 

CHAPTER  ni. 

THE  EFFECT  OF  DISSOLUTION. 

Dissolution  ends  partner's  authority,  ?  178,  and  divides  joint  title  into 
separate  titles.  ^179. 

CHAPTER  IV. 

THE  APPOINTMENT  OF  A  RECEIVER. 

Appointment  of  receiver  not  always  necessary.  ^180.  Receiver,  of  course 
against  partner's  vendee.  ^  181.  Partner  forfeits  right  to  receiver  by 
laches.  \  182. 

CHAPTER   V. 

LIQUIDATION. 

Firm  continued  only  for  liquidation.  \,  183.  Liquidating  partner  repre- 
sents firm  for  settlement.  \  184.  If  no  liquidating  partner,  any  part- 
ner may  bind  co-partners  for  liquidation.  \  185.  Retiring  partner 
gives  up  right  to  liquidate.  \  186.  Partner's  power,  coupled  with 
interest,  and  irrevocable;  stranger's  revocable.  ^187.  Liquidating 
partner  not  entitled  to  compensation.  \  188.  General  creditors  con- 
trol lifjuidating  partner.  ^189.  Liquidating  partner  displaced  only 
by  necessity  for  receiver.    <i  190. 

CHAPTER   VI. 

MARSHALLING  THE  ASSETS. 

Theories  to  explain  marshalling,  ijigi.  Firm  creditors  reclaim  assets 
from  separate  creditors.  ?  192      Equity  interferes  only  when  a  creditor 


Table  of  Contents- 

has  two  funds.  ^  193.  Firm  creditors'  equity  rests  ou  partner's  legal 
liability,  'i  194.  Equity  could  not  take  away  firm  creditors'  right, 
and  only  controls  the  exercise  of  it  against  the  separate  estate.  ^  195. 
Equity  does  not  interfere  with  firm  creditors,  except  when  they  have 
a  joint  fund,  'i  196.  The  restriction  protedls  nothing  but  the  separate 
estate.  ^  197.  Creditor  partner's  independent  claim  against  co-partner 
not  enforced  until  firm  debts  are  paid.  >/.  198.  If  there  would  be  no 
surplus  out  of  debtor-partner's  separate  estate,  recovery  might  be  had 
on  independent  claim.  ^  199.  Firm  creditors  may  become  separate 
creditors  of  partner  who  bought  out  co-partner.  ^  200.  Partner  may 
compete  with  separate  creditors  of  co-partner.  ?;20i.  Partner's  debt 
to  firm  not  an.  asset.  ?  202.  Surviving  partner's  indebtedness  to  firm 
would  not  prevent  firm  creditors  from  colle6ling  debts  out  of  deceased 
partner's  estate.  ^  203.  Exemption  at  law  of  deceased  partner's 
estate  did  not  enable  his  representative  to  recover  his  share  in  com- 
petition with  firm  creditors.  ?  204.  A  common  member  furnishes  no 
basis  for  marshalling.    ^  205. 

CHAPTER  VII. 

ACCOUNT. 

Account,  an  epitome  of  partnership.  ?  206.  Basis  of  account,  joint  prop- 
erty, partner's  liability  for  firm  obligations,  and  good  faith.  ^  207. 
Advances  have  priority.  ?  208.  Good-will  an  asset.  ^  209  Disburse- 
ments on  firm  account,  items  of  credit.  ^  210.  No  account  of  illegal 
business.  ^211.  Partner  must  account  for  a  breach  of  good  faith. 
^212.  Account  barred  by  Statute  of  Limitations,  or  by  laches.  ^  213. 
Outside  transadtions  not  included  in  account  ^  214.  Decree  for  ac- 
count. ^215.    Jurisdidlion  of  account.  |2i6. 


Authors  Mentioned. 


^mTbnrt>,  iH.     Tivj  ^JlcticimH-uii,  Ihth,  p.  8-i.     i;  37,  n.  d. 

*rnM«,  5.'.  r)J.  I'.  iJlrnC'Sbur^.  i.'cbrtnidi  bcr  iUmbcctcn,  ?  213,  13th  ed., 
'i,  92,  11.  V 

ArSTix,  John.  Leclures  oti  Jurisprudence,  or  the  I'hilosophy  of  Positive 
Law.     London:   1851.     Intro.  &  n.  3. 

Amk.s,  Prof.  J.  B.  The  history  of  Assumpsit,  2  Harvard  Law  Review,  i- 
19;  53-69-     Intro. 

B.\TKS,  Clkmknt.  The  Law  of  Limited  Partnership.  1886.  ?  37,  n.  2. 
The  Law  of  Partnership,  i  383.   1888.     \  117,  n.  2,  a. 

BiDDi.K,  Geo.  W.  "'The  Judicial  Characfter  of  Chief  Justice  Sharswood." 
1883.     \  102  &  n.  2,  b. 

BissKT,  AxDRKW.     Law  of  Partnership,  1847,  p.  47-56    i<  109,  n.  5. 

BoxjK.XN.  Dk.  L.  p..     Traite  dcs  Aclions,   2d  ed.   Paris:   1845.     Intro. 

■J^ptd'arM,  Jr.  Ckar.  Tie  f'iJettcnben  .'paribelegeiefee  bee  Grbballe.  sub 
voribus.  'i^crlin,  188H.  ?  28,  n.  i;  ii  79,  n.  2,  d.  Sub  vocibus,  i.'dl, 
''.  29,  >i.  I. 

Bkacton,  Hkxricls  de.  De  Legibus  lib.  iv.  cap.  28,  fol.  209.  Londoni: 
M  DC  XI,.     is  4,  n.  I . 

BR.w.xRD-ViCYRiiiRES.  Traitc  des  Societes  Coinmerciales,  p.  15,  26. 
Paris,  1862.     i!  16,  n.  4. 

BiMi',  Orlando  F.  The  Law  and  Practice  of  Bankruptcy,  5th  ed.,  ^j.  53, 
!•!,  it  !ifq.,    1872.     i;7S.  n.  2. 

Carter.  James  C.  The  Proposed  Codification  of  Our  Comman  Law. 
1S84.     Intro. 

Cassa REGIS.  Joseph  L.  M.  De.  Discursus  Legales  de  Commercio. 
XXIX,  no.  38.     Opera  Omnia,  Venetiis,  m  dcc  xl.     \  51,  n.  2,  a. 

CoLKYER,  John.  A  Pradical  Treatise  on  the  Law  of  Partnership,  1 468, 
5th  Am.  from  2d  Engl.  ed.  1861.  i;ii7,  n.  2,  a.  ^30  &  notes. 
''<  159.  >i    I. 


Authors  Mentioned. 

Cook,  Francis  Wii^liam.  a  Treatise  on  the  Law  of  Partnership  and 
Joint  Stock  Companies,  i  vol.,  p.  541.  1866.     §  96,  u.  3. 

COOLEY,  Judge  Thomas  M.  An  address,  entitled  "The  Uncertainty  of 
the  Law,"  delivered  to  the  Georgia  Bar  Association,  and  published 
in  22  Am.  Law  Review,  347-70,  1888.     Intro. 

Corliss,  Guy  C.  H.  Partnership  Real  Estate,  32  Alb.  Law  Jour.,  p.  284, 
304,  326.   1885.     ?  112,  n.  4,  a. 

Da  VIES,  S.  D.     Criteria  of  Partnership,  10  Am.  Law  Reg.,  n.  s.  209.  1871. 

?  46,  n.  2. 
DURANTON.     17,  Cours  de  Droit  Frangais,  p.  438.     ^36,  n.  3. 

Eddis,  B.  A.,  Arthur  Clement.  The  Rule  of  ex  parte  Waring.  1876. 
I  106,  n.  8,  c. 

F.  F.  "The  Legal  and  Equitable  Rights  of  Individual  and  Partnership 
Creditors."  26  American  Jurist  55.   1841.     ^  108,  n.  i. 

Felicius,  Hector,  Ictus.  Tradtatus  de  Societate,  c.  i.  No.  4,  (cited)  Ve- 
netiis,  M  DC  X.      ^  16,  n.  6,  c. 

fitting,  2)r.  Hermann.  ®te  5tatur  bcr  ©orrcal  Dbligationen.  'i.2.  ?  92. 
n.  3. 

^iiffel,  2)r.  5'^^^-  ?fi^'^"ff-  Societates  Innominatae,  ch.  Ill,  <>  3,  Lip- 
siae,  1843.     'i  37.  <^- 

@  I ii cf .  15.  Grldulerung  ber  ^anbecten,  p.  394  eiseq.  1. 965.  'i  33,  u.  i ;  p.  404- 
26,  i966,  |.  i,n.  i;  ^). 375-88,  i  962-3,  ^i,n.3;  16Xf)Cil,  ^3.  420-4, 
I.  988,  ?  108,  n.  3 ;  14  2J^eil  p.  276-8,    1 164,  n.  6. 

©olbfc^mibt,  CDr.  2.  §anbbuc^  bag  $anbelgrcd|tg,  1864,  3SI.  2,  61).  1,  g. 
41,  p.  299.     'i  7,  n.  5.   Bk.  2,  ch.  i,  ^^41.     p.  310-12,    ?8,  n.  2. 

Gould,  Tracy.     21  Albany  Law  Journal,  168.   1880.     ?  159,  n.  i. 

Gow  on  Partnership,  p.  31  London  :   1823.     >;  20,  n.  1. 

Green,  Wm.      1  Virginia  Law  Journal,  127.    1877.     ?  119,  n.  i. 

HadlEY,  James,  LL.D.     Introdudlion  to  Roman  Law.   1884.     Intro. 

Sal^n,  ®r.  ^rieberid)  »on.  Sommentar  jum  'iHUgemeinen  iDeutfd^cn 
^anbelsgefepuc^,  Sritte  2luflage.  1879.  21rt.  112,  i  7,  p.  403-t,  1 77,  n. 
I,  a,-  2lrt.  121,  i7,§  i3o,n.  3;  2lrt.  121,  i  8,  b,  §  130,  n.  4;  Slrt.  121, 
§.5,  ?  130,  n.  8,  a;  Slrt.  121,  ^.5,  ?  130,  n.  8,  b. 

Hamilton,  G.  F.  Critique  On  the  Dodlrine  of  Vyse  v.  Foster.  3  Law 
Quarterly  Review  211.    1887.     ^42,  n.  4. 

Hammond,  Anthony.  A  Pra<5lical  Treatise  on  Parties  to  Adlions  and 
Proceedings  Civil  and  Criminal.  1822.  p.  62.     ^  44,  n.  i  ;  p.  85,  <;  48, 


Authors  Mentioned. 

Hakk.J.  I.Ci.AKK.  LL.I).  The  Law  of Conlraas.  :887.  §44,11.1.  Notes 
lo  -AKlrioli  V.  Cooper:  White  &:  Tudor's  Leading  Cases  in  Equity. 
p.  22S,  4th  ed.      I  102,  n.  3. 

Hoi.MKS.  Jrix'.K  O.  \V  ,  Jr.     The  Common  Law.    Boston,  1881.     Intro. 

HpnTKR,  M.  .\..  LL.I).,  W.  A.  Roman  Law,  2d  ed.,  ^5,  p.  551,  ei  seq. 
i.  91.  n    3. 

.V  li  r  I  c  III  a  n  11 ,  0  0  b  a  n  nee.  Xai,  iBcrl^dltnifj  ber  Societdtgglaubigcr  ju  ben 
"i<rioatc\Uuibi3ern  im  (Soncurfc  ber  offenc"  .'onnbelegcfellfc^aft.  ^.\  7  u.  8. 
3iiridi,  IH4»).     '^  no,  n.  2-3;  ^  loi,  n.  3;  ^  164,  n.  7. 

Hutchinson,  R.  Executions  by  Separate  Creditors  Against  the  Joint 
Effeifls  of  the  Partnership.   3  vSo.  Law  Rev.  250.     ^  103,  n.  6,  a. 

,"\  b  e  r  i  n  i\ ,  %  u  b  0  I  p  b  'i!  0  n  .    Xer  ^Wid  im  3?ed)t.  liol.  1,  1877.    i  56.  n.  a. 

H  rt  b  ,  T  r  .  '.y  c  r  n  b  a  r  b  .  ikitrdije  juni  3iec6t  ber  6-rttierbe.=  u.  2Sirtf)fd)aft§s 
(lcnoffcnfd>aften.  p.  ;5;5.  1882.     (!  loi,  n.  2. 

HcUcr,  Jr.  A.  '>! .     Uober  ;L'tti'>=(Sontcitatton.    ?.  52,  a.  1827.     ^92,  n.  3. 

H  11  n  ti  e ,  3^  r  .  illrtitel  in  ber  3eiti*rtft  fiir  bas  gefamntte  .tianbelSred^t,  Sanb 
VI.  3.  22f)-229.     ^.  loi,  n.  2. 

I'cift,  Tr.  1' .  2}.  3ur  ©cfc^ic^te  ber  romifc^cn  ©ocieta§,  v>ena,  1881. 
?  I,  n.  2. 

LiNULKY,  NATHANlEt.     Law  of  Partnership,  i  vol.  6,  ei  seq.     \  37,  n.  b. 

"      529-  I  130,  n.  14. 

Mk.  Justice,     i  Partnership  329.     ?  40,  n.  i. 
"  "  19.     \  61,  n.  I. 

"  2  "  1140.     g  78,  n.  2. 

Lord  Justice,  Law  of  Partnership,  5th  ed.  18S8.      Intro. 

L.,  J.  M.  The  Power  of  One  Partner  to  Bind  the  Firm  by  a  Sealed  Instru- 
ment. 9  Am.  Law  Reg.  265.  1870.     'i  117,  n.  2,  a. 

Maine,  Sir  Henry  Sumner,  K.  C.  S.  L,  LL.D.  Ancient  Law,  p.  260,  et 
seq.,  6th  ed.,  1876.     ?  98,  n.  i. 

Maiti.ani.,  P.  \V.     Bracton's  Note  Book.    London.   1887.     Intro. 

Markhy.  Wii.UAM,  D.  C.  L.  Elements  of  Law.  3ded.,  ^.  516.  1885. 
<;98,  n.  2. 

?Jlattbiac,  i^on  6.  (SontrotJcrfen=i.'erifon  bee  romifd>en  6it)ilrec^t§.  Sei^jig, 
|K=)fM>4.     \  108,  n.  4. 

Maynz,  Charles.  Cours  de  Droit  Remain.  Professeur  de  droit  a 
ri'niversit^  de  Liege,  4^me  ed.  1877,  >,.  223,  No.  5.     I  164,  n.  6. 

M I  i.L.  John  Stuart.    System  of  Logic,  Rationative  and  Indudlive.  Intro. 

xiv. 


Authors  Mentioned. 

Mitchell,  Judge  J.  T.     Note  to  Northern  Bank  of  Kentucky  v.  Keizer, 
5  Am.  Law  Reg.,  N.  S.  75.   1886.     ?  104,  n.  i, 

MoLLOY,  Charles.  Dejure  Maritimo,  279,  282,  2S4,  5th  ed.,  London, 
1701.     ?  5,  n.  3. 

Montagu,  Basil.  A  Digest  of  the  Laws  of  Partnership,  chap,  vii.,  p. 
183,  etseq.   London.    1822.     \  103,  n.  13. 

Mokawetz.  Private  Corporations.  2ded.,  1886,  s.  748,  adfinem.  ?  24, 
n.  6;  s.  74S,  699.     ?  24,  n.  9. 

MOYLE,  B.  C.  L.,  J.  B.  Institutes  of  Justinian,  i  vol.  472-77.  Oxford, 
1883.     I  91,  n.  3. 

Parsons,  James.  A  series  of  Essays  on  Legal  Topics,  p.  50-5,  1876. 
\  48,  n.  3,  a. 

Parsons,  TheOPHILUS,  LL.D.  The  Law  of  Partnership,  2d  ed,  1870,  ch. 
X,  ^  I.   \  100,  n.  2,  b ;  p.  342.     \  100,  n.  6,  a. 

Pollock,  Frederick.  A  Digest  of  the  Law  of  Partnership,  4th  ed., 
Appendix,   London,  1883.     Intro  &  n.  2. 

Pothier,  R.  J.     6  Pandedls  448,  Paris,  1823.     \  63,  n.  4. 

^  u  n  t  f  d}  a  r  t ,  '^  r  o  f .  2)  r  .  ilritifcfie  a>ierte(ial()r|d}nft  fiir  ©efe^gebunoi  imb 
9Jed)f)t5>Di[fenfcf)aft.  29  SBairb  5L3,  514.  1887.     ^91,  n.  3. 

Reeves,  John.  History  of  the  English  Law.  Finlason's  ed.,  London, 
1869. 

Slcnaub,  3tc^iIIe§.  2)a§  3ied|t  ber  ©ommanbitgefellfc^aften,  ISiuUttung, 
Set^Sig,  1881.  |  3,  n.  i  ;  §.  33,  ^).  233-4.  I  32,  n.  i  ;  |.  13,  )).  94, 
^37,  n.c;  ?.61,  ^3.437,  |  130,  n.  2  ;  §.61,  )3.436,  |i30,n.  8,  ^;  ^,.61, 
^3.  439-40,  1 130,  n.  11,  12 ;  ?.55,  ^3.  386-7,  \  77,  n.  i. 

Stibbentro^j,  S)r.®eorg  ^uliug.  3"i^  2^'f'i^^ '^i'"  ^*^"  Gorreal^Dblis 
galionen  \.  5,  1831.     I91,  n.  3. 

Rogers,  Prof.  Henry  Wade.  Note  to  Davis  v.  Howell,  20  Am.  Law 
Reg.,  N.  S.,  461.   1861.     I  108,  n.  8. 

3fioggc,  Dr.  ilarl  2luguft.  Ueber  bae  0erid)t§lt)efen  ber  @ermanen, 
'^■iO.Vi.z,  1820.     Intro. 

Rousseau.  Societes  Civiles  et  Commerciales,  s.  64,  Paris,  1878.  \  16,  n. 
6,  a;  s.  66.   \  16,  n.  6,  b ;  s.  1736,  ^51,  n.  2,  b. 

©dtmibt,  5i^ifi5«ridj  6uftaD  3(bolf.  Sanbelsgefellfc^aftcn  in  '^ix\. 
beutfdien  ©tabtred)t§queUen  be^  93Httelalters,  1883.    ^  2.  n.  1. 

Sharswood,  C.  J.  GeoRGE.  Mss.  Le<flures  at  the  University  of  Peuncyl- 
vania.     \  102,  n.  2. 

Story  on  Partnership,  s.  51.     '<  63,  n.  5. 

XV. 


Authors  Mentioned 

STRACCHA.  ])e  Assecur,  ),'l.  20,  No.  4,  cited  from  i  Tropmjng,  p.  21. 
5  16,  II.  3. 

Stron«;,  Ji'UGK  Wm.  lutroductory  Address  to  the  Law  Students  of  the 
rniversity  of  rennsylvania,  Odlober,  1879.     Intro. 

SwiKT.  Jonathan.       "Tale  of  a  Tub,"   III  Vol.,  82,  ed.  1803.     J  33,  n.  3. 

Trohlonc.     Socidt^s  Civiles  et  Commerciales,  Paris,  1843.  Vol.  i,  p.  21, 
I  16,  n.  3;    p.  9,   "/.  16,  n.  6,  r;  p.  61,  J,  567,  |  33,  n.  i  ;    ^494,   ^51,  n. 
2,  a;  §499,    ?.5i.n.  2,  (J;    ?  482-3,    1485,^488;    §503-4,  ?  51,  n.  2, 
/  ?  487.  ?  57,  n-  5- 

Va.n  Wettkr,  r.  Les  obligations  en  droit  Roman,  2  Vol.,  292,  §54, 
1S82.   ?9i,  n.  3. 

^■AVASSKUR,  A.  Traitd  des  Socidtds  Civiles  et  Commerciales,  2d  ed., 
Paris,  1878.  I  28,  1 13,  n.  I  ;  s.  23,  §  16,  n.  5  ;  s.  92,  §  31,  n.  3  ;  s.  85- 
94.  ?  33,  n-  I  ;  s.  348,  ?  37,  n.  a ;  s.  315,  ^  51,  n.  2,  d. 

iiU  i  b  0 1 ,  ^\  0  i  .  X'  e  0  n  J    2)ie  Sortcalobligationen,  p.  d,  ei  seq.     §  91,  n.  3. 

W.,  K.     Retainer  of  Attorneys,  37  Law  Mag.  72,  1847.     §119,  n.  i. 


xn. 


TABLE   OF  CASES 


STATED     IN     THIS     TREATISE. 


A  few  cases  have  been  cited,  but  not  stated,  as  they  simply  confirm  the 

case  taken  as  the  illustration  for  the  proposition  in  the  text. 

The  cases  merely  cited  are  printed  in  italic. 


Abbott's  Appeal,  14  Wr.  234, 

Abbott  a.  Belkuap,  11  Ohio  411,  -        -         .  < 

Abergavenny's  Case,  6  Rep.  79,  ... 

Ackland  a.  Trethewy,  2  Saunders  48,  -        .        _ 

Abrams  a.  Stewart,  7  Watts,  448,         ... 

Adams  v.  Beall,  8  A.  Rep'r  664,  ----- 
Adams  v.  Howell,  68  N.  Y.  315,  .        -         -        - 

Adams  a.  Lothrop,  135  Mass.  469,  -  -  -  . 
Adams  v.  May,   27  Fed.  R.  907,  .         -         .         . 

Adams  v.  McKesson,  3  Sm.  81,  -         .         .         . 

Adams  a.  Walsh,   3  Denio.125, 

Addison  a.  Loeschick,  3  Rob.  331,       .        -        -        - 
Aigen  v.  B.  &  Me.  R.  R,,  132  Mass.  423,     - 
Ainey's  Appeal,  11  W.  N.  C.  568,         .         -         -         - 
Alberger  a.  Bank  (Steuben  Co.),  loi  N.  Y.  202, 
Alderson  v.  Pope,  i  Camp.  404,  u.,      - 
Alexander  v.  Gorman,  7  A.  Rep'r  243,         .        -        - 
Alexander  v.  Morgan,  31  Ohio  St.  546,        -        .        . 
Allen  a.  Dickey,  i  Gr.  Ch.  40,  -        .        .        . 

Allen  a.  Meech,  17  N.  Y.  300, 

Allen  a.  Morris,  i  McCart.  Ch.  44,       -         -         - 

Alter  a.  Scull,  i  Harr.  147, 

Altheimer  a.  Bank  (4  Nat.  of  St.  Louis)  3  S.  W.  Rep'r  858 
Altvater  a.  Kenney,  27  Sm.  34,    - 

Allen  a.  Ellis,  2  S.'  Rep'r  676, 

Allen  a.  Richards,  44  Leg.  Int.  432,  -  -  -  - 
American  Loan  and  Tr.  Co.  a.  Ricker,  140  Mass.  346, 
Ames  a.  Herrick,  8  Bosw.  115,     - 


no, 

106, 

194. 

103, 

.  109, 

J  03, 

94, 

95. 

137, 

177, 

140, 


Amsinck  v.  Bean,  22  Wallace  395         .        -        -        - 

Amsink  a.  Dingtnan,  27  Smith  114      - 

Anderson  v.  Levan,   i  W.  &  S.  334,     -        -         -        - 
Anderson  v,  Maltby,  4  Br.  Ch.  422 ;  s.  c.  2  Ves.  Jr.  244, 


104, 
192, 
62, 
216, 
126, 
134, 
105, 
138, 
215, 
193. 
165, 
170, 

59, 
177. 
114, 

113. 
16, 

215, 

rio6, 

\  106, 
(107, 

J    88, 
I    88, 

83. 
106, 


1S65. 
1842. 

1608 

1669. 

1838. 

1887. 
1877. 
1882. 
1886. 
1866. 
1846. 
1865. 
1882. 
1882. 
1886. 
1811. 
1886. 
1877. 
1838. 
1858. 
1861. 
1837. 
1887. 
1874. 
1887. 


6, 

1887. 

6, 

1885. 

3, 

1861. 

2,  b. 

%d, 

1874. 

2, 

3. 
^1 

1874. 

3. 

1841. 

2,  a. 

1793- 

Table  of  Cases. 

AiuU-rson  :•.  rollanl.  62  Geo.  46,          .        -        -        -  86,  6,  1878. 

\ii(lrfws  a.  I-osler.  2  P.  &  W.  160,       -         -         -         -  168,  i,  1830. 

\n.lrews  :-.  ruK'li.  24  I-  J,  Ch.  5«-        -         "         "         '  59-  g,  1855. 

Andri-ws  ;■.  Wilcoxon.  25  Ch.  Div.  505,       -         -         -  205,  3,  1884. 

AiiK'i-11  J-  Arnold.  62  N.  Y.  508, 65,  i,  1875. 

AiikIc  <i-  Shihley,  37  N.  Y.  626,             .         .        -         .  23,  3,  1868. 

Aushutz  :■.  iMt/siiiunoiis,  9  Barr  180,  -        -        -        -  169,  3,  1848. 

Anson  a.  Vice,  7  B.  cS:  C.  409, 23,  5,  1827. 

Appleby  a.  Hawkins,  2  Saudf.  421,      -         -         -         -  140,  3,  1849. 

Applc^ate  <7.  Van  Brunt,  44  N.  Y.  544,         -         -         -  112,  18,  1871. 

Arbendrolh<z.    Durant,    j^^  n.  y!  S^        -         -         -  37,  3,/  J^^; 

Ar^all  :■.  Smith.  3  Denio  435,       -----  37,  3,^,1846. 

.•\nnstronj,'  a.  Hijigins,  10  Pac.  R.  232,         -        -         -  15,  4,  i8s6. 

Arnistronj,' rt    Pettrecht,   5  Rob.  339,   -         -        -         -  178,  5,  1868. 

Arnol.l  :•.  Angell,  62  N.  Y'.  508,            -         .         -         .  65,  i,  1875. 

/Vrnold  <r  Cochran,  8  Sm.,  Pa.,  399,     -         -         -         -  24,  5,  1868. 

Arnold  a.  Patterson,  9  Wr.  410,            .         .         -         _  24,  4,  1863. 

r    8  2 

Artluirs  a.  Kramer,  7  Barr  165, -<         '  '  1847. 

Ash  i:  Guie,    i  Out.  493, -  16,  i,  1881. 

Ashton  a.  Robinson,   20  Eq.  25,            -        -         -         -  28,  2,  1873. 

Aspinwall  ;■.  Williams,  I  Ohio  84,        -         -         -         '      {  j\V  ]^  1823. 

Astor  (7.  Ogden,  4  Sandf.  311, 54,  i,  1850. 

Assurance  Co.   (London)  v.  Drennen,  {  \\l  U;  |  5i,^^  23,  3,  1885. 

Aitornev  General  v.  Hubbuck,  \  '^  Q'  ^  ^  488,      -  109,  4,  1883. 

<  13  y.  B.  D.  275,      -  109,  4,  1884. 

Atwfll  (7.  Morrison,   9  Bosw.  503,         -         -         -         -  jyo,  2,  1862. 

Atwood  :■.  Inipson,  5  C.  E.  Gr.  151,     -         -         -         -  106,  i,  a,  1869. 
Austirick  a.  Russell,  i  Sim.  Ch.  52, 
Austin  f.  Holland,  69  N.  Y.  571, 

Austin  :'.  Williams,  2  Ohio  61,     - 

Autin  :■.  Townsend,  Pen.  744,      ••        -        -        - 

Averill  v.  Loucks,  6  Barb.  19,       -        -        -        - 

Avery  r.  Myers,  60  Miss,  368,       -         -         - 
Axtell  a.  Young,  2  H.  Bl.  242,  arg. 
Aver  <z.  Smith,  13  Otto  320,  .         -         -         . 

Azel  :/.  Betz,  2  E.  D.  Smith  188, 


Racheller  a.  Lawrence,  131  Mass.  504.  -        -        -  2,7,     3,  a,  1881. 

Badcley  :•.  Consolidated  Bank,  38  Ch.  D.  238,    -        -  Intro.  i883 

Bagley  z/.  vSmith,  10  X.  Y.  4S9, /  ^74.  2,  „ 

.     .           ^     .                                                                            1 212,  ^.  ^^-^^ 

.  a.  Cushman,  i  Hill  526, 58.  "/",  1841. 

•    t'.  A'/zt-ar^.v,  ii6Eng.  C.  L.  Rep.  775,  n.,         -           90,  3,'  1866! 
^y 'i-  Monarty,  46Coun.  592,        -         -         .         -         167,  5,  a  1879. 

{197  2 

202',  I,  1887. 

nam  a.  uouiainj'.  4  bandi.  716,  -         .         .         .         l'^^'    ^'  ^'  ^\^c-2 

Bakera.  Wetn.ore,  9johns.  307,         -        -        -        .  62,     /,       1812! 


151, 

4, 

1826. 

177, 

2, 

1877. 

1  44, 
I  76, 

7> 

25- 

I825. 

76, 

4- 

1811. 

1  93, 

I, 
10, 

1S49. 

75- 

2, 

1882. 

58. 

g 

1784. 

74. 

5, 

1879. 

17, 

3- 

1853- 

Table  of  Cases. 

Baldwin  v.  Burrows,  47  N.  Y.  199,       -        -        -        -  23,  i, 

Baldy  z:  Brackenridge,  2  S.  Rep'r  410,         .         .         .  140,  3, 

Ballentine  v.  Freliughuyseu,  38  N.  J.  Eq.  266,             -  28,  3, 

Ballou  z>.  Spencer,  4  Cow.  163,     -----  8,  i, 

Banco  de  Portugal,  ex  parte,  11  Ch.  Div.  317,    -        -  164,  2, 

Banco  de  Portugal  v.  Waddell,  5  Appeal  Cases  161,   -  164,  2, 

Bank,  Agr.  &  Mfrs.,  v.  Stambaugh,  13  S  &  R.  299,     -  106,  8,  d, 

Bank,  Am.  Nat.,  a.  Blodgett,  49  Conn.  9,  -        -        -  74,  i, 

Bank,  Belleville  Sav.,  a.  Wiuslow,  30  F.  488,      -        -  85,  i. 

Bank,  CatskilL  v.  Gray,  14  Barb.  471,          -         -         -  58,  I  y^ 

Bank  (Central  City  Saving)  ?'.  Walker,  66  N.  Y.  425,  24,  3, 

Bank,  Citizens',  v.  Hine,  49  Conn.  236,       .        .        _  23,  3, 

Bank,  Consolidation,  a.  Miller,  12  Wr.  514,         -        -  127,  5, 

Bank  v.  Cushing,  53  Vt.  321,        -        .         .        .        _  197,  i, 

Bank  z'.  Dakin,  24  Wend.  411,     -         -        -        -        "     I    76  22' 

Bank,  Fayette  Nat.,  Lexington,  v.  Kenney,  49  Ky.  133,     195,  4, 

Bank,  Gainesville  Nat.,  a.  Stevens,  62  Texas  499,      -  51,  i. 

Bank,  Lancaster,  v.  Myley,   i  Harris  544,             -         -  tog,  7, 

Bank  z'.  Monteath,  i  Denio  402,  -----  44,  8, 

Bank  v.  Norris,  43  L.  I.  56, 68,  2, 

Bank  of  Bellows  Falls  a.  Washburn,  19  Vt.  278,  -     |  J"^'  2'  ^' 

Bank  of  Commonwealth  v.  Mudgett,  44  N.  Y.  514,    -  126,  4, 

Bank  of  Middletown  a.  Haldeman,  4  Cas.  440,   -         -  127,  6, 

Bank  of  Mt.  Pleasant,  a.  McKee,  7  Ohio  463,    -        -  117,  4, 

Bank  of  New  York  v.  Vanerhorst,  32  N.  Y.  553,          -  103,  2, 

Bank  of  U.  S.  o.  Cramond,  i  Binn.  64,         -        -        -  130,  16, 

Bank,  Steuben  Co.,  v.  Alberger,  loi  N.  Y.  202,  -        -  126,  5, 

Bank  v.  Sawyer,  38  O.  S.  339,      -----  19,  3, 

Bank  a.  Templar,  26  Fed.  Rep'r  580,  -        -        -        -  178,  i. 

Bank,  The  Cecil,  a.  Bowman,  3  Gr.  33,       -        -        -  127,  2,  d, 

Bank,  i  Nat.  of  Alleg.,  v.  F's  Deposit  Bk.,  5  C.  Rep.  505,     74,  5, 

Bank,  ist  Nat.  of  Greensville,  a.  Buzzard,  2  S.  W.  Rep.  54,  44,  4, 

Bank  (1st  Nat.)  z'.  Bissell,  2  McCrary  73,    -        -        -  15,  4, 

Bank,  4th  Nat.  ofSt.  Louis.,z^.  Altheimer,  3S.W.  Rep.  858,    59,  i. 

Bank's  Appeal  (York  Co.),  8  Casey,  446,    -        -        -     |  jq^'  3'   • 

Bai^ks,  ex  p.,  i  Atk.  106, -  197,  i. 

Baker  v.  Dawbarn,  19  Grant's  Ch.  113,  Up.  Can.         -  192,  3, 

Baker's  Appeu.,  9  Harris  76,         -        -        -        -         -  107,  3, 

Barber  a,  Suydam,  6  Duer  34,       -        -        -        -         -  84i  4, 

Barber  a.  Durbin,   14  Ohio  311,    -----  112,  4, 

Bardweil  v.  Perry,  19  Vt.  292,      -         -         -         -  i        '  ^ 

Barge  a.  Osborne,  29  Fed.  Rep'r  725,           -        -        -  131,  4, 

Barker  v.  Mayo,  129  Mass.  517, 165,  4, 

Barkery.  Parker,  i  T.  R.  287, 71,  i, 

Barlow  a.  Noakes,  26  L.  T.  136;  20  W.  R.  388,  -         -  71  -  i. 

Barnard,  in  re,  32  Ch.  D.  44,         -        -        -        -         -  126,  2, 

Barnes  v.  Barrow,  61  N.  Y.  39,    -        -        -        -        -  129,  i, 

Barnes  a.  Foster,  31  Sm.  377,       -----  113,  i,y] 

Barrow  a.  Barnes,  61  N.  Y.  39,    -         -         -         -         -  129,  i, 

Barrow  a.  Jenkins,  35  N.  W.  Rep'r  510,       -         -         -  156,  i, 

Barry  v.  Nesham,  3  C.  B.  641,       -----  58,  r, 

Barthan  a.  Kapp,    i  E.  D.  Smith  622,           -         -         -  215,  4, 

Bartle  a.  Cochran,  3  S.  W.  Rep'r  854,          -        -        -  48,  3,  b, 


Taiu.k  of  Cases. 

Barlon  a.  Conklin,  43  ^arb.  435.  -        -        "         "  ^9-4,       1864. 

Barton  ;•.  Hanson,  2  Camp.  97;  2  Taunt.  49-        -        "          ^2,  e,       1^09. 

Bast's  AptKal,  2oSm.  301, i5^,  5.       if>72. 

i     102,  4,                      Q 

Batcnjan  .;.  Brock,  25  O.  ht.  609.          -        -        -        -     j  j^^^  3^       io74- 

Bates  ;•.  James,  3  Ducr  45. ^^7,  5,  *.  1854. 

,.11.       '  "  Moore  421.                                         _/:  g 

Bates./.  Kadenhust,    -^   3  Riug.  463,            -        -        -          7^.  0, 

Battin  .;.  lonts.  6  Cas.  84,    ------         135.  5.  «.  1857. 

Bauir  <J.  Sinmph,   76  Iml-  157. 27,  i,        iSSi. 

Haurichlcr  <;.  Christman,  10  riiila.  115,        -         -         -           35,  4,        1674. 

liavinl  a.  C.ratz,  II  S.  cS:  R.  41.             -         -         -         -           72,  I,       1824. 

Ik-acli  r.  Ilaywar.l,  ioOhio455,           .         -         -         -           76,  11,        1841. 

Beach  a.  Hill,   1  Beas.  31,     ------     |  ^J'  l\       1858. 

Beall  a.  Adams,  S  A.  Rep'r  664,  -----         137,  5,       1887. 

{106,  2,  d, 

106,  9,  a',  1874. 

107,  2, 

Bean  a.  Walker,  34  Minn.  437,     -        -        -        -        -         120,  d,    1886. 

Beasley  a.  Green,  2  Biug.,  N.  C,  loS,          .        -        -           62,  ^,1835. 

Beaston  a.  Yorkshire  Bk'g  Co.  |  ^\^-  ^  C-  P;  D.  204  .           „5_  ^^^       jgso. 

Beatsou   :•.  Harris,  I J9  Cent  L^I.  275,       .        .        .         ^^^  2,       18S4. 

Beck  <i.  Mair,  4  K.  Rep'r  855, 120,  2,       1886. 

Beiker  z-.  Boon,  61  N.  Y.  317, 120,  b,  1874. 

Beckett  :■.  Raiiisdale,  31  Ch.  D.  177,    -         -         -         -           88,  8,        1855. 

Beerher  fl.  Gates,  60  N- Y.  518, 178,  5,        1875. 

Bilchera.  Guild,   119  Mass.  257,           -        -        .        -         167,  5,  f,   1876. 

Belknap  r.  Abbott,  II  O.  St.  411,         -        -        -        -      /  J°^'  3.       1882. 

,  105,'  h 

Bell  :■.  Newman,  5  vS.  &  R.  78,     -         -         -                  -J.  108,  7,       1819. 


195,  4, 

Bendell  v.  Heltrick,  3  I.  &  vSp.  405,     -        -        -        -          69,  21,  1S73. 

Benjamin  z:  I'orteus,  2  H.  Bl.  590,       -         -         .         .           63,  2,  1796. 

Benners  v.  Harrison,  19  Barb.  53,         -        .        .        .            8,  i,  1854. 

Bennett  :■.  Buchan,  61  N.  Y.  225,         -        .        .        -         129,  4,  1874. 

Bennett  a.  Hoyt,  59  N.  Y.  538, 86,  3,  1872. 

Benson  i'.  Tilton,  58  N.  H.  137, 215,  3,  1877. 

Bentley  v.  Craven,  iS  Reavan  75,         -        -        -        -         151,  3,  1853. 

Bentley's  Estate,   16  Pliila.  263,            -        .        -        .        216,  i,  1883. 

Bcntlya.  Reade,  4  K.  &J.  657,            ....          48,  3,  d,  1858. 

(115,  3, 

Bernhcim  a.  Johnston,  86  X.  Car.  339,         ...      J  134^  4^  1882. 


1.152,  I, 

Berry  t .  Kelley,  4  Rob.  106, 194,  2,  1S66. 

Bettner  a.  Cotter,  i  Bosw.  490, 15,  5'  1857. 

Bettsr.  June,  51  N.  Y,  274, 184,'  2,  1873' 

Betz  a.  A/.el,  2  K.  D.  vSmilh  1S8,           ....  17,  3,  1853. 

Bibb  I-urnace  Co.  a.  I-anchon,  2  S.  Rep'r  268,  -         -  120!  '  d,  1887. 

Bidwella.  Ir^^•in,  22  Sni.,  Pa.,  244,       ....  18,  4,  1872. 

BilliuKSfl.  Bowen,  i3Neb.  439, 112]  6*  1882. 

BdhnKS  7-.  Meigs,  53  Barb.  272,            -        .        .        .  130,  7  1869. 

Binney  r.  Mulrie,   12  Appeal  Cases  1S6,       ...  31,  2,  i886- 

Birdsallr-.  Cole.  2  Stock.Ch.  63,         ....  |  ^o^.  i-  1S54. 


Table  of  Cases. 

Bishop  V.  Countess  of  Jersey,   2  Drewry  143, 

Bishop^?.  Dodd,  50  L,a.  An.  1178, 

Bishop  a.  Ettenborough,   11  C.  E.  Gr.  262, 

Bishop  a.  Speer,   24  O.  St.  598,     -        -        -        - 

Bissell  a.  Bank,  ist  Nat.,  2  McCrary  73, 

Bissell  z/.  Foss,   114U.  S.  252,       .        -        -        - 

Bitter  v.  Rathman,  61  N.  Y.  512, 

Bitzer  v.  Shunk,  i  W.  &  S.  340, 

Bixby  a.  R.  R.  Co.,  55  Vt.  235,  -  -  -  - 
Blacka.  Pruyn,  21  N.  Y.  300,  -  -  -  - 
Black  ..S«pt,{37WN.   565,     .... 

Black  a.  Smith,  9  S.  R.  142,  -        -        -        - 

Black's  Appeal,  8  Norris  201, 

Blackwell  v.  Rankin,  3  Hal.  Ch.  152, 

Blair  v.  Brcuiiey,  2  Phil.  Ch.  354, 

Blair  v.  Snover,  5  Hal.  153,  .        .        .        - 

Blair  v.  Wood,  12  Out,  278,  .        .        -        - 

Blaker  z;.  Sands,  29  Kan.  551,      -        -        -        - 

Blanchard  a.  Hesketh,  4  East.  144, 

Blanchard  a.  Pattison,  5  N.  Y.  186,      - 

Blanchard  a.  Livingston,   130  Mass.  341,     - 

Blanford  a.  Willett,    i  Hare  253, 

Blight  V.  Ewing,  i  Pittsburg  275, 

Blodgett  V.  Am.  Nat.  Bank,  49  Conn.  9, 

Blodgett  V.  Weed,  119  Mass.  215, 

Bloss«.  North,  30  N.  Y.  374,        .        -        -         . 

Bloxam  v.  Pell,  2  Wm.  Bl.  999,    -        -         -        - 

Boardman  a.  Farnsworth,  131  Mass.  115,    - 

Body  a.  Owen,   5  A.  &  E.  28,- 

Boeklen  v.  Hardenburgh,  5  J.  &  Sp.  no, 

Bogue«.  Deal,  8  Harris  228,         -        .        -        - 

Bogert  a.  Murray,  14  Johns.  318, 

Boggs  a.  Sheppard,  9  Neb.  257,    -        -        -        - 

Bogue  V.  Steel,   i  Ph.  Rep.  90,     - 

Bogue's  Appeal,   2  Norris  loi,      - 

Bohrer  v.  Drake,  33  Minn.  408,    -        -        -        - 

Bond  V.  Gibson,  i  Camp.  185,       - 

Bond,  ex  p.,  i  Atk.  98,  .        .        -        .        - 

Bond  V.  Pittard,  3  M.  &  W.  357, 

Boon  a.  Beecher,  61  N.  Y.  317,     -         -         -         - 

Borden  a.  Fall  River  Whaling  Co.,  10  Cush,  438, 

Boston  &  Col.  Smelting  Co.  v.  Smith,   13  R.  I.  27, 

Bostwick  a.  Campion,  18  Wend.  182, 

Boswell  a.  Dry,  i  Camp.  329,       -        -        -        - 

Boswell  V.  Green,   i  Dutch.  391,  - 

Bourne  v.  Freeth,  9  B.  &  C.  632, 

Bourret  a.  Byers,  64  Cal.  73,  .         .         -         - 

Bowen  v.  Billings,   13  Neb.  439,  -        -        -        - 


140, 

2, 

1854. 

69. 

2, 

1878. 

112, 

10, 

1875- 

70, 

2, 

1874. 

IS- 

4, 

1885. 

IS, 

4, 

1S85. 

r  69, 

19, 

i  106, 

4,  a, 

1875. 

(138. 

I, 

f  95, 
1 122, 

e. 
2, 

1841. 

104, 

3, 

1882. 

94, 

c, 

i860. 

9, 

I, 

1879. 

84, 

I, 

1822. 

9, 

I, 

■    II, 

I, 

1879. 

112, 

5- 

f  106, 
1 192, 

2, 

1848. 

140. 

3, 

1S47. 

17S, 

5, 

1828. 

96, 

I, 

1885. 

14, 

I, 

1883. 

48, 

3, 

1803. 

62, 

e, 

1851- 

31, 

7, 

1881. 

43, 

I,  d, 

1842. 

59, 

b, 

1856. 

74, 

I, 

1881. 

124, 

2, 

1875. 

76, 

12, 

1864. 

66, 

2, 

1775- 

37, 

i,g^ 

1881. 

59, 

0, 

1836. 

67, 

6, 

1874. 

100, 

4, 

1853. 

J  171, 
1 206, 

2, 
2, 

1817. 

209, 

2, 

1879. 

104, 

10, 

1850. 

106, 

8,  e, 

1876. 

52, 

I, 

1881. 

115, 

I, 

1808. 

195, 

3, 

1745- 

48, 

3,'^- 

i8-,8. 

120, 

b, 

1874. 

10, 

10, 

1852. 

64, 

2, 

1883. 

62, 

/ 

1837- 

/  44, 
I  62, 

3, 
a 

1818. 

133. 

6, 

1856. 

23, 

4, 

1829. 

76, 

17, 

1883. 

112, 

6, 

1882. 

Table  of  Cases. 

Rowman  : .  Hank  (Cecil),  3  Or.  33,       .         -         -         - 

Bowman  : .  Kistlt-r.  9  Casey  106,  .        -        -         - 

Bowman  r.  vSpaldiiiK.  2  S.  W.  Rep'r  911,  - 

Boy<len  :.  Boyden,  9  Met.  519. 

lioytT  a.  ricblliort),  5  Watts  159, 

Brackcuriilge  n.  Balily,  2  S.  Rep'r  410. 

Bra<lbury  :■.  Dickens,  27  Btav.  53.       "  "        "        " 

Bradiur'a.  Stranj^,    114  l^'-  S.  555.         .  -         -         - 

Braswell  u.  Juilge,  13  Bush.  67,     -        -  -         -         - 

Bnuslk-lil  :•.  I'rench,  59  Miss.  632,         -  -        -        - 

Brcnton  r.  Thompson,  20  L.  I.  133.     "        '        '        '     { 
Brewer  a.  Dyke,  2  Car.  &  K.  828,         .         -         -         - 
Brewer  :•.  Norcross,  2  C.  E.  Gr.  219, 
Brewster  a.  Patterson,  4  Ed.  Ch.  352, 

Brewster  :■.  Sterrett,  8  Casey  115,         "        "        '        "      { 

Brick  a.  Young,  Pen.  663, 

Briggs  z.  Briggs,  15  N.  Y.  471, 

Briggs,  ex  ]).,  3  Dea.  &  Ch.  367 

Briggs  a.  llman,  32  La.  An.  657,  .  .  -  - 
Briggs  :•.  Vanderbilt,  19  Barb.  222,      .         -         -         - 

Brigham  ti.  Miller,  50  Cal.  615, | 

Brighls  a.  McKinney,  4  Har.  399,  .  .  -  - 
Brine  a.  Moley,  120  Mass.  324,  -  -  -  -  - 
Brink  a.  Greenwood,  1  Hun  227  ,  -  -  -  - 
Bristow  a.  Staats,  73  N.  Y.  264, 

Brock  z:  Bateman,  25  O.  St.  609,  .         .         .         -      j 

Brocklebank  a.  Stocker,  15  Jur.  591;  3  M.  &  G.  250,  -      I 

Brockway  :•.  Burnap,  16  Barb.  309,      .        -        -  - 

Brodhead  a.  (jreenwood,  6  Barb.  593,  .  -  - 
Brodie  a.  Howell,  6  Bing.  N.  C.  44,     - 

Brokam  a.  Runyan,  i  Hal.  Ch.  340,    -         -         -  - 

Bromley  a.  Blair,  2  Phil.  Ch.  354,        ...  - 

Brooks  a.  Gregorj',  1  Hun.  404, 

Brooks  i'.  Martin,  2  Wall.  70,       -         -         -         -  - 

Hrophy  i.  Holmes,  2  MoUoy,  Ir.  Ch.  i,       -         -  - 

Brotzman  a.  Newcomet,  19  Sm.  185,    -         -         -  - 

Brown  :'.  Clark,  2  Har.  469,  .  -  .  .  . 
Brown  a.  Dutton,  31  Mich.  182,  ----- 

Brown  :■.  Hicks,  24  Fed.  Rep'r  811,     -         -         .  . 

Brown  z'.  Jaquette,  i3Norrisii3,  -  .  .  . 
Brown  :-.  Tapscot,  6  M.  &  W.  119, 

Brown  a.  Thomas.  10  Atl.  Rep'r  713,  -  -  .  - 
Brown  :■.  Thompson,  Coxe,  2,     - 

Browning  a.  Ihler,  4  Dutch,  288,        .         -         -  - 

Brown's  Appeal,  8  Nor.  139,         -        -         -         _  . 

Brundrcd  :•.  Muzzey,  i  Dutch.  268,      ...  - 

Brush  a.  Levy,  45  N.  Y.  589,  .  -  -  .  . 
Brush  a.  Wood,  13  Pac.  Rep'r  627,      .... 

Hn.an  ::  Tooke,  60  Geo.  437,       .         -         -         _  . 

Bryant  v.  Wardell,  2  Exch.  479,  .        -        .        .  . 


127, 

2,  i, 

1859. 

79. 

I, 

90. 

I, 

1859- 

Ill, 

2, 

145, 

I, 

1887. 

136, 

2, 

1845. 

135. 

6. 

1836. 

140, 

3. 

1887. 

209, 

3, 

iS59- 

141, 

2, 

1884. 

15, 

4. 

1887. 

74, 

4, 

1882. 

102, 
106, 

a 
5.  " 

1863. 

144, 

5. 

1849. 

214, 

2, 

1865. 

8, 

1, 

1844. 

88, 
106, 

2, 
7,  « 

1858. 

153. 

3, 

1810. 

146, 

I, 

1857. 

48, 

2, 

1833- 

37, 

3./^ 

1880. 

62, 

I', 

1855- 

103, 
104, 

5. 

8, 

1875- 

168, 

3, 

1851. 

31. 

6, 

1876. 

59. 

3. 

I874. 

103, 

3. 

1878. 

102, 
105, 

4. 
3, 

1874. 

59. 
60, 

8, 
I, 

iS5i. 

60, 

I, 

1853- 

106, 

5,  '^, 

1850. 

18, 

4, 

1839- 

215. 

3, 

1846. 

140, 

3. 

1847. 

12, 

I, 

1874- 

211, 

3. 

1874. 

48, 

3.  a, 

,  1828. 

177, 

I, 

1871. 

178, 

2, 

1850. 

136, 

4,'^, 

1875- 

59, 

e 

,  1885. 

12, 

I, 

1880 

134, 

2. 

1840. 

173, 

12, 

1S87. 

130, 

7.  a 

,  1790. 

125, 

2, 

1869. 

216, 

I, 

1879. 

59, 

/.A 

1855. 

ID, 

3, 

1871. 

156, 

2, 

1887. 

125, 

5. 

1878. 

161, 

4. 

1848. 

Table  of  Cases. 


Bryant  a.  Grant,  loi  Mass.  567 

Buchan  c.  Bennett,  61  N.  Y.  225,         .        .         .        . 
Buchan  v.  Sumner,  2  Barb.  Ch.  165,   -        -        -        - 
Buchanan  v.  Cheeseborough,  2  Duer.  238, 
Buckham,  in  re.,  10  Nat.  Bankruptcy  Rep'r  206, 

Buckingham  v.  Ludlam,  2  Stew.  345  E.  A., 

Buckley  v.  Buckley,  11  Barb.  43,  ...        - 

Budd  a.  Wilkins,  i  Hal.  153, 

BufiFalo  City  Bank  v.  Howard,  35  N.  Y.  500 

Buisson  a.  Jacquin,  11  How.  Pr.  385,  -         -        -        - 
Bulkley  v.  Dingman,  11  Barb.  289,       .        -        -         - 
Bullen  V.  Sharp,  L.  R.  i  C.  P.  86, 
Bullitt  z^.  Church  (M.  E.),  2  Cas.  108, 
Bunning,  a.  FlocSlon,  L.  R.  8  Ch.  Ap.  323,  n. 

Burckle  v.  Eckhardt.  3  Comst.  132 ;  s.  c.  i  Denio  337, 

Burdick  v.  Garrick,  L.  R.  5  Ch.  App.  233, 

Burgan  v.  Cahoon,  i  Pennyp.  320,       -        -        -        . 

Burge  a.  Heyhoe,  9  C.  B.  431,      -        -        -        -        - 

Burke  a.  Tomlinson,  5  Hal.  295,  .        -        -        - 

Burkhardt  v.  Burkhardt,  42  Ohio  474, 

Burnap  a.  Brockway,  16  Barb.  309,      -         -         -         - 

Buruell  v.  Hunt,  5  Jur.  650, 

Burnett  v.  Snyder,  81  N.  Y.  550,  .         .         .         _ 

Burnham  a.  Smith,  3  Sumner,  435,      -        -        -        - 

Burns  v.  Hall,  Pen.  984,       --.-.. 
Burns  v.  Rowland,  40  Barb.  368  ----- 

Burrell  v.  Maudeville,  2  How.  560,      -        - 
Burrough's  Appeal,  2  Cas.  264,    -         -         -         -         - 

Burrows  a.  Baldwin,  47  N.  Y.  199,        .         -         -         - 
Burt  a.  Duryea,  28  Cal.  569,  ----- 

Burt  a.  Traphagen.  67  N.  N.  30,  - 
Burton,  a.  Patterson,  Pen.  717,- 
Burton  v.  Wookey,  6  Mad.  Ch.  367,     -         -         -         - 

Bush  V.  Bush,  33  Kan.  556,  ------ 

Bush  V.  Crawford,  29  Leg.  Int.  363, 
Bushell  a.  Edmunds,  L.  R.  i  Q.  B. 
Butler  a.  Johnson,  4  Stew.  35,      -        -        -        - 

Butler  a.  Jones,  87  N.  Y.  613,        -        .        -        - 
Butterfield  a.  Harris,  33  L.  J.  639, 
Butterfield  v.  Lathrop,  21  Sm.  225, 
Butterworth  a.  Haldane,  5  Bosw.  i,     - 
Buzzard  v.  Bank  of  Greenville,  2  S.  \V.  Rep'r  54, 
Byers  v.  Bourret,   64  Cal.  73,         -         -         -         - 

Byers  a.  Carson,  21  Rep'r  232,      -        -        -        - 

B.  &  M.  R.  R.  V.  Dick,  7  Neb.  242, 

B.  &  Me.  R.  R.  a.  Aigen,  132  Mass.  423,     - 


Cadet  a.  Levy,  17  S.  &  R.  126, 
Cady  V.  Smith,  12  Neb.  628, 


96, 


/  35, 
I  207, 

2, 
5, 

1869 

129, 

4, 

1874. 

no. 

4, 

1847. 

210, 

2, 

1856. 

164, 

I, 

1874 

J  165, 
1208, 

3, 
4, 

1878 

1  109, 

2, 

1850. 

\  112, 

17, 

85, 

3, 

1822. 

f  69. 

19, 

\   106, 

A.b 

1866 

(200, 

I, 

75, 

3, 

1855 

70, 

2, 

185 1 

64, 

/, 

1866 

106, 

9,  c, 

1856 

42, 

2, 

1864 

'  53, 
I  59, 

I, 
a, 

1849 

43, 

I,  r, 

1870 

69, 

17, 

1881. 

58, 

g 

1850 

76. 

2, 

1829. 

209, 

I,  b. 

1885 

60, 

I, 

1853 

18, 

I, 

1841. 

68, 

2, 

1880 

10, 

10, 

1838. 

76, 

2, 

1812 

69, 

18. 

1863 

74, 

4, 

1844 

76, 

21, 

1856 

23, 

I, 

1872. 

15, 

2, 

1865 

10, 

4- 

1 876 

155, 

I, 

1810. 

151, 

3, 

1822 

40, 

4, 

1885 

125, 

3, 

1872 

26, 

I, 

1865 

206, 

I, 

1879 

32, 

3. 

1882 

17, 

2, 

1876 

67, 

10, 

1872 

69, 

15, 

1859 

44, 

4, 

1886. 

76. 

17, 

1883 

195, 

I, 

1885 

76, 

I, 

1878. 

62, 

^. 

1882. 

178, 

6, 

1827 

76, 

I, 

1882 

Table  of  Cases. 

69,  17,  1881. 

.    unriran    1  Pennyp-  320.      "  '  .  16,     2,  1853- 

aSu:"S"'.s.SHxch.S98.       -  "        ;  SS,     :,  ,3.6- 

CaUlwell  a.  Oram.  5  Cow.  4«9.     -        "  ^  ^^^;     ^;.  ,329. 

,,,      n  ..   Stilcm.in,  1  K-awle2i2,     -  "  j^^      i,  a,  1872. 

^^h^'^'-^;  cS   4bN- V.  614.  -  -  .         1,3,     5-  1^53- 

CalkeU  ..   HJ""  6  0.  St.  190,  -  1840. 

Cameron  . .  }  r.mc^c  _  .  t,  ^ 

Camioc  «      I  Jones  394.  "  .         134,     i,        1829. 

H"nV'ISer37^^,^^I  ■  -  -    -    :    x^:  2:   x8£: 
gdti-1  Sr-A.57iv^^       -    :    :    -      6,  I.   1781 

rfrvirk'    Vickerv.  Douglas  653,         "  _         .  175, 


1886. 


S  re  .  'Kk  117  U.  S.  R.  201,  -  _  .  ,95.  ,,  1885. 
Srson  :••  Bver..  21  Rep'r  232  -  "  _  .  .  39,  2,  1883. 
Carter  r.  Lipsey.  70  Geo  417,  "  "  .  .  .  57.  4,  I793• 
Car^er  «.  Waugb.  ^  H.  Bl.  235.  -  -  fio6,  1,6  ^882. 
Carv..Goodbar,  16Fed.Rep.3x6.     -         "         "  \  107 -     4.  ^^  ^g^^ 

Carv  :■  Williams,  i  Duer  667,      -        "                  _  .         131,     2,       1836. 

Cai  </.  Deckard,  5  Watts  22.        -         -  .         172,     i,       1881. 

Cas^els  V   Stewart,  6  App.  Cases,  64,  -                 _  5^      2,       1884. 

Sss'lv-;.  Hall.97N.Y.  159.       --_:..  15,     i,       1871. 

Castle  a.  Taylor,  42  Cal.  367.        -        _        _        .  .         x2i,     9,       1877. 

Catanach  a.  Stanbndge,  2  Nor.  3^^,  .      9,     2,       ^378. 

Cavetta.  Lauffer,6Nor.  479-       -        "        "        '  '      U^o      5,       i860. 

Chadxvick  V.  Eelt,  II  Ca.  305.      --_:".  81',     i,       1880. 

Chafeea.  Slutts,  48W1S.617,       -  ^57,     3,       ^g^g 

ChafTaixr.  Lafitte,2oLa.Am.63i,     -        -  '     ^    77'     ^       ^887. 

Chambefort  v.  Chapman,  19  Q-  B.  D.  229,  -        ;  _           ^g'     ^'       1874. 

Chamberlain  !■   Forbes,  3^^ C    277,              _         _  _                    4_       1864. 
rhambersr.  Clearwater,  i  Keyes   310, 

Cliamuer^,  c.                       f  1 1  Wend.  571,                .  .           62,         /,  183/. 

Champion  v.  Bostwick,  |  jg  Wend.  182.  69    17,       1838. 

Champions.  Flanigan,  I  Or.  Ch.  51,  -        "        ]  ]          gi]     3',       x847. 

Chapin  V.  Clemitson,  i  Barb.  311.        "                 _  .         jSi,     2,       1852. 

Chaplain  a.  Renton,  i  S^^ck.  62           -  1887. 

Chapman  a.  Chambefort.  19  Q-  B.  D-  2?9,  ' '       6        1827. 

Chapman  a.  Everitt,  6  Conn.  247,        "        "        "  _         ^oo,     2,       186S. 

Chapman  I'.  Thomas.  4  Reyes  210,      -        -         _  _                    1,^,1887. 

Chanev  c.  Hoxie.  143  Mass.  .592,  -        -        "  _          §8,     3-       ^878. 

Chase  a.  Silverman.  90  111.  37.     -         "                  -  -           57,     4.       1821. 

Cheapf.Cramond    4B.&AI.663       ;        :  _        ^57      ,        ^g^^ 

Cheeseborough  a.  Buchanan,  2  Duer  238.  ^  ^^^      ^        ^^^ 

Cheescmanr.Sturges,6Bosw.  520.    -        -        "  '      UoS,   ^i,       ^gg^ 

Cheney  f.  Newberry,  67  Cal.  126,        -        -        -  "           ^^^     ^;       1873. 

Chesteri'.  Dickerson.  54N.  \.  I,         -        "  _                   7.  a,  i860. 

Cheveliera.  Petit.  2  Beas.  iSi,     -        -        "        '  _         j^^_     9,^,1857- 
Chidsey  a.  Siegel,  4  Cas.  279,       " 


Table  of  Cases. 


Cenlrai  Bauk  of  Pittsburg  a.  Fulton,  ii  Norris  112, 
Childs  a.  Harvey,  28  O.  St.  319,  -         -         -         - 
Childs  a.  Hasbrouck,  3  Bosw.  105, 
Childs  a.  Voorhis,  17  N.  Y.  355,  ... 

Chisholm  a.  Laird,  30  Scot.  Jur.  5S4,  - 

Christl  a.  Fitzgerald,  5  C.  E.  Gr.  90,  - 
Christman  :'.  Baurichter,  10  Phila.  R.  115, 


Chuck,  ex  p.,  8  Bing.  469,   -        -        -        - 

Church  (M.  E. )  a.  Bullitt,  2  Cas.  loS, 

Church  a.  Tassey,  6  W.  &  S.  465, 

City  of  Brooklyn  v.  Dearborn,  20  N.  Y.  244, 

City  of  Brooklyn  v.  McChesney,  20  N.  Y.  240, 

Clark  a.  Brown,  2  Har.  469,  -         -         - 

Clark  V.  Cullen,  9  Q.  B.  D.  355,  - 

Clark  V.  Cushing,  52  Cal.  617, 

292, 


Clark  a.  Eastman,  53  N.  H.  ■ 


296, 
295, 
341, 
267, 

Clark  a.  Jones,  42  Cal.  180, 
Clark  a.  Woodward,  30  Kan.  76, 
Clarke  v.  Mills,  13  P.  Rep'r  569,  -     •   ■ 

Clarke  a.  Rawlinson,  15  M.  &  W.  292, 

Clark's  Appeal,  22  Sm.  Pa.  142,  - 

Clark's  Appeal,  1 1  Out.  436, 
Clay  V.  Cottrell,  6  Har.  408, 
Clearwater  a.  Chambers,  i  Keyes,  310, 
Cleather  v.  Twisden,  28  Ch.  D.  340,    - 
Clement  v.  Clement,  35  N.  W.  17, 
Clements  a.  Wharton,  3  Del.  Ch.  209, 
Clemitson  a.  Chapin,  i  Barb.  311, 

Cleveland  a.  McGregor,  5  Wend.  475, 

Cleveland  a.  Reynolds,  4  Cow.  282,     - 
Cleveland  a.  Society  Rerun,  43  O.  St.  481, 
Clifton  a.  Fox,  6  Bing.  776, 
Cobb  a.  Wilson,  2  Stew.  361,  E.  &  A., 
Cobeau  a.  Schriver,  4  Watts,  130, 
Cochran  v.  Arnold,  8  Sm.,  Pa.,  399,     - 
Cochran  v.  Bartle,  3  S.  W.  Rep'r  854, 
Cochran  a.  Finney,  i  W.  &  S.  112, 

Cockroft  a.  Geery,  i  J.  &  Sp.  146, 

Codding,  in  re.,  9  Fed.  Rep.  849, 
Coddington  a.  Hampton,  i  Stew.  557 
Coddtag.on..Iddl,   {3|;-;54o,     -        ; 

Coddington  v.  Toppan,  11  C.  E.  Gr.  141,    - 

Coe  a.  Everitt,  5  Denio  180,         -        .        - 

Cohen  v.  N.  Y.  Mutual  Life,  50  N.  Y.  611, 
Cohen  a.  Reuben,  48  Cal.  543, 


185, 

2, 

1879. 

64, 

c 

1S76. 

32, 

I, 

1S58. 

86, 

I, 

1858. 

f  39, 

I, 

42, 

I, 

1858. 

i  42, 

4,  a 

179, 

I, 

1869. 

35. 

4, 

1S74- 

(  52, 

I  58, 

3.  b 

1832. 

106, 

9,  ^■, 

1S56. 

161, 

6, 

' 1843- 

69, 

7, 

1859- 

177, 

3, 

1859. 

178, 

2, 

1850. 

77, 

^, 

1882. 

104, 

9, 

1878. 

44, 

I, 

54, 

3,4, 

55, 

2, 

1872. 

58, 

2,3, 

62, 

I, 

15, 

I, 

1871. 

44, 

3, 

1883. 

158, 

4, 

1887. 

59, 

h 

1846. 

f  28, 
\  no. 

4, 
6, 

1872. 

147. 

I, 

1884. 

128, 

2, 

1852. 

139, 

4, 

1864. 

140, 

I, 

1884. 

175, 

2. 

1887. 

40, 

4, 

1868. 

81, 

3, 

1847. 

/  44, 
I  76, 

6, 
24, 

J  830. 

II. 

2, 

1825. 

24, 

3, 

1885. 

23, 

2, 

1830. 

54, 

I, 

1878. 

57, 

4, 

1835- 

24, 

5, 

1868. 

48, 

3,  ^ 

1887. 

87, 

I, 

1841. 

f  no, 

II, 

1871. 

1 167, 

5,«, 

III, 

6, 

1881. 

133, 

5, 

1877. 

208, 

4, 

1S79. 

210, 

4, 

1878. 

lOI 

I, 

1875- 

/  57, 
I  58, 

4, 

1848. 

16, 

2, 

1872. 

1874. 


Table  of  Cases. 


Coil  <i    Maimcy,  Sb  N.  C.  4^3. 
Cole  a.  Birdsall,  2  Stock.  Cli.  63, 

Cole  a.  Pease.  53  Conn.  53. 
Cole  a.  Tope,  55  N.  Y.  124,  - 
Cole  :•.  RevnoUls.  18  N.  V.  74,    - 


Coles  V.  Coles,  15  Johns.  159, 


Coles  tJ.  Newsome,  2  Campb.  617,       .        -        -        - 

Colbeck,  in  re.,  Buck48,      ------ 

Coljjrove  z>.  1-allmadge,  6  Bosw.  289,  .  -  -  - 

Colhoun  v.  Snider,  6  Biun.  135,            .  .  -  - 

Col  lender  v.  Phelan,  79  N.  Y.  366,      .  -  -  - 
Collingwood  a.  Lampton,  4  Mod.  315, 

Collins'  Appeal,  11  Out.  590, 

Collinsa.  Crawshay,   I  15  Vesey,  227 

Collins  a.  Whitaker,  34  Minn.  299,      -        -        -        - 

Colt  a.  Demmy,  3  Sandf.  284,       -        -        -        -        - 

Columb  V.  Read,  24  N.  Y.  505, 

Colvin  a.  Reppert,   12  \Vr.  248, 

Col  well  a.  Crocker,  46  N.  Y.  212, 

Col  well  a.  Farrell,  i  Vr.  123, 

Coniraercial  Bank,  Buffalo,  v.  Warren,  15  N.  Y.  577, 
Conimonweallh  a.  Hare,  11  Norris  141,       -        -        - 

Commonwealth  v.  Mateer,  16  S.  &  R.  416    - 

Commonwealth  v.  Vanderslice,  8  S.  &  R.  452,  - 
Commonwealth  a.  Wetherell,  17  W.  N.  104, 
Conklin  v.  Barton,  43  Barb.  435,  .        .        -        - 

Conklin  a.  Tremper,  44  N.  Y.  61, 

Conn  a.  Gardiner,  34  O.  St.  187,          .        -  -  . 

Connon  V.  Dunlop,  64  Geo.  680,          .        .  -  . 

Conroy  a.  Hargrove,  4  C.  E.  Gr.  281,           .  -  - 

Consequa  7'.  Willing,  i  Peters  301,       -         -  -  - 

Consolidated  Bank  a.  Badeley,  38  Ch.  D.  238,  - 

Converse  a.  Whitcomb,    119  Mass   38,          -  .  . 

Cooper  r'.  Prichard,   75!^.  T.  91,  -         -         -  -  - 

Cook  a.  Je.ssup,  i  Hal.  434, 

Cook  V.  Penrhyn  Slate  Co.,  36  O.  St.  135, 

Cook  a.  Wrenshall,  7  Watts  464,          -        .  -  . 

Cookingham  v.  Tasker,  2  Keyes  454, 

Coope  V.  Eyre,  i  H.  Bl.  39,  .        .         .        .         . 

Cooper  a.  Dixon,  3  Wilson,  40, 

Cofjper's  Appeal,  2  Casey  262, 

Coover's  Appeal.,  5  Casey  9, 

Corning  a.  Heartt,  3  Paige  566, 

Coryell  a.  Taylor,  12  vS.  &  R.  243,         -         .         .         . 
Corwin  v.  Suydam,  24  O.  S.  209,  .         .         .         . 


52, 

1882. 

f  lOI, 

1 180, 

I, 
2, 

1854. 

i4- 

I, 

1885. 

86, 

5, 

1873- 

161, 

7, 

1858. 

13. 

109, 

2, 

5. 

1818. 

112, 

L 158, 

2, 

2. 

176, 

2,  a, 

1811. 

/  57, 
i  58, 

4, 

1817. 

148, 

I, 

i860. 

109, 

7. 

1813. 

210, 

3. 

1879. 

103, 

8, 

1695- 

|i7i, 
1 172, 

3. 
2, 

1885. 

43. 

a, 

1808. 

99, 

2, 

139. 

6, 

1885. 

/  112, 
I113. 

5, 

1850. 

109, 

6, 

1862. 

178, 

I, 

1864. 

127, 

I. 

1871. 

f  100, 
1 104, 

8, 

1862. 

10, 

135, 

I,  a, 

1837. 

106, 

8,/ 

1875. 

/  89, 
1103, 

I, 
8, 

1827. 

103, 

8, 

1822. 

106, 

8,  d 

1885. 

69, 

4, 

1864. 

j   IOO| 

1103, 

5, 
2, 

1870. 

210, 

3. 

1877. 

105, 

4. 

1880. 

59. 

(i, 

1868. 

85. 

2, 

1816. 

Intro 

1888. 

31. 

4, 

1875- 

140, 

3. 

1883. 

215, 

I, 

1798. 

176, 

2,  a 

1880. 

130, 

6, 

1838. 

76. 

12, 

1866. 

f   7. 
I  49. 

I, 

6, 

1788. 

63. 

2, 

1768.. 

106, 

8./ 

1856. 

106, 

8, 

1857- 

215. 

I, 

1832. 

120, 

a 

1824. 

167, 

5,  c 

1873. 

Table  of  Cases. 

Cosgrove  a.  Goldsmid,  7  H.  L.  7S5,     - 

Cothran  v.  Marmaduke,  60  Texas  370, 

Cotter  V.  Bettner,  i  Bosw.  490,    -        -        -        - 

Cottrell  a.  Clay,  6  Har.  408,  -        -        .        . 

Coulter  a.  Stewart,  12  S.  &  R.  252, 

Countess  of  Jersey  a.  Bishop,  2  Drewry  143, 

Court  of  Wards  a.  Mollwo,  L.  R.  4  P.'C.  419, 

Cowan  V.  Kinney,  33  O.  St.  442, 

Cowart  V.  Perriue,  3  C.  E.  Gr.  457, 

Cox  V.  Hickman,  8  H.  L.  268,      -        .        -        . 

Coxa.  Keegan,  116  Mass.  289,     -        -        -        . 

Cox  I'.  McBurney,  2  Sandf.  561,  -        -        -        - 

Cox  a.  Munster,  10  Ap.  Cas.  680, 

Cox  V.  Peters,  2  Beas.  39,     -        -        -        -        - 

Cragin  a.  Logan,  27  La.  An.  352, 

Craig  a.  Hulschiser,  5  Vr.  363,     -        .        .        ■ 

Craig  V.  Smith,  15  Pac.  Rep'r  337, 

Cramond  v.  Bank  of  U.  S.,  i  Binn.  64, 

Cramond  a.  Cheap,  4  B.  &  Al.  663,      - 

Crandall  v.  Denny,  Pen.  137,        .        .        -        . 

Crary  v.  Williams,  2  Ohio  65,       - 

Craven  a.  Bentley,   i8Beavan75, 

Crawford  a.  Bush,  29  Leg.  Int.  363, 

Crawford  a.  Eager,  76  N.  Y.  97,  -        .        . 

Crawford  a.  Tiffany,  i  McCart.  Ch.  278,      - 

(  218     - 
Crawshay  v.  Collins,  15  Ves.    "^227- 

Critchfield  v.  Porter,  3  Ohio  519, 

Crites  v.  Wilkinson,  65  Cal.  559, 

Crocker  v.  Colwell,  46  N.  Y.  212, 

Crosby  a.  Parsons,  5  Esp.  199,      .        -        -        ■ 

Cross  a.  Daniel,  3  Ves.  277,  .        .        -        . 

Cross  V.  Jackson,  5  Hill  478,         -        -        .        . 

Cross  a.  Trowbridge.  117  111.  109, 

Cubbinson  a.  McCowin,  22  Smith,  358, 

Cullen  a.  Clark,  9  Q.  B.  D.  355,  -        -        -        ■ 
Culley  V.  Edwards,  44  Ark.  423. 
Cummiug's  Appeal,  i  Casey,  268, 
Cummings  v.  Mills,  i  Daly  520,  -        -        -        ■ 
Cummings  v.  Morris,  25  N.  Y.  625,     - 
Cummings  a.  Peacock,  10  Wr.  434,     - 
Cummins  a.  Pond,  50  Conn.  372, 

Cumpston  v.  McNair,  i  Wend.  457,      - 

Cunningham  v.  Littlefield,  i  Edw.  Ch.  104, 
Curry  v.   Fowler,  87,  N.  Y.  33,     - 
Curry  v.  White,  51  Cal.  185,  1875;  531, 
Curtis  V.  Woodward,  58  Wis.  499, 
Cushing  a.  Clark,  52  Cal.  617,     -        -        -        • 
Cushing  a.  Nat.  Bank,  53  Vt.  321, 
Cushman  v.  Bailey,  i  Hill.  526,  -        -        - 
Cutbush  V.  Cutbush,  i  Beav.  185, 

Dakin  a.  Bank,  24  Wend.  411,     - 

Dalton  a.  Romero,  11  Pac.  R.  863, 

Daly  a.  Randolph,  i  C.  E.  Gr.  313,     - 


205, 

6, 

1859- 

59, 

3, 

1883. 

15- 

5, 

1857- 

128, 

2, 

1852. 

130, 

7, 

1825. 

140, 

2, 

1854. 

64, 

b. 

1872. 

69- 

17, 

1878. 

213, 

I, 

1867. 

59. 

hP, 

i860. 

137, 

2, 

1874. 

112, 

8, 

1849. 

77, 

3, 

1885. 

180, 

I, 

i860. 

79, 

0■^ 

1875. 

167, 

2,  a. 

1871, 

95, 

I, 

1887. 

130, 

16, 

1803. 

57, 

4, 

1821. 

76. 

2, 

1806. 

76, 

10, 

1825. 

151, 

3, 

1853- 

125, 

3, 

1872. 

66, 

6, 

1879- 

III, 

14, 

1826. 

43, 

a 

1808. 

99, 

2, 

119, 

a, 

1828. 

114, 

3, 

1884. 

127. 

I, 

1871. 

48, 

2, 

1805. 

106, 

5,/ 

1796. 

76, 

6, 

1843. 

103, 

^, 

1886. 

178, 

4, 

1872. 

1S3, 

I, 

77, 

^, 

1882. 

64, 

2, 

1884. 

III, 

7, 

1855. 

61, 

3, 

1866. 

156, 

5, 

1862, 

152, 

2, 

1864. 

59, 

b. 

1882. 

7, 

4- 

1828. 

54, 

I, 

158, 

3, 

1831. 

64, 

d. 

1881. 

81. 

2, 

1885. 

193, 

I, 

1883. 

104, 

9, 

1878. 

197, 

I. 

1881. 

58, 

/ 

1841. 

74, 

7, 

1838. 

44, 
76, 

5, 
22, 

1840. 

12, 

I, 

1 886. 

105, 
193, 

2, 

3, 

1863. 

Table  ok  Cases. 

Dana  a.  Schcnklc,  i  iS  Mass.  237, 

Daim  :•.  SU-arns,  3  Cush.  372,       -         -         -         - 

Daiurl  .-.  Cross.  3  Ves.  277,  -         -         -         - 

Davenport  a.  Wild,  7  A.  R.  295,  -        -        - 

Davi.lson  r-.  Cohk-n  vStale  Iron  Works,  15  I'ac.  Rep  r  20, 

Davi.lson  r-.  Holden.  10  At.  Rep'r5i5, 

D.ivis,  ex  parte,  4  DeC.,  J.  &  S.  523,  -         -         -         ■ 

I)  ivis  :■.  Howell,  20  Am.  Law  Reg'r  N.  S.  461,  - 

Davis  :•.  Keves,  3S  N.  Y.  94,         .         -         -         -         • 

Davisrt.  LiniUey,   13  P.  Rep'r  118,        -         -         -         ■ 

Davis  a.  Marsh,  33  Rand.  326, 

Davisa.  Moore,   n  Ch.  D.  261,    -         -         -         -         • 
Davis  7'.  Morris,  36  N.  Y.  569,      -        -        -        -        • 
Davis  ::  Newkirk.  5  Deuio  92,     -        - 
Davis  (/.  (Juiii.  2S  Sni.  15.    -        -        ■        "        "        ' 
Davis  a.  Salmon,  4  Binn.  375,      -         -         -         - 

Davis  V.  Smith.  2  S.  Rep'r  897, 

Dawbarn  a.  Baker,  19  Grant's  Ch.  (Up.  Can.),  113, 

Dawes  a.  Hoare,  i  Doug.  371,     - 

Dav  V.  Stevens,  88  N.  C.  79, 

Dayton  v.  Wilkes,  5  Bosw.  655, 

Deal  Z'.  Bogue,  8  Harris,  228.       -        -        -        -        . 

Dean  v.  Harris,  33  L.  T.  |  g^^|  _  -  -  - 
Dean  <:  McDowelL  8  Ch.  Div.  345,  -  -  -  ■ 
Dean  a.  Wild,  3  Allen  579,  ----- 
Dearborn  a.  City  Bank  of  Brooklyn,  20  N.  \'.  244, 
Deckard  z:  Case,  5  Watts  22,  -  -  -  - 
Decker  z>.  Howell,  42  Cal.  636,  -  -  -  - 
Deems  a.  Lafond,  81  N.  Y.  507,  -  -  -  - 
Defora.  Weber,  8  How.  Pr.  502,  -        .        - 

Delaney  v.  Root,  99  Mass.  546,  -  -  -  - 
Delliasse,  ex  p.,  7  Ch.  D.  511,  -  -  -  - 
Delmonico  v.  Guillaume,  2  Sandf.  Ch.  366, 

Demmy  v.  Colt,  3  Sandf.  284,      -        -        -        - 

Denithorne  v.  Hook,  2  Am.  240,  .        .        - 

Dennis  Z'.  Kennedy,  19  Barb.  517,  ...  - 
Druny  a.  Crandall,  Pen.  137,  .... 
Denton  v.  N'oyes,  6  Johns  295,     -        -        .        - 

Deveau  v.  Fowler,  2  Paige  Ch.  400,     - 

Devoney  v.  Mahoney,  8  C.  E.  Gr.  247, 

Dexter  <7.  Jones.  125  Mass.  469,  1878;  130  Mass.  380, 

Dick  a.  B.  .S:  M.  R.  R.,  7  Neb.  242,      - 

Diikens  a.  Bradbury,  27  Beav.  53,         -         -         - 

Dickerson  a.  Chester,  54  N.  Y.  i, 

Dickey  z\  .Mien,   i  Gr.  Ch.  40,     - 

Dirkinson  v.  Valpy,  10  B.  &  C.  128,    - 

Dillon  z\  Horn.  5  How.  Pr.  35,    - 

Dilloti  a.  Plunkett,  4  Houston  338, 

Dinginan  v.  .Anisink,  27  Sm.  114.  118, 

Dingman  a.  Bulkley,   ii  Barb.  289,      -         .         . 

Ditmars  a.  Large,  12  C.  E.  Gr.  283,     - 


188, 

3, 

1875- 

137, 

4, 

1849. 

106, 

5,/, 

1796. 

73. 

I, 

1886. 

J,  17, 

4, 

1887. 

69- 

10, 

1S87. 

18, 

3, 

iS6v 

108, 

8, 

1861. 

175, 

3, 

1868. 

103, 

c. 

1887. 

10, 

7, 

1885. 

45- 

1879. 

77, 

e. 

iS8v 

122, 

7, 

1847. 

4, 

2, 

1875. 

"7. 

«, 

1812. 

112, 

I, 

1887. 

192, 

3, 

1872. 

1   '' 

3, 

1780. 

I  49. 

6, 

12, 

I, 

1883. 

147, 

2, 

1859. 

100, 

4, 

1853- 

17, 

2, 

1875- 

151. 

6, 

1877. 

170, 

4, 

1862. 

69. 

7, 

1859- 

131. 

2, 

1836. 

15, 

6, 

1872. 

16, 

I, 

1880. 

173. 

2, 

1853- 

12, 

1, 

1868. 

50, 

3, 

1878. 

no, 

3, 

1845. 

(112, 

I  "3. 

5, 

1850. 

69. 

3, 

1886. 

24, 

I, 

1854. 

76, 

2, 

1806. 

"9- 

I,  c 

1810. 

f  106, 
1148, 

7, 
2, 

1831. 

r  28, 

3. 

<  no, 

9, 

1872. 

iiii, 

15, 

100, 

8, 

i88r. 

76, 

I, 

1878. 

209, 

3, 

1859- 

10, 

7, 

1873- 

215. 

2, 

1838. 

23, 

4, 

1829. 

189, 

I, 

1850. 

57, 

4, 

1875. 

88, 

5.6, 

1874. 

70 

2, 

185 1. 

208, 

8, 

1876. 

Table  of  Cases. 


Dixon  V.  Cooper  3  Wilsou  40,      - 

Dob  V.  Halsey  16  Johns.  34,  .        .         .        . 

Docker  v.  Somers,   2  Mylne  &  K.  653, 

Dodd  V.  Bishop,  50  La.  Au.  1178, 

Dodd  V.  Tarr,  116  Mass.  287,         .        .         .         . 

Douer  z'.  Stauffer,   i  Pa.  203,         ...        - 

Donnally  r.  Ryan,  5  \Vr.  306,      -        -        .         - 

Doughty  z:  Doughty,  3  HaL  Ch.  227, 

Downey  z'.  F.  &  M.  Bank,  13  S.  &  R.  28S, 

Drake  a.  Bohrer,  33  Minn.  408,    -        -        -         - 

Drake  a.  Holland,  29  Ohio  St.  441, 

Drennen  a.  Assurance  Co.  (London)  -|  ^  ^^  ^'  q  ^^'^ 

Drennen  z'.  House,  5  Wr.  30,        -         -        -         - 

Drexel  a.  Sparhawk,  i  W.  N.  560, 

Driver  a.  Pooley,   5  Ch.  D.  458,  -         -         -         - 

Dry  V.  Boswell,   i  Campb.  329,     -        -        -        - 

Dubois'  Appeal,  2  Wr.  231,  ...         - 

Duckworth  a.  Gouthwaite,  12  East.  421,     - 
Duff  V.  Maguif  e,  107  Mass.  87,      -        -         -      '  - 
Duucan  a.  Pa   R.  R.  Co.,  i  Am.  352,  - 
Duugan  v.  Miller,  4  C.  E.  Gr.  219, 

Dunham  Z'.  Jarvis,  8  Barb.  88,      - 

Dunham  Z'.  Presby,  120  Mass.  285, 
Dunham  Z'.  Rappleyea,   i  Harr.  75,      - 

Dunham  v.  Rogers,   i  Barr  255    -         -         -         - 

Dunlap  V.  Watson,   124  Mass.  305, 
Dunlop  a.  Connon,  64  Geo.  680, 

Durant  v.  Arbendroth,   -I  ^?-vt'  ^.T   x,-,' 
(  97  N.  Y.  132, 

Durbin  v.  Barber,  14  Ohio  311,    -        -         -        - 

Durborrow  a.  Everly,  8  Ph.  93,    - 

Durborrow's  Appeal,  3  Nor.  404, 

Duryea  v.  Burt,   28  Cal.  569,         .         -         .         . 

Duttou  V.  Brown,  31  Mich.  182, 

Dwinell  a.  Sanborn,   135  Mass.  236,     - 

Dyke  Z'.  Brewer,  2  Car.  &  K.  828, 


Eager  z'.  Crawford,  76  N.  Y.  97,  .         .         .         . 

Earon  v.  Mackey,  10  Out.  452,  ----- 
[292,  -  .  -  - 
I  296,         -         -         -         - 

Eastman  z>.  Clark,  53  N.  H.  -j  295,         -         -         .         . 

341,  -  -  -  - 
1 297,        -         -        -         - 

Eaton  a.  Robson,  i  f.  R.  62, 

Eaton's  Appeal,  16  Smith  4^3,      ----- 

Eberhardt  a.  Roberts,  i  Kay  148,         .         -         -         - 

Ebbert's  Appeal,  20  Sm.  79, 

Eckhardt  a.  Burckle,  3  Comst.   132:  s.  c-  i  Denio  337, 

xxix. 


63, 

3, 

1768. 

51, 

2, 

1819. 

43. 

I, 

1834. 

69. 

2, 

1878. 

156, 

3, 

1874. 

102, 

I,  2, 

1829. 

38, 

I, 

1861. 

180, 

3. 

1S48. 

81, 

4. 

1825. 

52, 

I, 

1881, 

131, 

3, 

1876. 
1885. 

23, 

3, 

1886. 

i  69, 

5, 

1861. 

1 121, 

2, 

164, 

3, 

1875- 

/  50, 
I  64, 

3, 
I, 

1876. 

j  44, 

3, 

1818. 

\  62, 

a, 

117, 

I, 

1861. 

19, 

5, 

1810, 

161, 

5, 

1871. 

24, 

10, 

1886. 

130, 

7,-5, 

1868. 

1 152, 

2, 

2, 

1854. 

211, 

2, 

1876. 

157, 

3, 

1837. 

1      7. 
I  60, 

I, 
I, 

1845. 

188, 

I, 

1878. 

105, 

4, 

1880. 
1877. 

37, 

3,y, 

1884. 

112, 

4, 

1846. 

34, 

I, 

1871. 

100, 

c, 

1877. 

15, 

2. 

1865. 

136. 

4,5 

1875- 

205, 

4, 

1883. 

144, 

5, 

1849. 

66, 

6, 

1879- 

68, 

3. 

1884. 

44, 

I, 

54, 

3,  4 

55, 

2, 

'  1872. 

58, 

2,  3, 

62, 

I, 

"9. 

I, 

207, 

I, 

1 870. 

15, 

3, 

1853. 

"3, 

^ 

1871. 

1    53. 
\  59, 

I, 
a 

1849. 

Tahlk  of  Cases. 


r.lmnn^jn  V.  Thompson.  S  Jurist,  N.  S.  235,       -         -  17,  2,  1861. 

kLou.Is.  ex  parte,  4  1).  I--.  &  J-.  488          -         -         -  204  2.  862 

H.luiuiuls  : .  Hushell.  I..  R.  i  Q.  B.  96          -        -         -  26,  i,  1865. 

bMmun.ls.  exp^rte.   nl).  K.  &J.  488,        -        -        -  75,  i,  862. 

Ivlsun  a.  Smarte.  I  Lev.  30,         -         -         -         -         -  '3°.  7.  i&^i- 

/^./r.wn/v.:.  /An/tT.  ii6Kngl.  C.  L.  Rep.  775,    -         "  90,  3,  2866. 

H.Uvanls  (/.  CulU-y,  44  Ark.  423.            -         -         -         -  64  2,  1884- 

Ivlw.mlsr    Tracv.  i2Sin.  374. 67,12,  1869. 

I-Mwar.lsr.  RcininK'ton.  51  Wis.  336,            -         -         -  96,  2,  ib»i. 

KKh.rtsr.  \Voo.l.  3  I'aiKeCh.  517,      -         -         -         -  106,  6,  1832. 

Uhlre.!  </.  Masou.  6\Vall.23i, 82,  3,  1^79 

Ivl.lre<l.r  Roberts.  15  r.  Rep'r  16,       -         -         -         -  112,  7,  1887. 

Hl.lrulKC  :•.  Smith,  144  Mass.  35,          -         -         -         -  130,  15,  1887. 

ICl.lri.lL'e  z:  Froost.  6  Rob.  518, 67,  5,  1866. 

KlK'ie  :•.  Webster,  5  M.  ^^^V.  518,         ...         -  48,  2,  1839. 

i:i>,'iii  Watch  Co.  2:  Meyer,  30  Fed.  Rep'r  659,  -         -  131,  i,  1887. 

F:ii()t<;.  Hoskinson,  12  Sm.  393,           .        -        -        -  86,  i.  1869. 

Elliott  a.  Prentice,  72  Geo.  154, 213,  2,  1883. 

Ellis  :■.  Allen.  2  S.  Rep'r  676,      -         -         -         -         -  114,  2,  1887. 

Ellis  X'.  Ward,  21  \V.  R.  100, 22,  i,  1872. 

Ellis  a.  Wells,  68  Cal.  243, 132,  2,  a,  1885. 

I  8  C.  E.  Or.  '27,  1S72;  9  C.  E.  Gr.      2:2,  8,  g 

Elslon  a.  Murray,    -^^j^g^^^gg          -        -        -  215,  3,  '"73- 

Elton  :■.  Perkenpine,  i  E.  Rep'r  637,           -        -        -  150,  2,  1855. 

Elworlhy  a.  Teed,  14  East.  210,  -----  76,  8,  1811. 

Emory  a.  Van  Ransselaer,  9  How.  Pr.  135,          -         -  |  ^g^j  j'  1854. 

Eaiorv  v.  Wilson,  79  N.  Y.  78, 214,  2,  1879. 

Endefby  a.  Gilpin,  5  B.  &  Aid.  955,  -          -        -        -  208,  3,  1822. 

Englis  f .  F'umis,  4  E.  D.  Smith  587,  -        -        -        -  163,  i,  1855. 

English  a.  Hotchkiss,  4  Hun.  369,       -        -        -        -  17,  4,  1875. 

Fjigl.  &  Ir.  Ch.  &  I  iiiv.  Ass.  Soc,  in  re.,  i  Hem.  &  M.  85,     59,  a,  1863. 

F:nsign  :'.  Wands,  i  Johns  Cas.  171,    -         -         -         -  7>  6,  1799. 

Epping  a.  Flournoy,  68  Geo.  707,         -        -        -        .  69,  17,  1882. 

Flpstein  a.  Fedor,  10  Pac.  Rep'r  785,    -         -         -         -  76,  i,  1886 

F:rb's  F:state,  I  Pearson,  98.          -----  113,  2,  1856 

Erhard  a.  Zimmerman.  83  N.  Y.  94,    -        -        -        -  76,  15,  1880. 

Firie  Dime  vSav.  &  L.  Co.  a.  Kepler,  5  Out.  602,          -  ill,  3,  1882, 

Erie  R.  R.  a.  Wood.  72  N.  Y.  196,        .         -         -         -  76,  16,  1878. 

Erikson  a.  Hunt,  57  ISIich.  330,            -         -         -         .  51,  i,  1885, 

Erwin's  Appeal,  3  Wr.  535,           -----  m,  g,  1861. 

FIttenborough  r.  Bishop,  11  C.  E.  Gr.  262,           -         -  112,  10,  1875. 

F:ureka  Mnfg.  Co.  a.  Flint,  55  Vt.  669,        -         -         -  62,  i.  1881. 

Evans  a.  Johnson,  7  M.  &  G.  240,        -        -        -        -  100,  i,  1844. 

FZvans  Z'.  Meylert,       7  Harris  402,       -         -         -         -  ng,  f),  1862. 

Everett  z^.  Coe,  5  Denio  180,         -        -         -        -         '  \    ^l'  '^' e     ^^4^" 

F^verhart's  .\ppeal,  10  Out.  349,  -         -         -         -         -  10,  11,  1884. 

F>eritt  :'.  Chapman,  6  Conn.  247,       -         -         -         .  19,  6,  1827. 

Everitt  f.  Watts,  10  Paige  82,      -----  I  j^^'  ^°'  1843. 

Ftverly  x:  Durborrow,  8  Phila.  93,         -         -         -         -  34^  i^  1871. 

F^ving  a.  Blight,  i  Pittsburgh,  275,      -         .         -         -  59,  ^,  1856. 

Eyrea.  Coope,  I  H.  Bl.  39, ^      "'  3^'  1788. 

(   49,  6,  ' 

Fvtr,:,   „     T>ott      ^,  C.    B.   32,       ------  63,  I,  1846. 


Table  of  Cases. 

Fairchild  a.  Slocum,  7  Hill  292, 

Fairchild  v.  Fairchild,  64  N.  Y.  471,  - 

Fairlanb  v.  Percy,  3  P.  &  M.  217, 

Fairman  a.  Wallace,  4  Watts  378,        .... 

Falconer  a.  Freeman,  12  J.  &  S. -^  ^^' 

Fallmadge  a.  Colgrove.  6  Bosw.  289,  -        -        -        - 

Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  458.     - 

Fanchon  v.  Bibb  Furnace  Co.,  2  S.  Rep'r  268,    - 

Farmers'  and  Mchs.  Bank  a.  Downey,  13  S.  &  R.  288, 

Farmers'  and  Mchs.  Bank  v.  Green,  i  Vr.  366, 

Farmers'  Dep.  Bk.  a.  ist  Nat.  Bk.,  All'y,  5  Cent.  Rep.  505,   74, 

Farnsworth  v.  Boardman,  131  Mass.  115,   - 

Farr  v.  Johnson,  25  111.  522,  .        -        -        . 

Farr  a.  Osburn,  42  Mich.  134,      -        .        .        . 

Farrand  v.  Gleason,  56  Vt.  633,  .... 

Farrell  v.  Col  well,  i  Vr.  123, 

Farrington  a.  Harrison.  {  \l  i'_^^ep¥io5, 
Fedor  v.  Epstein,  10  Pac.  R.  785, 
Feigley  v.  Sponeberger,  5  W.  &  S.  564, 
Felt  a.  Chadwick,  11  Ca.  305,       -        .        -        . 
Felton  a.  Smith,  43  N.  Y.  418,     -        -         -        - 
Fenbrook  a.  Carlisle,  57  Ind.  529,        ... 
Fendrick  a.  Kaiser,  2  Out.  528,    -        -        -        - 
Ferguson  v.  Wright,  11  Sm.  258, 
Ferrell  a.  Orr,  5  S.  W.  Rep'r  490, 

Person  v.  Monroe,  \  i  Foster,  21  N.  H.  462, 

Fessler's  Appeal,  3  W.  N.  C.  71,  ... 

Fettretch  v.  Armstrong,  5  Rob.  339,    - 

Ficthorn  v.  Boyer,  5  Watts  159, 

Fielden  v.  Lahens,  9  Bosw.  436,  ... 

Filley  v.  Phelps,  18  Conn.  294,    -        -        -        - 

Filts  a.  Walker,  24  Pick.  191,      -        -        -        . 

Finney  v.  Cochran,  i  W.  &  S.  112, 

Fish  V.  Henarie,  13  Pac.  Rep'r  193,     -        -        - 

Fisher  a.  Kauffman,  3  Grant  302, 

Fisher  v.  Murray,   i  E.  D.  Smith,  341, 

Fisher  a.  Perkins,  80  Ky.  11, 

Fisher  v.  Sweet,  67  Cal.  228,         .        -        -        . 

Fitchera.  Wilson,  3  Stock  Ch.  71,       - 

Fitzgerald  v.  Christl,  5  C.  E.  Gr.  90,    - 

Fitzsimmons  a.  Anshutz,  9  Barr.  180,  -        -        . 

Flanigan  v.  Champion,  i  Gr.  Ch.  51,  - 

Fletcher  v.  Reed,   125  Mass.  312, 

Flint  V.  Eureka  Mfg.  Co.,  55  Vt.  669, 

Flockton,  V.  Bunning,   L.  R.  8  Ch.  App.  323,  n. 

Floss  a.  Fireman's  Ins.  Co.,  10  A.  Rep'r  139,     - 

Flournoy  v.  Epping,  68  Geo.  707, 

Fogerty  v.  Jordan,  2  Rob.  319,     - 

Foote  a.  Tenny,  95  111.  99,  .... 

Forbes  a.  Chamberlain,  3  S.  C.  277,    - 


62, 

/i5 

i  13, 

3,        li 

I  112, 

4, 

74, 

II,       i< 

/    95, 

3,       J, 

1149- 

2,       ^" 

69, 

■«.  ;: 

148, 

I,     I 

10, 

10,     I 

120, 

b,  I 

81, 

4,     I 

177, 

5,     I 

5.   74, 

5,     I 

37, 

3,^,  I 

36, 

6,       I 

76, 

8,       I 

13, 

I,       I 

f  loo, 
I  104, 

8'       I 

10,       ^ 

151, 

'.  ; 

76, 

I,     I 

152, 

I,     I 

10, 

5,     I 

130, 

5,  <&,  I 

32, 

2,     I 

129, 

I,     I 

153, 

I,     I 

132, 

I,     I 

fio6. 

I,  c, 

\  io7, 

4,       I 

(-194, 

3, 

154, 

I.       I 

178, 

5,       I 

135, 

6,       I 

125, 

I,       I 

147, 

3,       I 

12, 

I,       I 

87, 

I,       I 

91, 

2,       I 

122, 

6,       I 

131, 

3,       I 

164, 

I,       I 

12, 

2,       i< 

173, 

7,  i>,  \k 

179, 

I,       I. 

169, 

3,       i> 

69. 

17,         Ic 

184, 

3,       i^ 

62, 

I,       iJ 

42, 

2,            Ic 

144, 

4,       If 

69. 

17,       li 

121, 

4,       If 

^39- 

3,       If 

18, 

2,       If 

Table  of  Cases. 

Fonl  :■•  Munson,  i  South.  93, 76,  5.       1818. 

l-orrestera.  Oliver.  96III.  315, I73.  i.       1880. 

Fossa,  Hissell.  114  r.  S-  252, ^5.  4,       i«»5- 

Foster  :•.  Andrews.  2  r.  &  W.  160,       -        -         -        -  168,  i,       1830. 

Foster  :■.  Barnes,  31  Sm.  377,       -        -        -        -  113.  i-/   1876. 

f  L.  R.  7  Ch.  334,        .        -        -        -  40,  I,       1S72. 

Fostera.  Vvse. -^  L.  R.  8  Cb.  App.  309,        -        -         -  42,  3,       1870. 

I.L.  R.  7  H.  of  L.  318,  333.  -        -        -  42,  2,       1874. 

f  109.  9- 

Foster's  Appeal,  24  Sm.  399, i  112,  15,0,1874. 

1 113.  i>  ^. 

Fowle  V.  Torrev,  125  Mass.  289, 170,  4.       1881. 

Fowler  a.  Curry,  87  N.  Y.  33, 64,  d,  1881. 

Fowler  a.  Deveau,  2  Paige  Ch.  400, 1^  j^g'  2,       ^^3i- 

Fowler  a.  Schaeffer,  i  Am.  451, 49.  i>       1886. 

Fox  r.  Clifton,  6  Bing.  776, 23,  2,       1830. 

Fox  :-.  Hanburv,  Cowp.  445, 27,  5,       1776. 

Fox  a.  Harper,';  W.  &  S.  142, 122,  i,       1844. 

Foxall  a.  Jones,  15  Beav.  388, 42,  3.       1S52. 

Francisco  :-.  Cameron,  26  O.  St.  190,  -        -        -         -  210,  4,  a,  1875. 

Frasier  a.  Wilkinson,  4  Esp.  182,        .        .        -        .  62,  d,  1S05. 

Frazer  r.  Murdock,  6  H.  L.  855,           .        .        -        .  74,  8,       1881. 

Freeman  f.  Falconer,  1 2  J.  &S.  1^32,         -        -        -  g^  jg       1878. 

Freer  a.  Payne,  91  N.  Y.  43,         -        -        -        -        -  165,  2,       1883. 

Freeth  a.  Bourne,  9  B.  &  C.  632.          ....  23,  4,       1829. 

Frelinghuvsen  v.  Ballentine,  38  N.  J.  Eq.  266,  -        -  28,  3,       1864. 

French  a.  Brasfield,  59  Miss.  632,         -        .        .        -  74,  4,       1882. 

French  :■.  Styring,  2  C.  B.,  N.  S.  357,           ...  67,  7,       1857. 

Frick  a.  vSayre,  7  W.  &  S.  383, 6.  2,       1844. 

Frick  a.  Steel,  6  Sm.  172, 12,  i,       1867. 

Frlcke  a.  Ganzer,  7  Sm.  316,        .        .        -        .        .  69,  5,       1868. 

Frier  <7.  Young,    i  Stock.  465, 106,  5,  c,   1853. 

Froost  a.  Ivldridge,  6.  Rob.  518,           ....  67,  5,       1866. 

Frost  i:  Hanford,   i  E.  D.  Sm.  540,     ....  134,  2,        1852. 

Froude  r.  Williams,  56  L.  T.  Rep.,  N.  S.  441,     -        -  50,  3,       1887. 

Frow,  Jacobs  &  Co. 's  Estate,  23  Sm.  459,     -        -        -  107,  3,       1873. 

Frye  a.  Page,  2  B.  &  P.  240, 103,  11,       1800. 

Fuller  :'.  Perceval,  126  IMass.  381,        ....  125,  6,       1879. 

Fuller  :■.  Rowe,  57  N.  Y.  23, 24,  i,       1874. 

Fulton  z'.  Central  Bank  Pittsburg,  11  N.  112,      -         -  185  2,       1879. 

Funk  r.  Haskell,  132  Mass.  580,           -         .         .         .  58,  a,   18S2. 

Furuis  a.  Euglis,  4  E.  D.  Smith  587,  -        .        .        .  163,  i,       1855. 


Gaffney  z:  Hoyt,  10  Pac.  Rep'r  34, 
Gale  V.  Miller,  54  N.  Y.  536, 
Gano  fl.  Moore,  12  Ohio  300, 
Gano  :'.  Samuel,  14  Ohio  593, 
Ganzer  v.  Fricke,  j  Sm.  316, 
Gardiner  v.  Conn,  34  O.  St.  1S7, 
Crardiner  a.  Reid,  65  N.  Y.  578, 
Gardner  v.  McCutcheon,  4  Beavan  534, 
Garland,  ex  parte,  loVes.  110,    - 
Garnet  a.  Ward,  6  Duer  257, 


69, 

13, 

1886 

171, 

4, 

1874 

158, 

2, 

1843 

124, 

4, 

1846 

69, 

5, 

1868 

210, 

3, 

1877 

214, 

I, 

1875 

151, 

4, 

1842 

74. 

4, 

1804 

49. 

4, 

1857 

Table  of  Cases. 

Garrick  a.  Burdick,  L.  R.  5  Ch.  App.  233,           -        -  43,  i,  r,  1870. 

Gates  V.  Beecher,  60  N.  Y.  518. 178,  5,  1875. 

Gates  a.  Wells,  18  Barb.  554,        -         -         -         -         -  24,  i,  1854. 

Gauger  fl.  Pautz,  45  Wis.  449, 96,'  2,'  1878. 

Gavit  c'.  vSupplee,  2  W.  N.  C.  561,         -        -        .        .  121,  9,  1876. 

Gay  f.  Seibold,  97  N.  Y.  472, 76,  15,  1884. 

Gay  V.  Waltman,  8  N.  453,  - 120,          b,  1879. 

Gaylord  v.  Imhoff,  26  O.  St.  317,          -        .        .        .  X03,         a,  1875. 

Geddes'Appeal,   {34L^I_-33o, ^^^^^^^  ^3^^ 

Geery  :■.  Cockroft,  I  J.  &  Sp.  146,       -        .        -        -  {J^°'"'  1S71. 

Gellar,  ex  parte,  i  Rose  297,        -        .        .        .        .  54,  :,  1812. 

Gibbs  a.  Hogeboom,  7  Nor.  2^5  -        -        -        -        -  -'    95.  4-  jg-o 

Gibson  a.  Bond,  i  Camp.  185, 115,  i,  1808. 

(      7,  I. 

Gibson  V.  Lupton,  9  Bing.  297, k     19,  2,  1832. 

i   49.  5'. 

Gibson  V.  Stone,  43  Barb.  285, 63,  2,  1865. 

Gilbert  a.  Ryder,  16  Hun.  163, 25,  4,  1878. 

Gillies  a.  Williams,  75  N.  Y.  197,         -        -        ...  10,  i',  1878. 

Gillilan  v.  Ins.  Co.,  41  N.  Y.  376,        -        -        -        -  133,  3,  1869. 

Gilmore  (7.  Moorehead,  27  Sm.  118,     .        .         -        .  127,  7,  1874. 

Ginrich  a.  Walter,  2  Watts  204, S3,  4,  1834. 

Gilpin  V.  Enderby,  5  B.  Aid.  955,         .        .        .         .  208,  3!  1822. 

Glasgow  Bank  a.  Muir,  4  H.  L.  337,   -        -        -        -  73,  2,  1879. 

Gleason  a.  Farrand,  56  Vt.  633, '3,  i,  1884. 

Glennie  a.  Mair,  4  M.  &  S.  240,  -        -        -        -        -  59,  2,  ^,  1815. 

Goepper  E'.  Kinsinger,  39  Ohio  St.  429,        -         -         -  no,  6,  1883 

Goeway  a.  Townsend,  19  Wend.  424,           ...  1^8,  i,  1838' 

Goff,  a.  Reeves,  Pen.  609,     - 158,  i,  1809' 

Golden  a.  Mosgrove,  5  Out.  605,          ....  76,  3,  1882' 

Golden  State  Iron  Works  v.  Davidson,  15  Pac.  Rep'r  20,  171,  4,  1887' 

Goldsmid  v.  Cosgrove,  7  H.  L.  785,     -        .        -        .  205,  6,  1859' 

Goodbar  v.  Gary,  16  Fed.  Rep'r  316,  .        -        .        .  -j  J°^'  ^'  ^^  1882! 

Goode  V.  Harrison,  5  B.  Aid.  147,        -        -        -        -  |  ^^9.  20,  ^g^^ 

Goodwin  a.  Mch's  Bank,  i  Hal.  Ch.  334,    -        -        .  112,  12,  1846. 

Gordan  a.  Nanson,  L.  R.  i  Ap.  Cas.  195,     -        -         -  204,  i,  1876. 

Gordon  a.  Merrick,  20  N.  Y.  93,  -         -         -         -         -  62,          e,  1859. 

Gorman  a.  Alexander,  7  A.  Rep'r  243,         ...  105,  3,  1886. 

c^^   ^A  ^    r^      u      (8  Cow.  168,     .....  1828. 

^°"^^^-G°"l^-     Uwend.  263, ^67,  1,  ^g^^ 

Goulding  V.  Bain,  4  vSandf.  716, 173,  5,  1852 

Gouthwaite  v.  Duckworth,  12  East.  421,      -        -        -  19,  5,  1810. 

Grace  27.  Smith,  2  Wm.  Bl.  997, 1    a^'  ^'  ^775- 
Gram  V.  Caldwell,  5  Cow.  489, |  J^^-  ^'  1826. 

Gram  v.  Seton,  i  Hall  262, i  135,  "''  ^  1828. 

Grant  v.  Bryant,  loi  Mass.  567, '     35.  2.  ^gg 

1 207,  5,  ^ 

Graser  v.  Stellwagen,  25  N.  Y.  315,     -        -        -        -  114,  2,  1862. 

Gratz  J*.  Bayard,  11  S.  &  R.  41, 72,  i,  1824. 


Tarlk  of  Cases. 


Gray  <i.  Catskill  Hank,  14  Barb.  471,  - 
Green  :.  Hcasky,  2  Bing.,  N.  C,  108, 
Green  </.  Hoswel'l,  i  Dutch.  391,  - 
Green  a.  V.  &.  M.  Bank,  i  Vr.  366,      - 

Greene  V.  Greene,  i  Ohio  535,     - 

Green  it.  Merrill.  55  N.  Y.  270,    - 

Gii'rn  ;:  IVillis,  5  Hill  232, 

Grcenham  v.  Grav,  4  Ir.  C.  L.  501.      - 

Greenshaw  a.  Logan,  25  Fed.  Rep'r  299,     - 

Green  wald.  v  Kastcr,  5  Nor.  45,  - 

Greenwood  ::  Brink,  i  Hun.  227, 

Greenwood  v.  Brodhead,  6  Barb.  593, 

Gregg  a.  Smith,  9  Neb.  212, 

Gregory  i:  Brooks,  i  Hun.  404,    - 

Gregory  a.  Plumer,  L.  R.  18  Eq.  621, 

Grey  a.  Greenham,  4  Ir.  C.  L.  501. 

Grier  r'.  Hood,  l  Casey  430. 

Griffiths  a.  Caldicott,  8  Exch.  898, 

Grimes  «.  Rothell,  35  N.  W.  392, 

Grinnell  Mfg  Co.  a.  Haddock,  16  W.  N.  549, 

Grinnell  (/.  Richards,  63  Iowa  44, 

Griswold  v.  Haven,  25  N.  Y.  595, 

Groom  a.  Price,  2  Flxch.  542,       -        -        - 

Grover  «.  Lamb,  47  Barb.  317, 

Guetner  a.  McCuIlough,  i  Binn.  214,  - 

Guidan  :■.  Robsou,  2  Camp.  302, 

Guie  a.  Ash,  i  Out.  493,       .        -        -        - 

Guild  V.  Belcher,  119  Mass.  257, 

Guild  a.  Hubbard,  i  Duer  662,     -        -        - 

Guillauuie  a.  Delmonico,  2  Sandf.  Ch.  366, 

„    -11  n  *.  MI  Leg.  Int.  112, 

GuiUou  V.  Peterson,  ■{  ■'<j  x'       ^a- 
'  I    8  Nor.  103, 

Gulf  City  Paper  Co.  a.  Rapier,  64  Ala.  330, 

Gulick  :•.  Gulick, 


I  Harr.  186,    - 


t  2  Green  578, 

Gulick  a.  Princeton  &  K.  Turnpike  Co.,  i  Harr.  161, 
Guthrie  a.  Scott,  10  Bosw.  40S,  ----- 
Gwymne  v.  Holdredge,  3  C.  E.  Gr.  26,        -        -        - 


58, 

I, 

/, 

185 1. 

62, 

g, 

1835- 

133, 

6, 

1856. 

J  77, 

5, 

1863. 

112, 

13, 

1823. 

208, 

7- 

1853- 

148, 

3. 

1873- 

6, 

2, 

1843- 

50. 

2, 

1855- 

112, 

II, 

1885. 

90, 

3, 

1878. 

59- 

3, 

1874. 

106, 

5. 

c, 

1850. 

76, 

I, 

1879- 

12, 

I, 

1874. 

140, 

I, 

1874. 

50, 

2, 

1855- 

122, 

3, 

1855- 

16, 

2, 

1853- 

192,' 

1, 

a, 

1887. 

37, 

3. 

g, 

1885. 

51, 

I, 

1884. 

139, 

2, 

1872. 

59, 

2, 

«, 

1848. 

59, 

2, 

b, 

1866. 

119, 

d, 

1807. 

69, 

21, 

1809. 

16, 

I, 

1881. 

167, 

5, 

c, 

1876. 

n^, 

2, 

1853- 

no. 

3, 

1809. 

41, 

I, 

1870. 

139, 

5, 

1874. 

141, 

I, 

1874. 

25, 

I, 

1877. 

134, 

2, 

1837. 

157, 

2, 

1835- 

177, 

4, 

1837- 

170, 

3, 

1863. 

208, 

7, 

1866. 

Haas  a.  So.  White  Lead  Co.,    /  ^5  N.  W.  493,     - 

'    I  33  N.  W.  Iowa  657, 
Hackettrt.  White,  20  N.  Y.  178,  - 
Haddock  :'.  Grinnell  Mfg.  Co.,  16  W.  N.  549,    - 
Haight  rt.  Roseufield,  53  Wis.  260, 
Haldeman  v.  Bank  of  Middletowu,  4  Cas.  440,  - 

Hale  V.  Henrie,  2  Watts  143, 

Halfielda.  Moses,  3  S.  E.  Rep'r  538,  - 

Hall  a.  limns.  Pen.  984,      -        1        -        -        . 

Hall  a.  Cassidy,  97  N.  Y.  159,      -         .         -         . 

Hall  V.  Lanning,  i  Otto  160, 

Hall  a.  McLewee,  103  N.  Y.  639, 

Hall  a.  Tanner,  i  Barr,  417, 


123, 

I, 

1887. 

37. 

3,/ 

1859- 

37, 

3,^, 

1885. 

52, 

1881. 

127, 

6, 

1857- 

III, 

II, 

113, 

I,  r. 

1834. 

117, 

I, 

1887. 

76, 

2, 

1812. 

64, 

2, 

1884. 

"9, 

b, 

1875. 

64, 

2, 

1886. 

127. 

f  2.  a 

1  ,\    n 

1845. 

Table  of  Cases. 


/  I  Buck,  Cases  in  Bank'cv, 
1 3  Madd. 


Halsey  a.  Dob,  i6  Johns.  34, 
Hamill  v.  Purvis,  2  P.  &  W.  177, 
Hanulton,  iu  re.,  i  Fed.  Rep'r  800,     - 

Hamilton  a.  Kendall,  L,.  R.  4  App.  Cas.  504, 

Hamilton  a.  McKce,  33  O.  vSt.  7, 
Hamilton  a.  Williams,  i  South  220,    - 
Hamilton's  Appeal,  7  Out.  368, 

Hammock  a.  Hankey, 

Hammond  a.  Holme,  L.  R.  7  Exch.  218, 
Hampton  v.  Coddington,  i  Stew.  557, 
Hampton  a.  Sumner,  8  O.  328;  365,    -        -        - 
Hanbury  a.  Fox,  Cowp.  445,         -         .         .         . 
Hancock  v.  Hintrager,  60  Iowa,  374,  - 
Hanford  a.  Frost,  i  E.  D,  Sm,  540, 

Hankey  v.  Hammock,     {  '  il"^>>  <^^f «  ^"  Bank'cy, 

■'  I  3  Madd.  148, 

Hankinson  a.  Perrine,  6  Hal.  181, 
Hauna  v.  Wray,  27  Sm.  27,  - 
Hanrahan  a.  Tolman,  44  Wis.  133,       -        .        . 
Hanson  a.  Barton,  2  Camp.  97;  2  Taunt.  49, 
Harbert's  (Sir  William's)  Case,  3  Rep.  14, 
Hardenburgh  a.  Boeklen,  5  J.  &  Sp.  no,    - 
Hare  z/.  Commonwealth,  11  Nor.  141, 
Hare  a.  Hyat,  Comb.  383,     ----- 
Hargrave  v.  Conroy,    4  C.  E.  Gr.  281, 
Hargrove  a.  Mclnroy,   16  L.  T.  509, 
Harper  v.  Fox,  7  W.  &  S.  142,     - 
Harper  z>.  Raymond,  3  Bosw.  29, 

Harris  a.  Beatson, 


275, 


f  19  Cent.  h.  J. 

I  60  N.  H.  83, 
Harris  v.  Butterfield,  33  L.  T.  639, 
Harris  a.  Dean,  33  L,.  T.  639,         -         .         - 
Harris  v.  Fischer,  57  Geo.  229,    - 

Harris  v.  Murray,  28  N.  Y.  574,  - 

Harris  v.  Peabody,  73  Me.  262,    - 
Harris  v.  Sessler,  3  vS.  W.  Rep'r  316,  - 
Harris  a.  Wolbert,  3  Hal.  Ch.  605, 
Harrison  a.  Benners,  19  Barb.  53, 

Harrison  v.  Farrington,      |  ^5  Stew.  353,    - 
°       '      i  10  A.  Rep'r  105, 

Harrison  a.  Goode,  5  B.  &  Al.  147, 

Hart  V.  Kelly,  2  Nor.  286,    -  ■       - 
Hart  zj.  Withers,  i  P.  &  W.  285,  - 
Hartley  a.  Prosser,  29  N.  W.  Rep'r  156,      - 
Hartley  v.  White,  13  N.  31,  -         -         - 

Hartley's  Case,  Rus.  &  R.  139,     - 

Hartman  v.  Woehr,  3  C.  E.  Gr.  383,    - 

Harvey  v.  Childs,  28  O.  St.  319,  - 
Harvey  a.  Stillman,  47  Conn.  26, 
Hasbrouck  r.  Childs,  3  Bosw.  105, 
Hasbroiuk  a.  Horner,  5  Wr.  169, 


51, 

2,       I 

129, 

3,       I 

192, 

3,  «,  i^ 

f  76, 

13, 

77, 

3,       I 

I   92, 

4, 

124, 

3,       I 

130, 

3,       li 

120, 

2,       I 

74, 

6,       I 

75, 

I,       I 

133, 

5,       I 

112, 

14,       I 

27, 

5,       I 

69, 

9,       I 

134, 

21,       I 

^'     74, 

6,       I 

12, 

I,       I 

121, 

9,       I 

124, 

I,       I 

62, 

^,  I 

103, 

7,       I 

67, 

6,       I 

106, 

8,  h,  I 

5, 

I,       I 

59, 

a,  I 

49, 

2,       I 

122, 

I,       I 

171, 

5,       1 

117, 

2,       li 

17, 

2,       I 

17, 

2,       I 

104, 

2,       i( 

/    37, 

/'I 

1 104, 

7, 

193, 

I,       I 

69, 

2,       I 

206, 

2,       i! 

8, 

I,       i{ 

151, 

I,       ^ 
'       I 

/    69, 
1 136, 

20, 

3,       '' 

64, 

4,       i^ 

135, 

7,  a,  iJ 

103, 

c,  \\ 

167, 

7,  K  li 

59, 

k,  li 

1    '9, 

«'       M 

I  207, 

I,       ^' 

64, 

e,  \i 

133, 

4,       1^ 

32, 

I,       \'t 

100, 

7,       i^ 

Tai'.i.k  ok  Cases. 


liiLskell  a.  Funk,  132  Mass.  580, 

llasson  <r  Rich,  4  vSaiidf.  115, 

Haven  a.  Griswold,  25  N.  Y.  595, 

Hawkins  :'.  Appleby,  2  Sandl.  421, 

Hawley  Z'.  Huril.  56  Vt.  617, 

Hivcliv  </.  Shrpanf,  1  Conn.  367, 

Hawn  :-.  Land  ^;:  Water  Co.,  16  P.  Rep"r  196. 

Hayden  a.  Rose,  35  Raud.  106.    - 

,w  II  '3  Sandf.  293, 

Hayes  f.  Heycr,    ^ ;;  Sa,ijf.  cii.  485.    -         - 

Hayes  a.  Remel.  S3  Mo.  200, 

Havward  (J.  Beach,  10  Ohio  455, 

Ha'vward  a.  Parsons,  4  DeG.  F.  &J.  474,    - 

Heartt  :-.  Corninj:,  3  Paige.  566, 

Healhcol  z'.  Ravciicroft,  2  Hal.  Ch.  113, 

Heimstreet  :■.  Howland,  5  Deuio  68,    - 

Helion  a.  Webb,   3  Rob't  625, 

Helhnan  a.  Rtis,  25  O.  St.  180,    - 

Helmorer.  ^""th,  ^  ^^5  ^.j^    ^  4o^,  _ 

Helsby  v.  Mears.  5  B.  &  C.  504, 
Heiningsway  a.  Rensheinier,  1 1  Casey  432,  - 
Henarie  a.  Fish,  13  Pac.  Rep.  193, 
Henderson  :■.  Lewis,  9  S.  6c  R.  379,    - 
Henderson  a.  Taylor,  17  S.  &  R.  453, 
Henn  v.  Walsh,  2  Edw.  Ch.  129, 

Henrie  a.  Hale,  2  Watts  143, 

Hepburn  a.  Moore,  5  Barr  399,     - 

Herrick  v.  Ames,  8  Bosw.  115,     - 
Hervey  v.  Van  Pelt,  4  Bosw.  60, 
Hesketh  v.  Blanchard,  4  East.  144,  "  - 
Hettrick  a.  Bendell,  3  J.  &  Sp.  405,    - 
Heustis  a.  Patton,  2  Dutch.  293, 

Hever  a    Haves     '  ^  ^^-^^AL  293,  - 
Hesera.  Hayes,    ^  ^  g^^^if   Ch.  485,  - 

Heyhoe  v.  Burge,  9  C.  B.  431, 
Hicken.  ex  parte,  3  DeG.  J.  &  S.  662, 
Hickle  a.  Valentine,  39  Ohio  St.  19,    - 
Hickman  a.  Cox,  8  H.  L.  268, 
Hicks  a.  Brown,  24  Fed.  Rep'rSii, 
Higgins  V.  Armstrong,  10  Pac.  Rep'r  232,  - 
Higgins  V.  Rector,  47  Texas,  361, 
Higgins  V.  Rockwell,  2  Duer  650, 

Hill  :-.  Beach,  i  Beas.  31,     - 

HilU.  Laecv.    M  Ch.  Div.  237,  -        -        . 

-  •     (  3  Ap.  Cas.  94,    - 
Hill  V.  Sheiblev,  68  Ga.  556, 
Hill  V.  Smalley.  8  Vr.  103,  -        -        .        . 
Hill  a.  Smith,  45  Verm.  372, 
Hill  :-.  Voorhees,  10  Harris.  68,  - 
Hills  a.  Tanner,  48  N.  Y.  662,      - 
Hilton  V.  McDowell,  87  N.  C.  364, 
Hine  a.  Bank.  Citizens,  49  Conn.  236, 
Hiutragera.  Hancock,  60  Iowa,  374,    - 


5«. 

a,  ii 

121, 

13.   i{ 

139. 

2,   ii 

140, 

3.   iJ 

44. 

2,   li 

6, 

2,   1} 

185, 

V,          \{ 

10, 

9.   i<^ 

I3I. 

3.   li 

187, 

3.   I 

69, 

16,   l{ 

76. 

II,   I 

207, 

3.   I 

215, 

I,   I 

181, 

I.   I 

62, 

b,  I 

208, 

5.   I 

166, 

1,  a,  I 

104, 

5.   I 

183, 

I,   ^ 

144. 

2,   I 

104, 

6,   I 

91. 

2,   I 

130, 

13.   I 

"9. 

d,    I 

173. 

6,   I 

1  III, 

^^'     T 

U13, 

i,^, 

83, 

{::  ■ 

215, 

3.  I 

146, 

3.   I 

48, 

3,   I 

69, 

21,    I 

12, 

I,   I 

131, 

I 

187, 

3.   I 

58, 

g'   1 

59. 

/I 

19. 

7.   I 

59- 

/,Ai 

59. 

e,  ' 

15. 

4,   I 

193, 

I,   I 

87. 

2,   I 

(  165, 

h       , 

1  208, 

2,   ^ 

166, 

4.a.[ 

51, 

1,      I 

173, 

8,   I 

69, 

12,   iJ 

69, 

17.   I 

12, 

I.   I 

121, 

4.   I 

23. 

3,   li 

69. 

9.   I) 

Table  of  Cases. 


Hoare  v.  Dawes,  i  Doug.  371,      ^        -        -        -        '     \    Jd     ^       1780. 

Hobeusack  a.  Mershou,  2  Zab.  372,  -  -  - 
Hobbs  V.  McLean,  117  U.  S.  567,  .  -  - 
Hodgman  v.  Smith,  13  Barb.  302,  .  .  - 
Hoefiiuger  v.  Wells,  47  Wis.  628,  _  -  - 
HofFman  a.  Knerr,  15  Sm.  126,  - 
Hoffman  v.  Steiubeisser,   11  W.  N.  (C.  P.  4)383, 

Hogeboom  v.    Gibbs,  7  Nor.  235, 

Hoglan  a.   Young,    52  Cal.  467,     -        -        -        - 
Holdane  v.   Butterworth,  5  Bosw.  i,     - 
Holden  a.    Davidson,  10  At.  Rep'r5i5, 
Holdredge  v.  Gwynne,   5  C.  E.  Gr.  26, 
Holland  a.   Austin,    69  N.  Y.  571, 
Holland  v.    Drake,    29  O.  St.  441, 
HoUemback  v.   More,    44  N.  Y.  vSup'r  Ct.  107,     - 
HoUingshead  a.    Reed,  8  B.  &  C.  878, 
Hollistera.  Salt   Lake  City,   118  U.  S.  256, 
Holme  V.   Hammond,    L.  R.  7  Exch.  218,    - 
Holmes  «.   Brophy,   2  Molloy  Ir.  Ch.  i, 
Holmes  v.   Kortlander,  31  N.  W.  Rep'r532, 
Holmes  a.   Low,  2  C.  E.  Gr.  148,  .        -        - 

Holmes  v.    U.  Ins.  Co.,  2  Johns.  Cas.  329,    - 
Holthouse  a.  Kountz,   4  Nor.  235,         .        -        - 
Homer  v.   Wood,  11  Cush.  62,       - 

Hone  a.  Perring,  4  Bing.  28,         -        -        -        - 

Hood  a.  Grier,  i  Casey  430,  .        .        -         - 

Hood  V.  Riley,  3  Gr.  127,      ----- 

Hook  a.  Denithorne,  2  Am.  240,  .         -         - 

Hooker  a.  Wright,    10  N.  Y.  51,  - 
Hopkins  v.  Thomas,  28  N.  W.  Rep'r  147,    - 

Hopkins  «.  Walstrom,  7  Out.  118, 


Horbach  z'.  Huey,  4  Watts  455,    - 

Horn  a.  Dillon,  5  How.  Pr.  35,    - 
Horner  v.  Hasbrouck,   5  Wr.  169, 
Horner  a.  Jones,  10  Sm.  214.        _        -        . 
Hoskinson  v.   Eliot,  12  Sm.  393, 
Hotchkiss  v.-  English,  4  Hun  369, 

House  a.  Drennen,  5  Wr.  30,         -        -        - 

Houseal's  Appeal,  9  Wr.  484,        -        -        - 
Ilovey  a.  Rianhard,  13  Ohio  300, 

Howard  a.  Buffalo  City  Bank,  35  N.  Y.  500, 

Howard  v.  Kyte,  28  N.  W.  R.  609, 
Howard  v.  McLaughlin,   2  Out.  440,    - 
Howard  a.  Smith,  20  How.  Pr.  121,     - 
Howell  V.  Adams,  68  N.  Y.  315,  - 
Howell  V.  Brodie,  6  Bing.  N.  C.  44,     - 
Howell  a.  Davis,  20  Am.  Law  Reg'r,  N.  vS.,  461, 
Howell  a.  Decker,  42  Cal.  636,- 


\      7, 

3, 

I   49, 

6, 

69, 

10, 

36, 

I, 

59. 

3, 

124, 

6, 

157, 

4, 

190, 

I, 

)    95. 

4, 

1 121, 

12, 

1.56, 

6, 

69, 

15, 

69, 

10, 

208, 

7, 

177, 

2, 

131, 

3, 

41, 

2, 

52, 

24, 

7, 

75- 

I, 

48. 

3, 

a, 

135, 

5, 

a, 

180, 

4. 

7, 

I, 

144- 

7, 

167. 

2, 

b, 

J  153, 
ti6o, 

2, 

I, 

122, 

3. 

/130, 
1131, 

10, 

3. 

b 

69, 

3, 

44, 

8, 

128, 

I, 

/    95, 
1149. 

5, 

I, 

1130, 

3. 

I, 

a 

189, 

I, 

100, 

7. 

118, 

a, 

86, 

I, 

17, 

4, 

/    69, 
1 121, 

5, 

2, 

202, 

2, 

24, 

2, 

f   69, 

19, 

\  106, 

4, 

b, 

(200, 

I, 

12, 

I, 

192, 

2, 

a, 

106, 

9. 

b, 

177, 

4. 

18, 

4, 

108, 

8, 

15, 

6, 

Table  of  Cases. 

Howell  <j.  Reynolds,   L.  R.  «  Q-  H.  39S, 

Howell  <J.  Ross.  3  Nor.  129,  -         -         -         - 

Howell  v.  Teel,  2  Stew.  490,  -        -        -        - 

Howlaud  a.  Heimstreet,  5  Denio  68,  - 

Hoxie  V.  Chaiiey,  143  Mass.  592, 

Hovl  r.  Reimett,   59  N.  Y.  538,    -  -         -         - 

Hovl  *i.  tialTney,    10  Pac  Rep'r  34,  - 

Hovl  Z'.  Sprague,   103U.  S.  613,   -  -         -         - 

Hoyt's  Appeal,  2  Out.  257,   -        -  -        -        - 

Hubbard  v.  Guild,  I  Duer  662,      -  -         -         - 

Hubbard  :'.  Matthews,  54  N.  Y.  43,  - 

.      .  ^  ,      )  10  0.  B.  D.  488, 

Hubbuck  a.  Attorney  General,    |  g   g   ^   275, 

Huey  a.  Horbach,  4  Watts  455,    -        -        -        - 

Hulit  a.  Jaques,  i  Harr.  38,  .         .         .         . 

Hull  a.  Yanderburgh.  20  Wend.  70,     - 
Hulschizer  a.  Craig,  5  Vr.  363.     -        -        -        - 

Hnl«,^'c  FQtatP    '  '2  Phila.  130, 

Hulse  s  Estate,  \  ,1  w.  N.  449.    - 

Hunta.  Burnell,  5  Jur.  650,  .         .        -        - 

Hunt  ?'.  Eriksou,  57  Mich.  330,    -         -         -         - 

Hunter  rt.  Young,  4  Taunt.  583,  -         -         -         - 

Huntington  a.  Moore,  7  Hun  425, 

Hurd  (/.  Hawley,    56  Vt.  617,         .         -         -         - 

Hutchinson  v.  Onderdonk,  2  Hal.  Ch.  277, 

Hutchinson  a.  Onderdonk,  2  Hal.  Ch.  632,  E.  &  A. 

Hutchinson  a.  Sharp,   100  N.  Y.  533, 

Hutzler  v.  Phillips,   i  S.  E.  Rep'r  502, 

Hyat  v.  Hare,  Comb.  283, 

Hyde  a.  Leggett,  58  N.  Y.  272,  -        -        -        - 


Idell  a.  Coddington,    I  3  Stew.  540,     -        -        -        - 
'^  1 2  Stew.  504,     -        -        -        - 

Ibnisen  v.  Negley,  i  Casey,  297,  .        .        -        - 

Ihnison  v.  Lathrop,  8  Out.  365,   ----- 
Inihoffa.  Gaylord.  26  O.  St.  317,  -         -         .         - 

Impson  a.  Atwood,  5  C.  E.  Gr.  151,    -        -        -        - 
Inji.'illsa.  Julio,  i  Allen,  41,         .        .        .        -        . 
Insurance  Co.,  Fireman's,  v.  Floss,  10  A.  Rep.  139.  - 
Insurance  Co.  a.  Gillilan,  41  N.  Y.  376, 
Insurance  Co.,  Hamilton  Fire,  v.  Kimball,  8  Bosw.  495 
Insurance  Co.  a.  Mallery,  51  Conn.  222,      -         -         - 
Insurance  Co.,  Northern,  v.  Potter,  63  Cal.  157, 
Insurance  Co.,  Sun,  v.  Kountz  L,ine,  122  U.  S.  S.  C.  R.  583,  69,   11, 
Irwin  a.  Bidwell,  22  Sm.  Pa.  244,         -        .        - 
Irwin  V.  Riegle,  34  Leg.  Int.  447, 
Irwine  a.  Sutlon,  12  S.  &  R.  13,  - 
Isle-.  V  Turker,  5  Duer  393,  .... 


Jackson  a.  Cross,  5  Hill,  478, 
Jackson  v.  Litchfield,  8  Q.  B.  D.  474, 


119. 

I, 

1873- 

95. 

d 

1877. 

122, 

4. 

III, 

I, 

1878. 

62, 

b. 

1847. 

209, 

I,  f, 

1887. 

86, 

3, 

1872. 

69. 

13. 

1886. 

106, 

5./ 

1880. 

III, 

8, 

1881. 

133. 

2, 

1853. 

173. 

3. 

1873- 
1883. 

109, 

4. 

1884. 

76, 
130, 

3- 
I,  a 

1835- 

157. 

I, 

1837- 

59. 

c, 

1838. 

167, 

2,  a, 

1871. 

172, 

2, 

1878. 
1882. 

18, 

I, 

1 841. 

51, 

I, 

1885. 

20, 

2, 

1812. 

67, 

II, 

1876. 

44, 

2, 

1884. 

188, 

2, 

1847. 

188, 

2, 

1849. 

37, 

I, 

1885. 

108, 

5, 

1887. 

5, 

I, 

1609. 

52, 

1874- 

208, 

4. 

1879. 

210, 

4, 

1878. 

126, 

3, 

1855. 

69, 

2, 

1883. 

103, 

a 

1875. 

106, 

I,  a, 

1869. 

35. 

3. 

1861. 

144. 

4. 

1887. 

133. 

3, 

1869. 

114, 

2, 

1861. 

25, 

2, 

1883. 

90, 

3. 

1883. 

,  69, 

II. 

1886. 

18, 

4, 

1872. 

129, 

I, 

1877. 

129, 

I, 

1824. 

137, 

6, 

1856. 

76. 

5, 

1843- 

77, 

c 

1882. 

Table  of  Cases. 

Jackson  v.  Miller,  i  Dutch.  90,  -  -  -  -  - 
Jackson  a.  Skaife,  3  B.  &  C.  421, 

Jackson  a.  Smith,  2  Ed.  Ch.  28,  - 

Jacques  v.  Marquand,  6  Cowen,  497,  -  -  -  - 
Jacquin  v.  Buisson,  11  How.  Pr.  385,  -  -  -  . 
James  a.  Bates,  3  Duer  45,    - 

James  a.  Mattock,  2  Beas.  126,     -         -         -        .         . 

James  v.  Pope,  19  N.  Y.  324,         -        .        .        .        . 

James  a.  Rizer,  26  Kan.  221, 

Janes  v.  Whitbread,  1 1  C.  B.  406,         .         .         .         . 

Jaques  v.  Hulit,  i  Harr.  38,  -         - 

Jaquette  c.  Brown,  13  Nor.  113,    - 

Jardine  a.  Scarf,  7  App.  Ca.  345,  -         -~       - 

Jarvis  a.  Dunham,  8  Barb.  88,       -         -         -         -         - 

Jaycox  a.  Turner,  40  N.  Y.  470,    ----- 

Jenkins  v.  Barrow,  35  N.  W.  Rep'r  510,      - 

Jennings  v.  Rickard,  15  Pac.  Rep'r  677,      - 

Jessup  V.  Cook,  i  Hal.  434,  -        -         -         -         . 

Johnson  t'.  Buttler,  4  Stew.  35,     -         - 

Johnson  a.  Cammack,  1  Gr.  Ch.  83,     - 

Johnson  r-.  Evans,  7  M.  &  G.  240,        -        -         -         . 

Johnson  a.  Farr,  25  111.  522,  -        -        -         .         . 

Johnson,  in  re,  15  Ch.  D.  548,      ----- 

Johnson  v.  Kaiser,  11  Vr.  286,      -         -         -         -         . 

Johnson  v.  Miller,  16  Ohio  431, 

Johnson  v.  Stear,  109  Engl.  Com.  L.  Rep'r,  57  N.  S.  341, 
Johnson  a.  Tenuey,  43  N.  H.  144,        -         -"       -         . 
Johnson's  Appeal,  5  Am.  129,      -         -         .         .         . 

Johnston  v.  Bernheim,  86  N.  Car.  339, 

Johnston  v.  Straus,  26  Fed.  Rep'r       -        .        -         - 

Jones'  Appeal,  20  Sm.  169,  ------ 

Jones  V.  Battin,  6  Casey,  84,  -         .        -         .         . 

Jones  V.  Butler,  87  N.  Y.  613,       -         .         -         -         . 
Jones  V.  Clark,  42  Cal.  180,  - 

Jones  V.  Dexter,  j  ^^5  Mass.  469,  -  -  -  - 
'  i  130  Mass.  380,  -  -  .  . 
Jones  V.  Foxall,  15  Beav.  388,  ----- 
Jones  V.  Horner,  10  Sm.  214,  -  -  -  .  . 
Jones  V  Lloyd,  L.  R.  18  Eq.  265,  .  .  -  - 
Jones  a.  Pettingill,  28  Kan.  749,  ----- 
Jones  a.  Voorhees,  5  Dutch.  270,  .... 
Jones  V.  Walker,  103  U.  S.  444,  ----- 
Jones  a.  White,  i  Rob't  321,  -  -  -  .  . 
Jordan  a.  Fogert}',  2  Rob.  319,  - 
Judge  V.  Braswell,  13  Bush  67, 

f   3  B.  &  S.  847,    ...        - 
Jukes  a.  Kilshaw,    <  32  Law  J.  Q.  B.  217,  - 

i    9  Jurist,  N.  S.  1231,- 
Julio  Z'.  lugalls,  I  Allen  41,  ..... 

June  a.  Betts,  51  N.  Y.  274,  ..... 

xxxix. 


138, 

2, 

1355. 

167, 

3, 

1 824. 

1  '^' 

)  109. 

I  112, 

3, 

3, 

1833. 

16,  a 

40, 

3, 

1S26. 

75. 

3, 

1855. 

167, 

5,-^ 

1854. 

1  1 10, 

8, 

\I12, 

i860. 

11,'/, 

176, 

I, 

1859. 

69- 

16, 

1881. 

59- 

n 

1851. 

157. 

I, 

1837. 

12, 

I, 

18S0. 

70, 

I, 

1882. 

(  67. 
1152, 

2, 
2, 

1854. 

(  106, 
1  170, 

9./' 
3, 

1869. 

156, 

1, 

1887. 

151, 

2, 

1887. 

215, 

I, 

1798. 

206, 

I, 

1879. 

76, 

23, 

1839- 

100, 

1, 

1844. 

36, 

6, 

1861. 

74, 

10, 

1880. 

130, 

5,  a, 

1878. 

67. 

II, 

1S47. 

n.  47, 

3,  b, 

1869. 

194, 

3, 

1864. 

212, 

6, 

1886. 

(  "5, 

3, 

1  134, 

4, 

1S82. 

1 152, 

I. 

)  106, 

I,  d, 

t  107, 

4, 

1882. 

113. 

h, 

1871. 

135, 

5,  a, 

1857. 

32, 

3, 

1882. 

15, 

I, 

1871. 

100, 

B, 

1878. 
1881. 

42, 

3, 

1852. 

118, 

a, 

1869. 

173- 

11, 

1874. 

158, 

3, 

1882. 

52, 

1S65. 

74, 

3, 

1880. 

209, 

I,  b, 

1863. 

121, 

4, 

1864. 

15, 

4, 

18S7. 

64, 

1', 

1863. 

35, 

3, 

1861. 

184, 

2, 

1873. 

Table  of  Cases. 

,.  ..11  -  Appi-al,  II  Nor.  276, 

K.iiMT  : .  IVii.lrick,  2  Out.  52S,    -         -         -         -         - 
KiHscT  <;.  Johnson.  II  Vr.  286. 

Kane  a.  Meason.   13  Sin.  335, 

Kai>l>  :•.  Barlhan.  i  K.  I>.  Sm.  622,      -         -         -         - 
Kastcr  a.  Oreenwald,  5  Nor.  45,  - 
KaulTman  :•.  ImsIkt,  3  Grant  302,        .        -        -        - 
Kayser  ::  Maut;hani,  8  Col.  232,  .         .         -         - 

K«.-i.;^an  :■.  Cox',   116  Mass.  2S9, 

Ki'ini  (1.  Sparniau.  83  N.  V.  245,  .         -         -         - 

Keller  (7.  vSeoor,  4  Duer  414, 

Kelley  a.  Berry.  4  Rob.  106, 

Kellogj,'  a.  Wilcox,  1 1  Ohio  394,  .  -  -  - 
Kellv  a.  Hart.  2  Nor.  286, 

..   ,,         117  1  1     '  27  How.  I'r.  559, 

Kelly  a.  Walsh. -^^^B^^^ljgS^  -         -         -         - 

Kemp  (/.  Carnley,  3  Duer  I,  .        -        -        -        - 

Kendall  :■.  Hamilton,  L.  R.  4  App.  Cas.  504,      - 

Keiinady  a.  Mecutchen,  3  Dutch  230, 

Kennedy  a.  Dennis,   19  Barb.  517,        .         -         -         - 

Kenney  r.  Altvater,  27  Sm.  34,    - 

Kenney  a.  Bank,  Fayette  Nat.,  of  Lexig'n,  49 Ky.  133, 

Kepler  v.  Erie  Dime  S.  &  L.  Co.,  5  Out.  602,      - 

Keves  a.  Davis,  38  N.  Y.  94,        -        -        -        -        - 

(    3  B.  &  S.  847,   -        -        -        - 
Kilshawz/.  Jukes,     i  32  Law  J.  Q.  B.  217,  - 

l^    9  Jurist,  N.  S.  1231,- 
Kimball  z:  Hamilton  Fire  Insurance  Co.,  8  Bosw.  495, 

Kiny  a.  Morriset,   2  Bur.  891, 

KiiiK  V.  Sarria,  69  N.  Y.  24, 

K\u^  z'.  Wilcomb,  7  Barb.  263,  ----- 
Kin^  (I.  Woodruff,  47  Wis.  261,  ----- 
Kinj.;'s  Appeal,  9  Barr.  124, 

Kingsbury  :-.  Tharp,  28  N.  W.  R.  74,  -        -        - 

Kinney  a.  Cowan,  33  Ohio  St.  442,  -  -  -  - 
Kinsinj^er  a.  Goepper,  39  Ohio  St.  429,  .  -  - 
Kirkwood  a.  Solomon,  55  Mich.  256, 

Kistler  a.  Bowman,  9  Casey  106,  -        .        .        . 

Kitchen  :'.  Lee,   11  Paige  Ch.  107,       -        .        .        - 

Klein  a.  Shanks,  14  Otto  18, 

Knerr  v.  Hoffman,  15  Sm.  126, 

Knickerbocker  a.  Woodling,  31  Minn.  268, 

Knott  V.  Knott,  6  Oregon  142, 

Knowles  a.  I<yon,  3  B  &  S.  556,  .        .        .        . 

Kohn  a.  Sparrow,  3  E.  R.  293,    -        -        -        -        - 

Koningsburg  v.  Launitz,  i  E.  D.  Sm.  215, 

Kortlander  a.  Holmes,  31  N.  W.  Rep'r  532, 

Kountz  z'.  Holthouse,  4  Nor.  235,         .... 

Kountz  Line  a.  Sun  Insurance  Co.,  122  I'.  S.  S.  C.  R.  583, 


xl. 


106, 

8,  i, 

1879. 

129, 

I, 

1881. 

130, 

5.  a, 

1878. 

i  10, 

I  121, 

6, 
I, 

1869. 

215- 

4. 

1852. 

90, 

3. 

1878. 

122, 

6, 

i860. 

51. 

2, 

1885. 

137, 

2, 

1874. 

136, 

4,  a, 

188;). 

76, 

13, 

1855. 

194, 

2, 

i8t)6. 

ii94, 
I  200, 

I, 
I, 

1842. 

64, 

4, 

1877. 

106, 

9,b, 

1864. 

131, 

2, 

1853- 

f  76, 

13, 

77, 

13, 

1879. 

I  91. 

4, 

126, 

6, 

1858. 

24, 

I, 

1854. 

177, 

I, 

1874. 

195, 

4, 

1880. 

III, 

3, 

1882. 

175, 

3, 

1868. 

64, 

a 

1863. 

114, 

2, 

1861. 

66, 

I, 

1759' 

37. 

3,  « 

1877. 

no. 

7, 

1849. 

184, 

4, 

1879. 

106, 

8,  a 

1848. 

21, 

2, 

1886. 

69- 

17, 

1878. 

no. 

6, 

1883. 

174, 

I,  a 

1884. 

i  79, 
I  90, 

I, 
I, 

1859- 

147, 

I, 

1844. 

f  106, 
1  no, 

7,  a 

18S1. 

5. 

157- 

4, 

1870. 

140, 

4, 

1883. 

36, 

6, 

1876. 

62, 

c. 

1863. 

76, 

16, 

1885. 

(  lOI, 

1 179, 

I, 

I, 

1851. 

135. 

5,  « 

,  1887. 

144, 

7. 

1877. 

53,  69, 

II, 

1886. 

Table  of  Cases. 


Kramer  v.  Arthurs,   7  Barr  165,  - 

Kremer  a.  Reed,   i  Am.  482, 
Kyte  a.  Howard,  28  N.  W.  R.  609, 


Labouchere  v.  Tupper,  11  Moore,  P.  C,  198,  - 

„.„    14  Ch.  D.  237, 

Laceyz^.Hill,|^^p  Cas.94,      -        -        -  -        ■ 

Lafittefl.  ChafFaix,  30  L,a.  An.  631,     -        -  -        - 

Lafond  v.  Deems,  81  N.  Y.  507    -        -         -         -        ■ 
Lahens  a.  Fielden,  9  Bosw.  436,  .        -         - 

Laird  f.  Cbisbolm,  30  Scotishjur.  584, 

Lamb  v.  Grover,  47  Barb.  317,    - 

Lambert's  Case,  Godbolt  339,      -        -         -        - 

Lambeth  a.  Marshall,  7  Rob.  L.  A.  47, 

Lampton  v.  CoUingwood,  4  Mod.  315, 

Land  &  Water  Co.  a.  Hawu,  16  P.  Rep'r  196,     - 

I     13  C.  B.  (N.  S.)  278, 
Lane  a.  Leverson,    <  ^^g  E  C  L 

Lane  v.  Thomas,   37  Tex.  157,      -  -        -        - 

Lane  v.  Williams,  2  Vern.  277,    -  -        -        - 

Langdale,  ex  parte,   18  Ves.  Jr.  300,  - 

Lanning  a.  Hall,  i  Otto  160,        -  -        -         - 

Large  v.  Ditmars,  12  C.  E.  Gr.  283,  - 
Lasley  a.  Yeoman,  40  O.  S.  190, 

Laswell  a.  Robins,  27  111.  365,     -  -        -        - 

Lathrop  a.  Butterfield,   21  Sm.  225,  - 

Lathrop  a.  Ihmson,  8  Out.  365,    -  -         -         - 

Latshaw  v.  Steinman,  11  S.  &  R.  357. 

LaufFer  v.  Cavett,  6  Nor.  479,       -        -         -         - 

Laughliu  v.  Lorenz,  12  Wr.  275, 

J  10 
Launitz  a.  Kpningsburg,   i  E.  D.  Sm.  215,  -         '     ti; 

Law  a.  Roberts,  4  Sandf.  642,      .        -        -        - 

Lawrence  v.  Bacheller,   131  Mass.  504, 

Lawrence  v.  Sebor,   2  Caines  505, 

Lawrence  a.  Williams,  47  N.  Y.  462,  - 

Leaf's  Appeal,  9  Out.  505,  -         -         -         -         - 

Leask  a.  Pole,  9  Jurist,  N.  S.,  829, 

Leavitt  a.  Nicholson,  4  Sandf.  252,     - 

Leavitt  v.  Peck,  2  Conn.  124,        -        -         -        - 

Lee  a.  Kitchen,  11  Paige  Ch.  107, 

Lee  V.  Orr,   11  Pacif.  R.  745.         "        '         "        " 

Lefevre's  Appeal,  19 Sm.  22,         -        -        -        - 

Leggett  V.  Hyde,  58  N.  Y.  272,  -        -        -        - 
Lennig  v.  Lennig,  11  W.  N.  18,  - 
Lennon  a.  Walsh,  98  111.  27,       -         -        -        - 
Lesley  v.  Wiley,  47  N.  Y.  648,     -         -         -         - 
Levan  a.  Anderson,  i  W.  &  S.  334.      - 

xli. 


8, 
109, 

2, 

7, 

1847. 

69. 

5- 

iS86.- 

12, 

I, 

1 886. 

73, 

I, 

1857. 

166, 

4,  a, 

1876. 
1877. 

57, 
61, 

3, 

4, 

1878. 

16, 

I, 

1880. 

125, 

I, 

1862. 

39, 

I, 

42, 

I, 

1858. 

42, 

4,  a, 

59, 

b, 

1866. 

5, 

2, 

1614. 

37, 

3,  a, 

1844. 

103, 

8, 

■695. 

185, 

I, 

1887. 

129, 

5, 

1862. 

169, 

2, 

211, 

I, 

1872, 

5, 

3, 

1692. 

21, 

I, 

1811. 

"9, 

b, 

1875- 

208, 

8, 

1876. 

8, 

2, 

1883. 

25, 

6, 

1862. 

67, 

10, 

1872. 

69, 

2, 

1883. 

94, 
95, 

a 
a 

1824. 

9, 
III, 

2, 
2, 

1878. 

71, 

.154, 

2, 
I, 

1864. 

101, 
L179, 

I, 
I, 

1851. 

210, 

I, 

1851. 

37, 

3,  a 

1881. 

103, 

10, 

1804. 

67, 

4, 

1872. 

109, 

8, 

1884. 

69, 

9, 

1863. 

170, 

I, 

1850. 

152, 

I, 

1819. 

147, 

I, 

1844. 

76, 

I, 

1886. 

(III, 

II, 

,^  1871 

I  113. 

I,  ' 

52, 

'  1874. 

188, 

I, 

I  8m. 

118, 

(" 

1S81. 

76, 

12, 

1S72. 

83, 

3, 

1841. 

Table  of  Cases. 

Kcvi-rick  a.  I'ringlc,  97  N.  V.  181, 

Lcversoi.  v.  Lane.  |  ^^  ^  ^[;  (^-  ^-  ^  ^^B,  -        - 

Levy  :/.  Brush,  45  N.  Y.  589.        ...        - 

Levy  V.  Cadet,  1 7  S  &  R.  1  -'6,      - 

Lewis  a.  Henderson,  9  S.  ^v  R.  379,     - 

Ivcwis  </.  Locke,  124  Mass.  1, 

Lewis  a.  I'niled  States,   13  Nat.  Bank'cy  Regr  ;i^, 

Lewis.-'.  Webber.  1 16  Mass.  450, 

Ix?wis  :•.  Williams.  6  Wh.  263,     -         -         -         - 

Lidiijerwood  <:.  Thursby,  69  N.  Y.  198, 

Lindley  :•.   Davis,  13  P.  Rep.  118, 

Liiil'ord  :-.   Linford.  4  Dutch.  113, 

Linn  v.  Ross,   i  Harr.  55, 

Lipincott  a.  Wisham,   i  Stock.  353,     -        -        - 

Lipsey  a.  Carter,  70  Geo.  417,      - 
Lilchtield  a.  Jackson,  8  Q.  B.  D.  474, 
Litllelieltl  </.  Cunningham,    i  Edw.  Ch.  104, 
Livini^ston  ;■.  Blanchard,    130  Mass.  341,     - 
Livingston  z'.  Lynch,  4  Johns.  Ch.  573, 
Lloyd,  in  re.,  22  Fed.  Rep'r90,  -        -        .        - 
Lloyd  (7   Jones,   L.  R.  18  Eq.  265,         -        .        . 
Lloyd  V.  Thomas,  29  Sm.  68,       -        -        -        - 
Lock  :•.  Lynam.   4  Ir.  Ch.  188,     -        -        -        . 
Ivocke  :'.  Lewis,  124  INIass.  i,       - 
Lockwood  ti.  Ralph,  61  Cal.  155,  ... 

Loeschick  z:  Addison,  3  Rob.  331,  ... 
Logan  a.  Cragin,  27  La.  An.  352,  ... 
Logan  V.  Greeushaw,  25  Fed.  Rep'r  299,    - 

Long,  in  re,  7  N.  Bank'cy  Reg'r  227, 

Long  i'.  Seavers,  7  Out.  517,  .... 
Long  (7.  Townsend.  27  Sm.  143,  .... 
Lorah  a.  Todd,  25  Sm.  155,  .... 

Lord  .\bergavenny's  Case,  6  Rep.  79, 
Lord  r.  Proctor,  7  Phila.  630,        .... 
Lord  (7.  Schulten,  4  E.  D.  Smith  206, 

Lorenz  a.  Laughlin,  12  Wr.  275,  ... 

Loring  a.  vSmith,  2  Ohio  440,       .        -        .        . 

Lothrop  V.  Adams,  135  Mass.  469,       ... 

Loucks  a.  Averill,  6  Barb.  19,      - 

Loucks  :•.  Martin,  9  A.  Rep'r  279, 

Love  :■.  Rhyne.  86  Xo.  Car.  572,  ... 

Low  :■.  Iloluies,  2  C.  E.  Gr.  148, 

Lowrcy  a.  Ruth,  10  Neb.  260,      -         -         .         . 

Luce  V.  Snively,  4  Watts  396,       -        .        .        . 

Ludlam  a.  Buckingham,  2  Stew.  343.  E.  &  A.    - 

Luer  r.  Waydell,  3  Denio4io,     .... 

Lupton  a.  Gibson.  9  Bing  297,     .... 

Lynam  a.  Lock,  4  Irish  Ch.  188, 

xlii. 


146, 

3, 

1884. 

129, 

5, 

1862. 

169, 

2, 

10, 

3, 

1871. 

178, 

6, 

1827. 

130, 

13, 

1823. 

37, 

3,^ 

1878. 

204, 

3. 

1876. 

194. 

5, 

1875- 

«3, 

2, 

1 841. 

"7, 

I, 

1877. 

103, 

A 

1887. 

192, 

2, 

1859- 

140, 

2, 

1837. 

1  ''■ 

I, 
4, 

1853- 

39. 

2, 

1883. 

77, 

c 

1882. 

158, 

3. 

1831. 

31, 

7. 

1 881. 

135. 

4.  a 

1820. 

196, 

2, 

1884. 

173. 

II, 

1874. 

184, 

6, 

1875- 

151, 

3, 

1854. 

37, 

3,^ 

1878. 

76, 

17, 

1882. 

192, 

I, 

1865. 

79, 

a 

1875. 

112, 

II, 

1885. 

j  106, 

2,  c, 

1 107, 

3, 

1874. 

12, 

I, 

1883. 

148, 

4, 

1874. 

169, 

I, 

1874. 

103, 

2, 

1608. 

64, 

c, 

1870. 

76, 

14. 

1855- 

I  154, 

2, 
I, 

1864. 

f  126, 

I, 

i  167, 

8,  a 

1825. 

U92, 

3. 

140, 

4, 

1882. 

i  93. 
I  no, 

I, 
10, 

1849. 

146, 

2, 

1887. 

156, 

I, 

1882. 

180, 

4. 

1S64. 

76, 

I, 

1880. 

100, 

7. 

1835- 

•  165, 
1  208. 

3. 

4, 

1878. 

184, 

5. 

1846. 

J   7. 

I, 

>9. 

2, 

18^,2 

(  4). 

5, 

151, 

3. 

i8;4. 

Table  of  Cases. 

Lynch  a.  Livingston,  4  Johns.  Ch.  573,       -        -        -  i35>  4,^,1820 

Lynch  a.  Staughton,  6  Johns.  Ch.  467,        -        -        -  208,  6,       i»i5 

Lynch  v.  Thompson,  61  Miss.  354,      -        -        -        -  52,  i«^3 

Lyon  V.  Knowles,  3  B.  &  S.  556,          -        -        -        -  62,  c,  1863 

Lyon  a.  Yates,  61  N.  Y.  344. ^37,  2,       1874 


MacDowell  a.  Dean,  8  Ch.  Div.  345,  -        -        -        -         151,     6,  1877. 

Mackall  a.  Owens,  33  Md.  372,    -----           72,     2,  1670. 

Mackey  a.  Earon,  10  Out.  452,     -----          6»,     3-  i^M- 

Macmillan,  Ex  parte,  24  L.  T.  143,       -        -        -        -        207,     2,  1871. 

( 106,     5,  a, 

Mageea.  Potter,  PamphletU.  S.  C.  C.  21,            -        -     -^107,     1,  1878. 
°                                                                                               1. 108,     2, 

Maguire  a.  Duff,  107  Mass.  87, 161,     5,  1871. 

Mahagan  v.  Mead,  63  N.  H.  130,         -        -        -        -           10,   n.  1884. 

(    28,     3, 

Mahoney  a.  Devoney,  8  C.  E.  Gr.  247,        -        -        -     ^  no.     9.  1872. 

U",  15, 

Mair  z/.  Beck,  4  E.  Rep'r  855,       -----         120,     2,  1886. 
Mair  v.  Glennie,  4  M.  &  8.  240,           .        .        -        -          59.          ^-   ^^^S- 

Mallery  v.  Insurance  Co.,  51  Conn.  222,      -        -        -           25,     2,  I083. 

Mallory  z/.  Russell,   32  N.  W.  Rep'r  102,     -         -         -         112,14,  1887. 
Maltby  ..Anderson,!  4  B-^Ch^42j^;^^^.        .        ,         ,06,     2,  a, 

Mandeville  a.  Burrell,  2  How.  560,      -        -        -        -           74-4,  1844. 

Mandeville  a.  Sheehy,  6  Cranch  253,           -        -        -          93,     i,  i°iO- 

Manhattan  B.  &  Mfg.  Co.  v.  Sears,  45  N.  Y.  797,       -           51,     i,  i^^i- 

Manhattan  Ins.   Co.  v.  Webster,  9  Sm.  227,         -        -         103,   10,  1868. 

Manufg.  &  Mer.  Co.  of  Sandusky  zv.  Schooly,  Tappan  233,    76,     7,  1818. 

Manville  z'.  Parks,  7  Col.  128,      -----          5i,     2,  1883. 

Markham  a.  Tellyett,57Geo.  II,        -         -        -        -           32,     i,  187b. 

Marklea.   Pardee,  17W.  N.  C.  211,     -        -        -         -         151,     i,  1886. 

Marmaduke  a.   Cothran,  60  Texas  370,         -        -        -    ,       59,     3,  1053. 

Marsh  v.  Davis,   33  Rand.  326,     -----           10,     7,  16^5. 

Marsh  z/.  Russell,  66  N.  Y.  288,            -        -        -        -         211,     2,  1876. 
Marshall  z/.  Lambeth,  7  Rob.,  La.  47,          -        -        -          37,     3,  «-  iM4. 

Marquand  a.  Jaques,  6  Cowen  497,       -        -        -        -          4o,     3,  i82b. 

Martin  a.  Brooks,  2  Wall.  70.       -         -         -         -         "         211,     3,  1874. 

Martin  a.  Loucks,   9  Atl.  Rep'r  279,     -         -         -         -         146,     2,  1887. 

Marx  a.  Miller,  65  Texas  131, 58,         ^-  i-^5- 

Mason  z;.  Eldred,   6  Wall.  231,     -----           82,     3,  1679. 

Mason  v.  Partridge,  66  N.  Y.  633,        -        -        -        -         i34,     5,  1876. 

(  419,        -        -          89,     I,  TQ97 

Mateer  a.  Commonwealth,  16  S.  &R.  I ^jg'        .        .         j^^^     8,  '' 

Matherson  v.  Wilkinson,  8  Atl.  Rep'r  84,  -        -        -         130,     i,  b,  1887. 

Matthews  a.  Hubbard,  54  N.  Y.  43,    "         "         "         "         \73,     3,  i»73- 

Matthewsa.  McStea,  50N.  Y.  166      -        -        -        -           i/,     3,  ^^z/- 

Matthews  a.  Oliphant,   16  Barb.  608,  -        -        -        -           76,  20,  ibo3. 

Matthews  a.  Wilcox,  44  Mich.  192,      -        -        -         -          57,     4,  lo^o. 

J    1 10,        O,  tRAo 

Mattock  z/.  James,  2  Beas.  126,    -----     |ii2,  9,11, 

Maugham  a.  Kavser,  8  Col.  232,           -        -        -        -           5i,     2,  1885. 

Mauneyz^  Coit,'86N.  C.  463, 52,  8b2. 

May  a.  Adams,  27  Fed.  R.  907,^  -   ^-         "         '         "           76,     i,  886. 

Mayberry  v.  Willoughby,  5  Neb.  368,          -        -        -        i7»,     7.  i»77- 

xliii. 


Taulk  of  Cases. 


Mavod.  Harker,  129  Mass.  517,   -         -         -         - 

Mavou,  Kx  i)arle,  4  DeG.  J.  &;  S.  664, 

McAvov  i:  Wright,  137  Mass.  206,      - 

McIUiriiev  n.  Cox,  2  Saiulf.  561, 

McChesu'ey  <i.  City  Rank  of  Brooklyn,  20  N.  Y.  240, 

McClure  a.  Torter,  15  Wend.  187, 
McCormick's  Appeal,  5  Sm.  252, 

McCormick's  Appeal,   7  Sm.  54,  .         .         - 

McCowin  J'.  Cubbison,   22  Sm.  358,     -         -         - 

McCoy  a.  Potter,  2  Casey  458,       -         -         -         - 
McOliiy  7'.  I  'anncman,  Pen.  870, 
McCullough  r.  Guetner,   i  Binn.  214, 
McCutcheon  a.  Gardner.  4  Beavau  534, 
McDonald  a.  Smith,  i  South.  103, 
McDowell  a.  Hilton,  87  N.  C.  364, 

McKwen,  in  re,  12  Nat.  Bank'cy  Reg'r  11, 

McFall  a.  Williams,  2  S.  &  R.  281,     - 
McGovern  a.  Yoho,  42  O.  St.  11, 

McGregor  v.  Cleveland,  5  Wend.  475, 

Mclnroy  :'.  Hargrove,  16  L.  T.  509, 
Mcintosh  a.  Robinson,  3  E.  D.  Sm.  221,     - 
McKce  V.  Hank  of  Mt.  Pleasant,  7  Ohio  463, 
McKee  v.  Hamilton,  33  Ohio  St.  7,     - 
McKesson  a.  Adams,  3  Sm.  81,   - 
McKinnev  v.  Brights,  4  Har.  399,        ... 
McKnigh't  :■.  Ratcliff,  8  \Vr.  156, 

McKnight  a.  Robbins,  i  Hal.  Ch.  645,  E.  &  A. 

McLaughlin  a.  Howard,  2  Out.  440,    ... 
McLean  a.  Hobbs,  117  U.  S.  567, 
McLean,  in  re,  15  Nat.  Bank'cy  Reg'r  341, 
McLcod  a.  Napier,  9  Wend  120,  ... 

McLewee  a.  Hall,  103  N.  Y.  639,  ... 

M<-Mahon  :■.  O'Donnel,  5  C.  E.  Gr.  306,     - 

McManus  a.  Tracy,  58  N.  Y.  257,         ... 

>L'-Naira.  Cumpston,  i  Wend.  457,     ... 

McNaughten  v.  Partridge,  1 1  Ohio  223, 

McNaughton's  Appeal,  [  ^^  ^^\^-  5"^°'       - 

^  *^'       '  I   5  Out.  550, 

MrStca  V.  Matthews,  50  N.  Y.  166,      - 
Meail  (/.  ^L'^hagan,  63  N.  H.  130, 
Mcars  a.  Helsby,  5  B.  &  C.  504,  .... 

Meason  :■.  Kaine,  13  Sm.  335,      .... 

Mechanics'  Bank  v.  Goodwin,  i  Hal.  Ch.  334,  - 
Mecutchen  v.  Kennady,  3  Dutch  230, 

Medera  a.  Sheridan,  2  Stock.  469,  E.  &  A. 


165 

107 

47 
112 

177 

I  44 
f  106 

\  163 
(.202 

(  ID 
1113 

fi78 
1183 

135 
76, 

119 

151 

76 

121 

/  105 

1193 

81 

84 

I    44 

I    76, 

49 

207 

117 

124 

12 

168 

142 

I   67 

192 

36: 

201 

i87: 

64: 

60, 

r  48 
I  67 

I     7 

I    54 

135 

19 

T7 

10 

144 

I  '° 
(  121 

112 

126 

/  57 
I    66 


4, 

5, 
I, 

8, 
3, 
2, 

4, 

7,b, 

2, 

I, 

8, 

I,  e, 

4, 
I, 
2, 


4, 
5, 
4. 
3- 
I, 
2, 
2, 
6, 
24. 
2, 
I, 
4, 
3, 


I, 

9, 

2,  c. 


I, 
I, 
2, 
I, 

3>  c, 
13. 
4, 
I, 

I.  <^, 
4, 

3, 
II, 

2, 

6, 

I, 
12, 

6, 

4, 

4, 


xliv. 


^93. 

2, 

18,58 

59, 

3. 

1886 

I30, 

7. 

1869 

1 09, 

7, 

1872 

131, 

I, 

1887 

103, 

4, 

106, 

T,  ^ 

107. 

4, 

1^73 

Table  of  Cases. 

Meech  v.  Allen,  17  N.  Y.  300,  -  .  .  .  . 
Meehan  v.  Valentine,  29  Fed.  Rep'r  276,  -  -  . 
Meigs  a.  Billings,  53  Barb.  272,  .         -        -        -        - 

Meily  t/.  Wood,  21  Sm.  488, 

Meyer  a.  Elgin  Watch  Co.,  30  Fed.  Rep'r  659,  - 

Menagh  v.  Whitwell,  52  N.  Y.  146,     -        -        -        -      J 

L  167,  7-  a, 

Meng  a.  Pleasants,  I  Dall.  380,     -        -        -        -         --  132,  3,       1788. 

Meranda  a.  Rogers,  7  O.  St.  179,          ....  197^  3^       1857. 

Merrick  v.  Gordon,  20  N.  Y.  93,           -        -        -        -  62,  e,  1859. 

Merrill  v.  Green,  55  N.  Y.  270,    -----  148,  3,        1873. 

Merritt  v.  Walsh,  5  Tiffany  685,           .        -        .        .  67,  3,       1865. 

Mershon  v.  Hobensack,  2  Zab.  372,     -        -        -        -  69,  10,       1850. 

Merwin  v.  Playford,  3  Rob.  702,           -        .        .        .  59,  >&,  1865. 

Metropolis  Nat.  Bank  v.  Sprague,  5  C.  E.  Gr.  13,       -  194,  4,       1869. 

Meyer  v.  Sharpe,  5  Taunt.  74,      -        -         -         -         -  27,  4,        1813. 

Meyer  a.  Styles,   7  Lans.  190,       -----  69,  9,       1872. 

Meylert  a.  Evans,   7  Harris  402,  -----  119,  b,  1862. 

Mifflin  V.  Smith,  17  S.  &  R.  165,          .        .        -        -  76,  18,       1827. 

Miles  a.  Strong,  45  Conn.  52, 167,  5,  d.  1877. 

Miles  V.  Wenn,  27  Minn.  56, 91,  2,       1880. 

Miller  v.  Brigham,  50  Cal.  615,   -----     |  ^°3,  5,        ^^^^ 

Miller  v.  Consolidation  Bank,  12  Wr.  514,           -         -  127,  5,       1865. 

Miller  a.  Dungau,  4  C.  E.  Gr.  219,       -        -        -        .  130,  7,  b,  1868. 

Miller  a.  Gale,  54  N.  Y.  536, 171,  4,       1874. 

Miller  a-  Jackson,  i  Dutch.  90,    -        -        -        -        -  138,  2,       1855. 

Miller  a.  Johnson,   16  Ohio  431,  -----  67,  11,       1847. 

Miller  z'.  Marx,  65  Texas  131, 58,  ^,1885. 

Miller  v.  Reed,  3  Casey  244,         -        -        -        -        -     j    ^3,  6,       ^g^^ 

Miller  v.  Sims,  2  Hill  479,    ------  136,  i,       1834. 

Millers  a.  Wynne,  61  Geo.  345,  -----  103,  12,       1878. 

Millett  V.  Stringer,  17  Abb.  Pr.  152,    -         -         -         -  41,  2,       1858. 

Mills  a.  Clarke,    13  P.  Rep'r  569,           .         -         -         _  158,  4,        1887. 

Mills  a.  Cummings,  i  Daly  520,  -----  61,  3,       1866. 

Mitchell  a.  Palmer,  2  Mylne  &  K.  655,        -         -         -  43,  i_        1834. 

Mitchell  a.  Rammelsberger,  29  O.  St.  22,  -        -        -  212,  i,       1875. 

Mittnight  v.  Smith,  2  C.  E.  Gr.  259,  -         -        -        .  106,  5,  c,  1865. 

Mize  a.  Westbrook,  10  P.  Rep'r  881,    -        -        -        -  47,  i,       1886. 

Mohawk  &  H.  R.  R.  v.  Niles,  3  Hill  162,    -        -        -  62,  e,  1842. 

Moies  V.  O'Neill,  8  C.  E.  Gr.  207,        -         -        -         .  180,  i,       1873. 

Moist's  Appeal,  24  Sm.  166,           -----  88,  3,        1873. 

Moley  V.  Brine,  120  Mass.  324,     -         -         -         -  31,6,       1876. 

MoUwo  V.  Court  of  Wards,  L.  R.  4  P.  C.  419,     -  64,  b,   1872. 

iio6,  I,  c, 

107,  4,        1850. 

194,  3. 

Monteith  a.  Bank,  i  Denio  402,  -----  44,  s,        1845. 

Moore  v.  Davis,  11  Ch.  D.  261, 45,  1879. 

Moore  v.  Gano,  12  Ohio  300, 158,  2,       1843. 

Moore  v.  Hepburn,  5  Barr  399, ^3'  1  i'       ^847. 


xlv. 


Table  of  Cases. 


Moore  r.  Huntingdon,  7  Hun  425, 

Moore  <z.  Sloan,  i  Wright  217,     - 

Mooreheatl  r.  Ciilmorc,  27801.  118,     - 

Moore's  Appeal,  10  Cssey  41 1,      - 

More  (/.  Holleniback,  44  N.  V.  Sup'r  Ct.  107, 

Morvj.iii  <i.   Alexaniler,  31  O.St.  546,     - 

M.)r..^.iii  :'.  Schuyler,  79  X.  Y.  490, 

Mori^aiislL-rn  v.   Thritt,  66  Cal.  577, 

.M  iriartv  :■■   Hailcy,  46  Conn.  592, 

Morrelli/.   Ran.lc'll,  2  C.  E.  Gr.  343,    - 

Morrell  <:.   Ryan,   21  Reporter,  Ky.,  273,     - 

Morris  :•.  Allen,  i  IMcCart.  Ch.  44, 

Morris  a.   Cuininings,    25  N.  Y.  625,    - 

Morris  a.  Davis,  36  N.  Y.  569,      - 

M  irriset  V.  King,  2  Bur.  891,        -        -        - 

Morrison  ::  Atwei',  9  Bosw.  503, 

M^rri-son  a.  Sweet,  7  E.  Rtp'r389, 

Morse  a.   Page,    1 28  Mass.  99,       -         -        - 

Morse  :-.  Wilson,  4  Term.  353,     - 

Mortimer  a.  Noble,  4  W.  N.  C.  300,   - 

Morton  a.  Pulford,  28  N.  W.  R.  716,  - 

Moses  V.  Halfield,  3  S.  E.  Rep'r  538, 

Mosgrove  v.  (jolden,  5  Out.  605, 

Muilgett  a.  Bank  of  Commonwealth,  44  N.  Y. 

Muir  V.  City  of  Glasgow  Bank,  4  H.  L.  337, 

Muir  a    Parkhurst   ■'  ^  ^'''^-  ^^-  3°7.   " 
Muir  a.  Farkliurst,  ^^  ,  ^^^  ^.^   ^^^_    _ 


514, 


Muir  a.  Tellers,  Pen.  749,     - 
Mulock  a.  Smith,  i  Rob.  569, 
Mumford  :•.  Nicholl,   20  Johns   611,     - 

Munro  a.  Whitman,   8  Hun  553, 

Munson  a.  Eord,  i  South.  93, 
Munster  v.  Cox,    10  App.  Cas.  680, 
Murdock  a.  Frazer,  6  H.  L.  855, 
Murphy  rt.  Tait,   2  S.  Rep'r  317, 

Murray  ;■.  Bogert,   14  Johns.  318, 

Murrave-.  Elston,{^C.E.  Gr.  127,    - 

I  9  C.  E.  Gr.  310,  589, 
Murray  a.  Fisher,   i  E   D.  Sm.  341,     - 

Murray  a.  Harris,  28  N.  Y.  574,  - 

Murray,  in  re,  13  Fed.  Rep'r  550, 
Murray  a.  Watson,  8  C.  E.  Gr.  257,     - 
Murrell  v.  Murrell,  33  La.  1233, 
Mutrie  (/.  Binncy,    12  .\ppeal  Cases  186, 
Muz/.ey  <i.  I'.rundred,  i  Dutch.  268, 
Mu/./.y  r'.  Whitney,  10  Johns.  226, 
Mvcrs  a.  Avery.  60  Miss.  368, 
Myers  i:  Nell.  4  W.  N.  229. 
Mvers  7'.  Smith,  29  Ohio  St.  120, 
Mvler  a.  Smith,  in  Harris  36, 
Myley  a.  Bank  of  Lancaster,  i  Harris  544, 


67, 

II, 

876. 

f  114. 

I, 

131, 

I,"   1 

860. 

ii73. 

4, 

127, 

7, 

[874. 

88, 

3, 

1859- 

41, 

2, 

[878, 

138, 

3, 

877. 

209, 

I,  a, 

1879. 

47, 

3, 

885. 

167, 

5,  a, 

879. 

173. 

10, 

86b. 

40, 

4.   ] 

885. 

165, 

4, 

[861. 

156, 

5, 

[862. 

77, 

e, 

883. 

66, 

I, 

^759- 

170, 

2, 

1862. 

206, 

2, 

[886. 

136, 

4,  ^, 

[880. 

66, 

5,   1 

791. 

121, 

10, 

[877. 

10, 

5, 

[886. 

117, 

I, 

[887. 

76, 

3,   ] 

8S2. 

126, 

4, 

871. 

73, 

2, 

1879- 

180, 

2, 

[848. 
[849- 

121, 

4, 

[811. 

178, 

4, 

1863. 

67, 

I, 

1822. 

/  32, 
I  57, 

2, 
4, 

1876. 

76, 

5, 

1818. 

77, 

3, 

1885. 

74, 

8, 

1 881. 

100, 

b, 

[887. 

/171, 
I  206, 

2, 
2, 

1817. 

(212, 
1215, 

8, 

1872. 

3, 

1873- 

131, 

3, 

1850. 

1  37, 
1 104, 

7- 

1864. 

69, 

22, 

[8S2. 

211, 

2. 

[872. 

112, 

2, 

[88r. 

31. 

2, 

1886. 

59. 

/,A 

1855- 

59, 

d, 

[81-5, 

75, 

2, 

[882. 

94. 

2, 

[877. 

216, 

2, 

876. 

130, 

I,  9, 

[853- 

109, 

7, 

[850. 

xlvi. 


Table  of  Cases. 

Nanson  r.  Gordon,  L.  R.  i  App.  Cas.  195, 
Napier  z/.  McLeod,  9  Wend.  120, 
Nash  a.  Nixon,  12  O.  St.  647,       .        -        -        - 
National  Bank  of  Salem  .'.  Thomas,  47  N.  Y.  15, 


Neff,  in  re,  19  Q.  B.  D.  88,    - 

Negley  a.  Ihmsen,  i  Casey  297,  -        -        -        - 
Nell  a.  Myers,  4  \V.  N.  229,  ...        - 

Nelson  a.  Tomlinson,  49  Wis.  679,  ... 
Nesham  a.  Barry,  3  C.  B.  641,  .... 
Newberry  a.  Cheney,  67  Cal.  126, 
Newbold  v.  Wright,  4  Rawle  205,  ... 
Newcomet  v.  Brotzman,  19  Sm.  185,  -  -  . 
Newkirk  a.  Davis,  5  Denio  92,     - 

Newman  a.  Bell,  5  S.  &  R.  78,     - 

Newman  v.  Richardson,  9  Fed.  Rep'r  865, 
Newsome  v.  Coles,  2  Camp.  617, 
New  York  &  H.  R.  R.  a.  Straiton,  2  E.  D.  Sm.  \i 
New  York  Mut.  Life  a.  Cohen,  50  N.  Y.  611, 
Nicholl  a.  Mumford,  20  Johns.  611,     ... 
Nichols  V.  White,   15  N.  Y.  531,  - 
Nicholson  v.  Leavitt,  4  Sandf.  252,      .         .         - 
Niles  (7.  Mohawk  &  H.  R.  R.,  3  Hill  162,    - 
Nisbet  V.  Patton,  4  Rawle  120,     -        -        .        - 
Nixon  V.  Nash,  12  O.  St.  647^        .        _        .        . 
Noakes   v.  Barlow,  20  W.  R.  388;  26  L.  T.  136, 
Noakes  v.  Smith,   i  Yeates  238,  -        -        -        - 
Noble  V.  Mortimer,  4  W.  N.  C.  300,    - 
Noland  v.  Oblius,  13  Petersdorf  106 ;  i  Stark  272, 
Norcross  a.  Brewer,   2  C.  E.  Gr.  219,    .        -        - 
Norris  a.  Bank,  43  L.  I.  56,  .... 

North  V.  Bloss,  30  N.  Y.  374,        .         -         -         - 
Noyes  a.  Denton,  6  Johns.  295,    -        .        .        - 


Oblius  a. Noland,  13  Petersdorf  106;  i  Stark  272, 
O'Donnell  a.  McMahon,  5  C.  E  Gr.  306.     - 
Ogden  V.  Astor,  4  Sandf.  311,       - 

Oliphant  v.  Matthews,  16  Barb.  608,    -         -         -         . 
Oliver  v.  Forrester,  96  111.  315,     -        -        -        .        . 
Onderdonk  a.  Hutchinson,  2  Hal.  Ch.  277, 
Onderdonk  v.  Hutchinson,  2  Hal.  Ch.  632,  E.  &  A.  - 
O'Neill  a.  Moies,  8  C.  E.  Gr.  207,        .... 

Oram  v.  Rothermel,  2  Out.  300,  -         -         -         -         - 

Orr  jT.  Ferrell,  5  S.  W\  Rep'r  490,         _         -         .         . 
Orr  a.  Lee,  11  Pac.  R.  745,  ------ 

Orsee  a.  Smith,  42  N.  Y.  132,        -        ...        - 
Orser  a.  Pettee,  6  Bosw.  123, 

Osborne  v.  Barge,  29  Fed.  Rep'r  725,  -        .        -        - 
Osburii  V.  Farr,  42  Mich.  134,       . 

Otis  V.  vSill,  8  Barb,  102, 

Ouachita  Belle  a.  Wilmont,  23  La.  An.  607, 

Owen  V.  Bodv,  5  A.  &  E.  28, 

Owens  v.  Mackall,  33  Md.  372,    -         -         -         -         - 
Oxley  a.  Tucker,  5  Cranch  34>      -        ■        "        '      ^  * 

xlvii. 


204, 

I, 

1876. 

187, 

I, 

1832. 

100, 

d, 

i86j. 

128, 

3> 

1871. 

201, 

I, 
2, 

1887. 

126, 

3. 

1855- 

94, 

2, 

1877. 

156, 

3, 

1880. 

58, 

c, 

184 1. 

76, 

17, 

1885. 

4, 

I, 

1833- 

177, 

I, 

1871. 

122, 

7, 

1S47. 

105, 

I, 

108, 

7, 

1819. 

195. 

4, 

125, 

4, 

1881 

176. 

2, 

<i, 

1811 

62, 

e, 

1853 

16, 

2, 

1872 

67, 

I, 

1822 

178, 

3. 

1881 

170, 

I, 

1850 

62, 

e, 

1842 

139. 

I, 

1833 

100, 

d, 

1861 

ii> 

I, 

1872. 

112, 

15, 

1793 

121, 

10, 

1877 

62, 

/ 

1816 

214, 

2, 

1865 

68, 

2, 

1886 

76, 

12, 

1864. 

119, 

c, 

1810 

60, 

I, 

1869. 

54, 

I, 

1850. 

76. 

20, 

1853- 

173, 

I, 

1880. 

188, 

2, 

1847 

188, 

2, 

1849 

180, 

I, 

187,3. 

87, 

3, 

1881. 

132, 

I, 

1887. 

76, 

I, 

1886. 

104, 

4, 

1870. 

131. 

I, 

i860. 

131, 

4, 

1887 

76, 

8, 

1879. 

1 12, 

19, 

1849. 

122, 

5, 

1S80. 

59, 

0 

1836. 

72, 

2, 

1870. 

105, 

2, 

1809. 

Tajjlk  ok  Cases. 


TaiMork  .;.  Toi)niiig,  92  HI.  92,    - 

I'age  . .  li  vc,  2  IV  vS:  l'.  240,  .         -         -         - 

I'a^t.-  :■•  Morse,  12S  Mass.  99,        -         -         -         - 

r.i-L-  :•.  Thomas,  43  O.  >St.  38,      - 

Vm-a^  :■■  I'aig*--.  32  N.  W.  Rcp'r  360,     - 

ralimr  :•.  Mitchell,  2  Mylne  &  K.  655, 

raliiKT  .-■.  Tunly,  83  N.  V.  144,    -         -         -         - 

Palmer  r.  Stephens,    iDeuio47i, 

I'anU-e  .-.  Markle,    17  W.  N.  C.  211,     - 

Parke  :■.  Smith,  4  W.  6t  S.  290,    -        -         -        - 

Parker  (/.  Harker,  i  T.  R.  287,      -         -         -         - 

Parker  z:  Canfield,  37  Conn.  251, 

Parker,  in  re.  19  Q.  H.  I).  84,         .         -         -         - 

,,•13  Hal.  Ch.  307,  - 
Parkhursti'.  Mmr.^^jj^l    ^.j^    555.  -         "         " 

Parkins  <i.  Ross,  L.  R.  20  Eq.  331, 

Parks  a.  Manville,  7  Cal.  128,      -         -         -         - 

Parmalee  r.  Wiggenhorn,  6  Neb.  322, 

Parsons  :•.  Crosby,   5  Esp.  199,     - 

Parsons  :•.  Hayward,  4  DeG.  F.  &  J.  474,    - 

Partridge  a.  Mason,  66  N.  Y.  633, 

Partridge  a.  McXaughten,  II  Ohio  223, 

Partridge  z'.  Wells,  3  Stew.  176,  - 

Paschal  a.  vSlade,  67  Geo.  541,      -        -        -        - 

Patterson  v.  Arnold,  9  Wr.  410,  -         -         -         - 

Patterson  v.  Brewster,  4  Edw.  Ch.  352, 

Patterson  v.  Burton,   Pen.  717,     .         -         -         - 

Pattison  v.  Blanchard,  5  N.  Y.  186,     - 

Patton  a.  Ileustis,  2  Dutch.  293, 

Patton  «.  Nisbet,  4  Rawle  120,     -         -         -         - 

Pant/,  a.  Ganger,  45  Wis.  449,       -         -         -         - 

Payne  Z'.  Freer,  91  N.  Y.  43i         -         -         -         - 

Peabody  a.  Harris,  73  Me.  262,     -         -         -         - 

Peacock  z'.  Cuinmings,  10  Wr.  434,      - 

Pearce  a.  Renfrew,  68  111.  125,     -         -         -         - 

Pearcc  a.  Strulhers,  51  N.  Y.  359,  365, 

Pearce  fl.  Wilkins,  5  Denio  541,    -         -         -         - 

Pease  v.  Cole,  53  Conn.  53,  .... 

Peck  !•.  Leavitt,  2  Conn.  124,       - 

Peck  a.  Sayre,    i  Barb.  464,  .... 

Pell  a.  Bloxam,  2  Wni.  Bl.  999,    -         -         -         - 

Peltier  :•.  Sewall,  12  Wend.  386,  .... 

Penn  i'.  Whitehead,  17  Gratt.  503,        -,      . 

Penu'a  R.  R.  Co.  r.  St.  Louis,  A.  &  T.  R.  R,  118U.  S.  290, 

Penrhyn  vSlate  Co.  a.  Cook,  36  O.  St.  135,  - 

Pennrick  a.  Thomas,  28  O.  St.  55,        -        -        - 

Pepple  a.  Roberts,  55  Mich.  367, 

Perceval  a.  Fuller,  126  Mass.  381, 

Percy  a.  Fairland,  3  P.  &  M.  217, 

Perry  a.  Smith,  5  Dutch.  74,         ...         . 

Perkenpine  a.  Elton,  i  E.  Rep'r  637, 

Perkins  f.  I-isher,  80  Ky.  11, 

Perrine  a.  Cowart,  3  C.  E.  Gr.  457, 

Perrine  t'.  Hankinson,  6  Hal.  181,        ... 

(  28 
Perring  v.  Hone,  4  Bing.  -'.      '       " 

xlviii. 


20, 

3' 

1879. 

103, 

11, 

1800. 

136, 

4,  ^, 

1880. 

III, 

10, 

1885. 

112, 

14, 

1887. 

43. 

I, 

1834- 

149. 

3. 

1880. 

131. 

3.  «. 

1845. 

151, 

I, 

1886. 

"7, 

a 

1842. 

71. 

I, 

1786. 

60, 

2, 

1870. 

47. 

3. 

1887. 

180, 

2, 

1848. 
1849. 

59. 

c, 

1875- 

51. 

2, 

1883. 

144, 

I, 

1877. 

48, 

2, 

1805. 

207, 

3. 

1862. 

134, 

5, 

1876. 

135, 

I,  a 

1842. 

no. 

2, 

1878. 

69, 

16, 

1881. 

24, 

4, 

1863. 

8, 

I, 

1844. 

155. 

1, 

1810. 

62, 

e, 

1851. 

12, 

I, 

1857- 

139. 

I, 

1833- 

96, 

2, 

1878. 

165, 

2, 

1883. 

193. 

I, 

1881. 

152, 

2, 

1864. 

197, 

2, 

1878. 

212, 

9. 

1873- 

^33, 

I, 

1848. 

14, 

I, 

1885. 

152, 

I, 

1819. 

215, 

3. 

1847. 

66, 

2, 

1775- 

67. 

9. 

1834. 

138, 

4, 

1867. 

,  24, 

7, 

1886. 

176, 

2,  a 

1880. 

167, 

4,d 

,  1878. 

91. 

2, 

1884. 

125, 

6, 

1879. 

f  74, 
L141, 

II, 
I, 

1875- 

27. 

2, 

i860. 

150, 

2, 

1855- 

164, 

I, 

1882. 

213. 

I, 

1867. 

12, 

I, 

1829. 

153. 
160, 

2, 
I, 

1826. 

Table  of  Cases. 


Perry  a.  Bardwell,  19  Vt.  292, 

Perry  a.  Roach,  16  111.  37,    - 

Peters  a.  Cox,  2  Beas.  39,     -        -        -        - 

„    ...         (8  Nor.  163, 
Peterson  a.  Guillou,  |  ^^  j^^^  ^^^   ^ ^2,       - 

Peterson  v.  Roach,  32  Ohio  St.  374,     - 
Petit  V.  Chevalier,  2  Beas.  181,     - 
Petry's  Appeal,  11  W.  N.  512,      - 
Pettee  v.  Orser,  6  Bosw.  123, 
Pettingill  v.  Jones,  28  Kan.  749, 
Phelan  a.  Collender,  79  N.  Y.  366, 
Phelps  a.  Fillev,  18  Conn.  294,    - 
Phillips  a.  Hutzler,   i  S.  E.  Rep'r  502, 
Phillips  V.  Reeder,  3  C.  E.  Gr.  95, 
Pilcher,  Succession  of,  i  S.  Rep'r,  La.,  929, 
Pilgrem  v.  Pilgrem,  18  Ch.  D,  93, 
Pilley  V.  Robinson,  20  Q.  B.  D.  155,    - 
Pittard  a.  Bond,  3  M.  &  W.  357, 

Place  V.  Sweetzer,  10  Ohio  142,    - 


Playford  a.  Merwin,  3  Rob.  702, 
Pleasants  v.  Meng,  i  Dall.  380,     - 
Plumer  v.  Gregory,  L.  R.  18  Eq.  621, 
Plunkett  V.  Dillon,  4  Houston  338,      - 
Pole  V.  Leask,  9  Jurist,  N.  S.,  829, 
Pollard  a.  Anderson,  62  Geo.  46, 
Pollion  V.  Secor,  61  N.  Y.  456,     - 
Pond  V.  Cummins,  50  Conn. ^372, 

Pooley  V.  Driver,  5  Ch.  D.  458,     - 

Pope  a.  Aldersou,  i  Camp.  404,  n. 
Pope  V.  Cole,  55  N.  Y.  124, 
Pope  a.  James,  19  N.  Y.  324, 
Poppenhauser  a.  Riper,  43  N.  Y.  68,   - 
Poppenhusen  a.  Richter,  39  How.  Pr.  82, 
Porter  a.  Critchfield,   3  Ohio  519, 

Porter  v.  McClure,  15  Wend,  187, 

Porter  a.  Whitman,  107  Mass.  522, 
Porteus  a.  Benjamin,  2  H.  Bl.  590, 
Pott  V.  Evton,  3  C.  B.  32,     - 


Potter  V.  Magee,  Pamphlet  U.  S.  C.  C.  21,  - 

Potter  V.  McCoy,   2  Casey  458, 

Potter  a.  Northern  Insurance  Co.,  63  Cal.  157,  - 

Powers  a.  Purdy,  6  Barr.  492,        - 

Prentice  v.  ElUott,  72  Geo.  154, 

Presby  a.  Dunham,  120  Mass.  285,       -        -        -        - 

Price  V.  Groom,  2  Exch.  542,        -        -         -        -        - 

f  7  Phila.  179, 

Price  z/.  Spencer,  I  ^^  j^   J   .6_     -        -        -        -        - 

Prichard  a.  Cooper,   75  L.  T.  91,           -  -        -        - 

Princeton  &  K.  Turnpike  Co.  v.  Gulick,  i  Harr.  161, 

Pringle  v.  Leverick,  97  N.  Y.  181,       -  -        -         - 

Prodler  a.  Lord,  7  Phila.  630,       -        -  -        -        - 

xlix. 


f  108, 

6,    c 

1 195, 

2    1847. 

36, 

6',   1854. 

180, 

I,   i860. 

41, 

I,   1879. 

139, 

5,   1874. 

128, 

I,   1877- 

173. 

7,  a,   i860. 

184, 

I,   1882. 

131, 

I,   i860. 

158, 

3,   1882. 

210, 

3,   1879. 

147, 

3,   1847. 

108, 

5,   1887. 

212, 

6,   1866. 

103, 

c,   1887. 

74. 

9,   1881. 

77, 

3,   1887. 

48. 

3,  ^  1838. 

(  100, 
\  103, 

/..847. 

59. 

k,     1865. 

132, 

3,   1788. 

140, 

I,   1874. 

57, 

4,   1875. 

69, 

9,   1863. 

86, 

6,   1878. 

69, 

I,   1875. 

59, 

b,   1882. 

1  50, 

I  64, 

3'   1876. 

'34, 

3',   181 1. 

86, 

5,   1873. 

.76, 

I,   1859. 

37, 

3,  g,  1870. 

72, 

2,   1870. 

119, 

a,  1828. 

1   7, 

^'   1836. 

I  44, 

4, 

31, 

5,   1871. 

63, 

2,   1796. 

63- 

I,   1846. 

f  106, 

5,d, 

\   107, 

I,   1878. 

(108, 

2, 

135, 

2.   1856. 

90, 

3,   1883. 

167, 

4,  <-h   1847- 

213, 

2,   1883. 

211, 

2,   1876. 

59, 

11,   1848. 

1870. 

161, 

^'   1873. 

140, 

3,   1883 

177. 

4,   183/. 

146, 

3,   1884. 

64, 

c,   1870. 

Tahkk  of  Cases. 

I"^osser  ::  Hartley,  29  N.  \V.  Rep"r  156,     - 
rrmilv  :■.  vSwifl,  51  N.  Y.  594,      - 
I'mvii  :■•  Black,  21  N.  Y.  300, 
l'U)/h  u.  Andrews,  24  L.  J.  Ch.  5S, 
riillord  z:  Morton,  28  N.  \V.  R.  716,  - 
I'urdya.  Talnier,  83  N.  Y.  144,    - 
I'unlv  :'.  powers,  6  Barr.  492, 
I'lirvis  ii.  Haniill,   2  P.  cS:  W.  177, 
Putnam  :■.  Wise,   I  Hill  234, 


gueen  v.  Robson,   16  y.  B.  137,  - 
yiiin  I'.  Davis,  28  Sm.  15,     - 
(Juinn  (7.  vStamets,  1 1  C.  E.  Gr.  38^, 


Radenhurst  r.  Bates,   11  Moore  421  ;  3  King.  463, 
Rafferty  tf.  Todd,  3  Stew.  254,      .        -         -        - 

Raigucl's  Appeal,  30  Smith  234,  .... 

Raiguel  a.  Wentworth,  9  Phila,  275,  - 

Railroad  Co.  v.  Bixby,  55  Vt.  235,        -         -         - 

Railroad  Co.,  Pa.,  r.  Duncan,  i  Am.  352,    - 

Rali)li  V.  Lockwood,  61  Cal.  155, 

Raninielsbergcr  r.  Mitchell,  29  O.  St.  22,  - 

Ranisdale  a.  Beckett,  31  Ch.  D.  177,    - 

Randell  v.  Morrell,  2  C.  E.  Gr.  343,    .... 

Randolph  r.  Daly,  I  C.  E.  Gr.  313,      - 

Randolph  a.  Shafer,  3  Out.  250, 

Rankin  i'.  Blackwell,  3  Hal.  Ch.  152, 

Rapier  v.  Gulf  City  Paper  Co.,  64  Ala.  330, 
Rapplevea  a.  Dunham,  i  Harr.  75,       ... 
Ratcliffa.  McKnight,  8  Wr.  156, 

Rathman  a.  Bitter,  61  N.  Y.  512, 

Ratzer  v.  Ratzer,  i  Stew.  137,       .... 
Raub  V.  Smith,  28  N.  \V.  R.  676, 
Ravenscroft  a.  Heathcot,  2  Hal.  Ch.  113,  - 
Rawlinson  :■.  Clarke,  15  M.  &  W.  292, 
Raymond  a.  Harper,  3  Bosw.  29,  .        .        . 

Read  z:  Bailey,  L.  R.  3  App.  Cas.  94, 

Read  a.  Collumb,  24  N.  Y.  505,  -         -         -         . 

Reader.  Bentley,  4  Kay  &  J.  657,       ... 

Rector  (I.  Higgins,  47  Texas  361, 

Reed  a.  Fletcher,  125  Mass.  312, 

Reed  v.  Hollingshead,  8  B.  &.  C.  878, 

Reed  V.  Kremer,  1  Am.  482,  .... 

RCed  a.  Miller,  3  Casey  244,         .        .        .        . 

Reeder  a.  Phillips,  3  C.  E.  Gr.  95,       -        -        -        -      '  212,     6,       1866. 


103, 

^, 

1886. 

59. 

i, 

1873- 

94, 

c, 

i860. 

59, 

g, 

1855. 

10, 

5, 

1886. 

J  49. 

3, 

i860. 

167, 

4,  a, 

1847. 

129, 

3, 

1830. 

12, 

I, 

1841. 

16, 

I, 

1885. 

4, 

2, 

1875- 

201, 

3, 

1876. 

76, 

6, 

1826. 

212, 

7, 

1878. 
1876. 

161, 
162, 

3, 
I,  a, 

162, 

I,  a, 

1873- 

104, 

3, 

1882. 

24, 

ID, 

1886. 

76, 

17, 

1882. 

212, 

I, 

1875- 

88, 

8, 

1855- 

173, 

10, 

1866. 

105, 
193, 

2, 

3. 

1863. 

69, 

2, 

1881. 

106, 
192, 

5,  <?, 
2, 

1848. 

25, 

I, 

1877. 

157, 

3, 

1837- 

142, 

I, 

1863. 

69, 

19, 

106, 

4,  a 

1870. 

138, 

I, 

3, 

2, 

1877. 

10, 

5, 

1866. 

181, 

I, 

1847. 

59, 

h 

,  1846. 

171, 

5, 

1858. 

197, 

2, 

202, 

I, 

1877. 

.205, 

I,  2, 

4, 

109, 

6, 

1862. 

48, 

Z,b, 

1858. 

193, 

I, 

1877. 

184, 

3, 

188  r. 

52, 

1825. 

69, 

5, 

1886. 

63, 
91. 

6, 

I, 

1856. 

Table  of  Cases. 


Reeves  v.  GofF,  Pen.  609,      -         .         .         . 

Reg.  V.  Wortley,  15  Jurist  1137,  - 

Reid,  Ex  parte,  2  Rose  84,  ... 

Reid  V.  Gardiner,  65  N.  Y.  578,    - 

Reis  V.  Hellman,   25  O.  St.  180,  -        -        . 

Remel  v.  Hayes,  83  Mo.  200,        -        -        . 

Remington  a.  Edwards,  51  Wis.  336,  - 

Renfrew  v.  Pearce,   68  111.  125,     - 

Rensheimer  v.  Hemingsway,  1 1  Casey  432, 

Renton  v.  Chaplain,    i  Stock.  62, 

Reppert  v.  Colvin,   12  Wr.  248,    -        -        - 

Reuben  v.  Cohen,  48  Cal.  545,     -        -        . 

Reynolds  v.  Cleveland,  4  Cowen  282, 

Reynolds  a.  Cole,  18  N.  Y.  74,    - 

Reynolds  v.  Howell,  L.  R.  8  Q.  B.  398, 

Reynolds  a.  Stidger,  19  Ohio  351, 

Rhyne  a.  Love,  86  No.  Car.  572, 

Rianhard  v.  Hovey,   13  Ohio  300, 

Rice  V.  Shute,  5  Burr.  261 1, 

Rice  a.  Wheat,  97  N.  Y.  296,        -        .        . 

Rich  V.  Hasson,  4  Sandf.  115, 

Richards  v.  Allen,  44  Leg.  Int.  432,    - 

Richards  v.  Grinnell,  63  Iowa  44, 

Richardson  v.  Hughitt,  76  N.  Y.  55,    - 

Richardson  a.  Newman,  9  Fed.  Rep'r  865, 

Richter  v.  Poppenhusen,  39  How.  Pr.  82,  - 

Rickard  a.  Jennings,  15  Pac.  Rep'r  677, 

Ricker  v.  Am.  Loan  &  Tr.  Co.,  140  Mass.  346, 

Riegle  v.  Irwin,  34  Leg.  Int.  447, 

Riessner  a.  Rogers,  30  Fed.  Rep'r  525, 

Riley  a.  Hood,  ,3  Gr.  127,     - 


Ringo  V.  Wing,  5  S.  W.  Rep'r  787,      - 
Riper  v.  Poppenhausen,  43  N.  Y.  68, 
Rizer  v.  James,  26  Kan.  221, 
Roach  V.  Perry,  16  111.  37,  -        -        - 

Roach  a.  Peterson,  32,  O.  St.  374, 

Robbins  v.  McKnight,  i  Hal.  Ch.  645,  E.  &  A. 

Roberts  Appeal,  11  N.  407,  O.  C.  13  Phil.  36, 

Roberts  v.  Eberhardt,  i  Kay  148, 
Roberts  v.  Eldred,  15  P.  Rep'r  16, 
Roberts  i'.  Law,  4  Sandf.  642, 
Roberts  v.  Pepple,  55  Mich.  367, 
Roberts  a.  Ruppell,  4  N.  &  M.  31, 
Roberts  a.  Tench,  6  Madd.  Ch.  145,    - 
Robertson  a.  Saville,  4  Term.   720. 
Robertson  v.  Smith,  18  Johns.  459, 
Robinett's  Appeal,  12  Casey  174, 
Robins  v.  Taswell,  27  111.  365,      ... 
Robinson  v.  Ashton,  20  Eq.  25,     - 
Robinson  v.  Mcintosh,  3  E.  D.  Sm.  221, 
Robinson  a.  Pilley,  20  Q.  B.  D.  155,  . 
Robson  V.  Eaton,  i  T.  R.  62,        .        .        - 
Robson  a.  Guidan,  2  Camp.  302,  -        -        - 
Robsou  a.  Queen,  16  Q.  B.  137,    .        -        - 


158, 

59. 
198, 
214, 
166, 
69, 
96. 
197, 
104, 
181, 
178, 
168, 

II. 
161, 

"9. 
207, 

156, 

24, 
80, 

144, 
121, 

113. 

51. 
66, 

125- 
72, 

151, 
16, 

129, 

144. 

r  130, 
1 131. 
171, 
37, 
69. 
36, 
128, 

I  51. 

I  67. 

■  24, 

.135. 

15. 

112, 

210, 

91. 

50, 

211, 

19. 
84, 
42, 
25, 
28, 

207, 
77, 

119- 
69, 
16, 


I,  a, 
I, 

I,  a, 
16, 
2, 
2, 
6, 


2, 
I, 
6, 

13. 
6, 
I, 
6, 
4. 
2, 
2, 
6, 
I, 

3. 
10, 

I, 

16, 
6, 
I, 
I, 

9, 

8, 

3.  a, 
3. 
7, 
I, 

*2, 

3.  a, 
2, 
I, 
I, 

3- 
6, 


21, 

I, 


1809. 
,  1851. 
,  1814. 

1875. 
.  1874. 
1884. 
1881. 
1878. 
i860. 
1852. 
1864. 
1874. 
1825. 
1858. 

1873- 
1841. 
1882. 
1844. 
1770. 
1884. 
1850. 
1887. 
1S84. 
1879. 
1881. 
1870. 
1887. 
1885. 
1877. 
1887. 

1835. 
1887. 
1870. 
1881. 
1854. 
1877. 
1847. 

1880. 

1853- 
1887. 
1851. 
1884. 
1834. 
1819. 
1792. 
1821. 
i860. 
1862. 
1873- 
1854. 
1887. 

1785- 
1809. 

1885. 


li. 


Tablk  of  Cases. 

Rockwell  a.  Higgins,  2  Duer.  650,       - 

Rogers  a.  Diinhuni,  i  Harr.  255,  , 

Ro^t-rs  :  .  MiraiKla,  7  O.  St.  179, 
Ko^ji-is  ;■.  Riessiitr,  50  Fed.  Rep'r  525, 
RoHtrs  :.  Roj;crs.  5  Ire.  ICii.  3'.  - 
Roj^crs  <;.  Rooj),  5  Walls  193, 
Rogers  i'.  Sutlle,  19  Hra<l\VLll  163. 
Romero  ::  Dallon,   1 1  I'ac.  R.  .S63, 
R...)p  :.  Rogers,  5  Watts  193, 
Root  V.  Delaney,  99  Mass.  546,    - 
Rorbach  ti.  Vausyckle,  2  Hal.  Cb.  234, 
Rose  Z'.  Havcleii,'35  Raud.  106,    - 
Roseufield  v.  Ilaigbt,  53  Wis.  260, 

Ross  v.  Howell,  3  Nor.  129, 

Ross  ii.  Linn,  i  Harr.  55,      - 

Ross  z:  I'arkins,  L.  R.  20,  Eq.  331,      - 

Ross  I'.  West,  2  Bosw.  390,  -         -         -         - 

Rothell  V  Grimes,  35  N.  W.  392, 

Rothermel  a.  Oram,  2  Out.  300, 

Rowe  a.  I'uller,  57  N.  Y.  23.         -         -         - 

Rowland  a.  Bums,  40  Barb.  368, 

Rovce  a.  Sanborn,  132  Mass.  594, 

Ruggles  (/.  Sbamburg,  2  Nor.  148, 

Run  von  r.  Brokam,  i  Hal.  Ch.  340,     - 

Ruppell  r.  Roberts,  4  N.  &  M.  31, 

Rusher  a.  Wade,  4  Bosw.  537,     - 

Russell  i:  Austwick,  i  Sim.  Ch.  52,     - 

Ru.ssell  a.  I^Iallory,  32  N.  W.  Rep'r  102, 

Russell  a.  Marsh,  66  N.  Y.  288, 

Russell  :-.  Russell,  14  Ch.  D.  471, 

Russell  a.  Scruggs,  McCahou  39,  U.  S.  C.  C. 

Russell  :-.  Stroud,  12  W.  N.  419, 

Ruth  V.  Ivowrey,  10  Neb.  260, 

Ryan  a.  Donnally,  5  Wr.  306, 

Ryan  v.  Morrell,  21  Reporter  273,  Ky. 

Ryder  v.  Gilbert,  16  Hun  163,      -        -        - 


Sage  z.  Sherman,  2  N.  Y.  417,     -        -  -  -        • 

Sager  z:  Tupper,  38  Mich.  258,     -        -  -  - 

Salmon  v.  Davis,  4  Binn.  375,      -        -  -  - 
Salt  Lake  City  v.  HoUister,  118  U.  S.  256, 

Samuel  a.  Ganf),  14  Ohio  593,        .         .  .  .         . 

.SanlMjrn  z:  Dwintll,  135  Mass.  236,      -  -  -         . 

Sanborn  v.  Royce,  132  Mass.  594,        -  -  - 

Sands  r7.  Blaker,  29  Kan.  551,      -        -  .  - 
Sar;;eant  a.  Tibbals,  I  McCart.  449,     - 

Sarria  a.  King,  69  N.  Y.  24,          .        -  .  . 

St.  I^uis,  Alton  &T.H.  R.R.Co.aPa.  R.  R.,  118U.  vS. 

Savage,  in  re,  T6Nat  Bank'cy  Rep'r  36S,  - 

Saville  f.  Robert.son,  4  Term.  720,       -  -  - 

Sawyer  a.  Bank.  ^8  O.  S.  339,       -         .  -  . 

Sayre  z/.  Frick.  7W.  &S.  383,     -        -  -  - 

lii. 


87. 

2, 

1853- 

I  60! 

I, 
I, 

1845.  , 

197. 

3. 

1857- 

144. 

3. 

1887. 

162. 

2, 

1847. 

106, 

8,  d, 

1836. 

69- 

17. 

1885. 

12, 

I, 

1886. 

106, 

8,  d, 

1836. 

12, 

I, 

1868. 

137, 

I, 

1847. 

10, 

9. 

1886. 

52, 

1881. 

)  95. 
I  122, 

d, 
4. 

1877. 

140, 

2, 

1837- 

59- 

c, 

1875- 

117, 

3, 

1858. 

192, 

I,  a, 

18B7. 

87, 

3. 

1881. 

24, 

I, 

1874. 

69, 

18, 

1863. 

103, 

5. 

1882. 

70, 

2, 

1876. 

215. 

3. 

1846. 

50, 

3.  a 

1834. 

(140, 
1.166, 

3. 

3.  a 

1859. 

151, 

4, 

1826. 

112, 

14, 

1887. 

211, 

2, 

1876. 

215, 

2, 

1880. 

10, 

2, 

1858. 

103, 

I, 

1882. 

76, 

I, 

1880. 

38, 

I, 

1861. 

40, 

4. 

1885. 

25. 

4. 

1878. 

8, 

2, 

1849. 

44. 

2, 

1878. 

117, 

a 

,  1812. 

24, 

7, 

1886. 

124, 

4, 

1846. 

205, 

4. 

1883. 

103, 

5. 

1882. 

14, 

I, 

1883. 

182, 

I, 

1862. 

37, 

3.  a,   1877 

290,  24, 

7, 

1886. 

164, 

4, 

1878 

19, 

I, 

1792. 

19. 

3. 

1882. 

6, 

2, 

1844- 

Table  ok  Cases. 

Sayre  v.  Peck,  i  Barb.   464, 

Scarf  V.  Jardine,  7  App.  Cas.  345,         -         .         .         . 

Sceva  V.  True,  53  N.  H.  632, 

Schaeffer  z'.  P'owler,  I  Am.  451,  Pa.,  -  -  -  - 
Schenkle  z^.  Dana,  118  Mass.  237,  .  -  .  . 
Schlieper  a.  Wetter,  4  E.  D.  Smith  707,  .  -  . 
Schmertz  v.  Shreeve,  12  Sm.  457,  -  .  .  . 
Schncck  a.  Secly,  Pen.  75,  -  -        .        .         -        . 

SchooUy  c.  Mfg.  &  M.  Co.  of  Sandusky,  Tappan  233, 
Schriver  <'.  Cobeau,  4  Watts  130,         -         .         .         . 
Schulten  v.  Lord,  4  E,  D.  Smith  206, 
Schuyler  a.  Morgan,  79  N.  Y.  490,       -         -         .         . 
Schwamb  a.  Taft,  80  111.  289,        ----- 

Scoles  a.  Wood,  L.  R.  i  Ch.  369,         -        -        -        - 

Scott  T'.  Guthrie,  10  Bosw.  408,    -         -         -         -         - 
Scott  a.  Nat.  Ins.  Co.,  i  Johns.  106,     -        -        -        - 
Scruggs  V.  Russell,  McCahon  39,  U.  S.  C.  C,     - 
Scull  V.  Alter,  i    Harr.    147,  ----- 

Seabrook  a.  Stout,  3  Stew.  187, 

Sears  a.  Manhattan  Brass  &  Mfg.  Co.,  45  N.  Y.  797, 

Seavers  a.  Long,  7  Out.  517, 

Sebor  a.  Lawreuee,  2  Caines  505,  -  .  -  - 
Secor  V.  Keller,  4  Duer  414,  ----- 

Secor  a.  Polliou,   61  N.  Y.  456,     ----- 

Seely  v.  Schncck,  Pen.  75,     - 

Seelye  v.  Taylor,  32  La.  An.  11 15, 

Seguin's  Appeal,  7  Out.  139,         -         -         -         -         - 

Seibold  ^7.  Gay,  97  N.  Y.  472, 

Seighortner  v.  Weissenborn,  5  C.  E.  Gr.  172, 
Seipt  a.  Black,  7  W.  N.  565  ;  34  L.  I.  66,     - 

Semple  a.  Uhler,  5  C.  E.  Gr.  288,         -         -         -         - 

Sessler  a.  Harris,  3  S.  W.  Rep'r3i6,  -        -        -        - 

Seton  a.  Gram,   i  Hall  262,  ----- 

Sewall  a.  Peltier,    12  Wend.  386,  -         .         .         - 

Shafer  v.  Randolph,  3  Out.  250,  ----- 
Shafer's  Appeal,  10  Out.  49;  39  L.  I.  304,  - 
Shaler  v.  Trowbridge,  i  Stew.  595,       -        -        -        - 
Shamburg  v.  Ruggles,  2  Nor.  148,       -         -         -         - 

Shanks  v.  Klein,  14  Otto  18, 

Shannon  a.  Skinner,  44  Mich.  86,        -        -        -        - 
Sharp  a.  Bullen,  L.  R.  i  C.  P.  86, 
Sharp  V.  Hutchinson,  100  N.  Y.  533,  -        -         -         - 
Sharps  a.  Meyer,  5  Taunt.  74,      -         -         -         -         - 
Sheehy  i'.  Mandeville,  6  Cranch  253,  .         -         . 

Sheibley  a.  Hill,  68  Ga.  556,         ----- 

Sheldon  :-.  Wood,  2  Bosw.  267, 

Shepard  v.  Haivley,  i  Conn.  367,  -  -  -  . 
Sheppard  :'.  Boggs,  9  Neb.  257,  ----- 
Sherburne  a.  Walden,  15  Johns.  409,  -         -         -         - 

Sheridan  v.  Medera,  2  Stock  469,  E.  &.  A. 

Sherman  a.  Sage,  2  N.  Y.  417, 

Shibley  v.  Angle,  37  N.  Y.  626,  -         -       •  - 

liii. 


215, 

3- 

70, 

I, 

46, 

I, 

49, 

I, 

188, 

3, 

131, 

I, 

118, 

b, 

76, 

2, 

76, 

7, 

57. 

4, 

76, 

14, 

209, 

I,  a. 

l^^ 

3, 

[    35, 
I  208, 

I, 

I, 

170, 

3. 

49- 

6,  a, 

10, 

2, 

170, 

4, 

213, 

3- 

51, 

I, 

12, 

I, 

103, 

10, 

76, 

13, 

69, 

I, 

76, 

2, 

30, 

I, 

42, 

3, 

76, 

15- 

173, 

9, 

9, 

I, 

J  112, 
1165, 

6, 

4, 

69, 

2, 

135  { 

7,  a, 
8, 

67, 

9, 

69, 

2, 

"3, 

I,  b, 

166, 

3,  ^ 

70, 

2, 

/  106, 

7,  a, 

l  no, 

5, 

103, 

b, 

64, 

/ 

37, 

I, 

27, 

4, 

93, 

I, 

51, 

I, 

212, 

5, 

6, 

2, 

209, 

2, 

57, 

4. 

i    57, 
I   66, 

4, 

4, 

8, 

2, 

23, 

3- 

Table  of  Cases. 

Shrccvea.  Schmertz,  12  Sm.  457. 
Sbryock  <;.  Weaver,  6  S.  &  R.  262, 

Shunk  a.  BiUer,  1  \V.  &  S.  340, 

Sbule  a.  Rice,  5  Burr.  261 1,          .  .  -         - 

Sic-).;cl  V.  Cbidscy.  4  Cas.  279,       .  -  -         - 

Sill  ii.  Utis,  8  Barb.  102,        .         .  -  - 

Silvcrinan  Z'.  Cbase,    90  111.  37,     -  -  - 

Simmoiuls  u.  Wills,  8  Hun  189;  51  How.  I'r.  4^ 

Simpson  a.  Tenuey,   15  V.  Rep,r  187, 

Sims  a.  Miller,  2  Hill  479,    -         -  -  -         • 

Skaife  :'.  Jackson,  3  B.  &  C.  421, 

Skinner  :-.  Sbannon,  44  Micb.  86,  - 

Sladc  :-.  Paschal,  67  Geo.  541,      -  -  -         - 

Slemmer's  Appeal,  8  Sm.  168,     -        -         -        ■ 

Sloan  r    Moore,    i  Wrigbt  217,    - 

Slocum  i:  Fairchild,  7  Hill  292, 

Slutts  z'.  Cbafee,  48  Wis.  617,  -  -  - 

Small  a.  Wisb,  i  Camp.  329,  -  -  - 

Smalley  a.  Hill,  8  Vr.  103,  .  -  -         , 

Smarle  v.  Edsuu,  i  Lev.  30,  .  .  - 

Smith  a.  Argall,  5  Denio  435,  .  -  -         • 

Smith  V.  Aver,  13  Otto  320,  ... 

Smith  a.  Bagley,  10  N.  Y.  489,     -        -        -        . 

Smith  V.  Black,  9  S.  &  R.  142,     - 

Smith  a.  Boston  Smelting  Co.,  13  R.  I.  27, 

Smith  :■.  Burnbam,  3  Sumner  435, 

Smith  a.  Cady,  12  Neb.  628,         .        .         - 

Smith  a.  Calkins,    46  N,  Y.  614, 

Smith  a.  Craig,  15  Pac.   Rep'r  337, 

Smith  (Z.  Davis,    2  S.  Rep'r  897, 

Smith  a.  Eldridge,  144  Mass.  135, 

Smith  z'.  Felton,  43  N.  Y.  418,    - 

Smith  a.  Grace,  2  Wm.  Bl.  997, 

Smith  V.  Gregg,  9  Neb.  212, 

Smitha.  Helmore,  35  Cb.  D.  436,  449, 

Smith  V.  Hill,  45  Vt.  372,      -        -        .        . 
Smith  a.  Hodgman,  13  Barb.  302, 
Smith  V.  Howard,  20  How.  Pr.  121,    - 

Smith  V.  Jackson,  2  Ed.  Cb.  28,  - 


Smith  V.  Loring,  2  Ohio  440, 

Smith  V.  McDonald,  i  South.  103, 
Smith  a.  Mifflin,  17  S.  &  R,  165, 
Smith  a.  Mittiiight,  2  C.  E.  Gr.  259,  - 
Smith  v.  Mulock,  i  Rob.  569, 
Smith  a.  Mvers,  29  O.  St.  120,      - 
Smith  V.  Myler,  10  Harris  136,     - 

liv. 


iiS, 

b, 

1869. 

86, 

4, 

1820. 

'  95- 

(^, 

1841. 

(.  122, 

2, 

80, 

1, 

1770. 

106, 

9,  a, 

1857. 

112, 

19. 

1849. 

88, 

3- 

1878. 

59- 

m,q 

1876. 

112, 

4. 

1887. 

136- 

I, 

1834- 

167- 

3, 

1824. 

103, 

b, 

1880. 

69. 

16, 

18S1. 

1  180, 

5. 

1868. 

1209, 

3. 

(  114- 

I, 

131. 

I, 

i860. 

ii73. 

4- 

62, 

/, 

1843. 

81, 

I, 

1880. 

27- 

1, 

1808. 

173- 

8- 

1874. 

103, 

7, 

1661, 

37- 

i,g, 

1846. 

74. 

5: 

1879. 

)  174- 
l  212, 

2, 

3, 

1853. 

84. 

I, 

1822. 

64, 

2, 

1883. 

10, 

10, 

1838. 

75, 

I, 

1882. 

167, 

I,  a. 

1872. 

95, 

I 

1887. 

112, 

I, 

1887. 

130, 

15, 

1887. 

130, 

5,  b, 

1870. 

/  55, 
I  66, 

I, 

3, 

1775- 

76, 

I, 

1879. 

I104, 
I  183, 

5, 
I, 

1885. 

69, 

12, 

1850. 

59, 

3, 

1852. 

106, 

9,b, 

1859- 

f  '3, 

3- 

i  109, 

3, 

1833- 

(.112, 

16,  a, 

fl26. 

I, 

ii67. 

8,  a, 

1825. 

1 192, 

3, 

76, 

5, 

1818. 

76, 

18, 

1827 

106, 

5-  c, 

1865. 

178, 

4, 

1863. 

216, 

2, 

1876. 

130, 

I-  9, 

185.^ 

Table  of  Cases. 

Smiths.  Noakes,  i  Yeates  238,             .         -         .        .  112,  15, 

Smith  V.  Orsee,  42  N.  Y.  132,       -        .        .        .         .  104,  4, 

Smith  a.  Parke,  4  W.  &  S.  290, 117,         a, 

Smith  V.  Percy,  5  Dutch.  74,         -        -        -        -         -  27,  2, 

Smith  a.  Raub,  28  N.  W.  R.  676,          .         .        .         .  10,  5, 

Smith  a.  Robertson,  18  Johns.  459,      -         -        .         .  84,  i. 

Smith  V.  Tarlton,  2  Barb.  Ch.  336,       -         -         -         -  10,  11, 

Smith  a.  Thayer,   116  Mass.  363,           .         -         .         -  124,  5, 

Smith  V.  Walker,  57  Mich.  459,    -----  209,  i,  d, 

Smith  V.  Watson,  2  B.  &  C.  401,  -        -        -        -      \    ^l'  ^' 

Smith  V.  Wright,    i  Abb.  Pr.  243,         -         .        -         -  44,  8, 

Suider  a.  Colhoun,  6  Binney  135,          .         -         -         -  109,  7, 

Snively  a.  Luce,  4  Watts  396,       -----  100,  7, 

Snodgrass'    Appeal,  i  Harris  471,         -        -        -         -  106,  9,  a, 

Snover  a.  Blair,  5  Hal.  153, 178,  5, 

Snyder  v.  Burnett,  81  N.  Y.  550,           .        -        -        -  68,  2, 

Societe  de  I'lsere,  5  Rev.  des  Societes,         -        -        -  50,  3, 

Society  Perun  v.  Cleveland,  43  O.  St.  481,           -        -  24,  3, 

Solomon  v.  Kirkwood,  55  Mich.  256,           -        -        -  174,  i,  a, 

Somes  a.   Docker,  2  Mylne  &  K.  653,           -         -        .  43^  i^ 

So.  White  Lead  Co.  v.  Haas,  25  N.  W.  493;  33  N.  W.  657,   123,  i, 

Spalding  a.   Bowman,  2  S.  W.  Rep'r  911,    -        -         -  145,  i, 

Sparhawk  v.   Drexel,   i  W.  N.  560,        -         -         -         -  164,  3, 

Sparmau  v.  Keim,  83  N.  Y.  245,           -         .         -         .  136,  4,  a, 

Sparrow  v.  Kohn,    3  E.  R,  293,     -----  76,  16, 

Speerz;.  Bishop,  24  O.  St.  598,      -----  70,  2, 

Spencer  a.  Ballou,  4  Cowen  163,           -        -        -        -  8,  i, 

Spencer  a.  Price,  {7  Pbila   179,  -        -        -        .        -  ^^              . 

^  '  1,40  L.  I.  76, I 

Sponeberger  a.  Feigley,  5  W.  &  S.  564,       -        -         -  152,  i, 

Sprague  a.  Hoyt,   103  LT.  S.  613,            -        -        -        -  106,  5,  /, 

Sprague  a.  Metropolis  Nat.  Bank,  5  C.  E.  Gr.  13,        -  194,  4, 

Sprague  a.  Staples,  75  Me.  458,    -----  52, 

Staats  V.  Bristow,   73  N.  Y.  264, 103,  3, 

Stambaugh  a.  Ag.  &  Manuf 's  Bank,  13  S.  &  R.  299,  106,  8,  d, 

Stamets  v.  Quinn,   11  C.  E.  Gr.  383,     -        -         -        -  201,  3, 

Stanbridge  v.  Catanach,  2  Nor.  368,    -         -         -         -  121,  9, 

Stanford  a.    Sweeney,  67  Cal.  635,         -         -         -         -  76,  17, 

Stanton  v.   Westover,   loi  N.  Y.  265,    -        -        -        -  178,  5, 

Staples  V.   Sprague,    75  Me.  458,    -----  52, 

Stapp  a.  Strong,  15  Pac.  835,        .         .        -         -        -  208,  2, 

Stauffer  a.   Doner,   i  Pa.  203, 102,  i,  2, 

Staughton  v.  Lynch,  6  Johns.  Ch.  467,         -        -         -  208,  6, 

Stear  a.  Johnson,   109  Engl.  Com.  L.  Rep.  N.  S.,  3  41,  n.     47,  3,  b, 

Stearns  a.  Dana,   3  Cush.  372, 137,  4, 

Steel  a.   Bogue,    i  Ph.  Rep.  90,     -        -        -        -         -  104,  10, 

Steel  V.  Frick,  6  Sm.  172, 12,  1, 

Steele  a.  Campbell,  i  Jones  394,           ...        -  84,  3, 

Steinbeisser  a.  Hoffman,  11  W.  N.    383  (C.  P.  4)         -  190,  i, 

Steinman  a.  Latshaw,   11  S.  &  R.  357,         -        -         -      >    ?!'        !!' 

t    95>         "> 

Stellwagen  a.  Graser,  25  N.  Y.  315,     -         -         -         -  114,  2, 

Stephens  a.  Palmer,  i  Denio  471,         -         -        -         -  131,  3,  a, 

Sterrett  a.  Brewster,  8  Casey  115,         .         .         .         .      \         '       ' 

Stevens  a.  Day,  88  N.  C.  79, 12,  i, 


Table  of  Cases. 


Stocker  v.  Brockelbank, 


b>ii:vin>-  i:  (.■ainesville  Nat.  Bank,  62  Texas  499, 

Stewart  ::  Abrauis,  7  Watts  448, 

Stfwart  a.  Casstls,  6  App.  Cas.  64,       - 
Stewart  :-.  Coultc-r,  12  S.  &  R.  252,      - 
Stiil.Ljcr  :.  Reynolds,  190111035:, 
Still-mill  ii.  Caltlwcll,  i  Rawle  212,      - 
Stiles  :■.  :\Iev<.r.  7  Lans.  190,         .        .        .        - 
Stilltuaa  v.  Harvey,   47  Conn.  26,         -        -        - 
I    3  McN.  &  G.  250,      - 
(  15  Jurist  591, 
Stone  a.  (ribson,  43  Barb.  285,     -        -        -        - 
Stoner  i'.  Stroiiiaii,  9  W.  &  S.  85,         -        .        . 
Stout  :'.  Scabrook,  3  Stew    187,    -        -        -        - 
Straiton  v.  N.  Y.  &  N.  H.  R.  R.,  2  E.  D.  Sm.  18 
Strang  f.  Bradner,   114  U.  S.  555, 

Straus  a.  Johnson,  26  Fed.  Rep'r  57,   - 

Strin,.;^!-  it.  Millett,  17  Abb.  Pr.  152 
Slroinan  a.  Stoner,  9  W.  &  S.  85,   - 
Slron<^  z:  Stapp,    15  Pac.  835, 
Stron.t^  v.  Miles,  45  Conn.  52,  -        - 

.S'.roiid  a.  Russell,  12  W.  N.  419, 
Struthcrs  v.  Pearce,  51  N.  Y.  357,  365,    - 
Stuinph  V.  Baur,  76  Ind.  157,  -        - 

Sturges  a.  Cheeseman,  6  Bosw.  520, 

Styring  a.  French,  2  C.  B.  N.  S.  357, 
Sullivan  v.  Campbell,  2  Hall  271,    - 
Sumner  a.   Buchan,  2  Barb.  Ch,  165, 
Sumner  v.  Hampton,  8  Ohio  328,  365,     - 
Supplee  a.  Gavit,  2  W.  N.  C.  561,  - 
Sutro  -'.    Wagner,  8  C.  E.  Gr.  388, 
Suttle  a.  Rogers,  19  Bradwell  163, 
Sutton  :'.  Irwine,  12  S.  &  R.  13,      - 
Suydam  f.  Barber   6  Duer  34,  -         - 

Suydrim  a.  Cor^vin,  24  O.  St.  209,    - 
Sweeney  :■.  Stanford,  67  Cal.  635,    -         - 
Sweet  (i.  I-islicr,  67  Cal.  228, 
Sweet  Z'.  Morrison,  7  E.  Rep'r  389, 
Sweet  a.  Prouty,  51  N.  \'.  594, 

Sweetzer  a.  Place,  10  Ohio  142, 
Syers  v.  Syers,  i  App.  Cas.  174,       - 


Taft  V.  Schwamb,  80  111.  289, 
Tait  :;.  Murphy,  2  S.  Rep'r  317, 

Tanner  v.  Hall,  i  Barr  417, 
Tanner  v.  Hills,  48  N.  Y.  662,      - 
Tapscota.  Brown,  6  M.  &  W.' 119, 
Tarlton  a.  Smith,  2  Barb.  Ch.  336, 
T.irr  a.  Dodd,  116  Mass.  287, 
Tasker  a.  Cookingham,  2  Keyes  454, 


51, 

I, 

1884. 

94, 
95, 

1838. 

172, 

I, 

1881. 

130- 

7, 

1825. 

207, 

4. 

184 1. 

175, 

I, 

1829. 

69, 

9. 

1872. 

133 

4, 

1879. 

59, 
60, 

I, 

185 1. 

63, 

2, 

1865. 

89, 

2, 

1845. 

213, 

3, 

1878. 

62, 

e, 

1853- 

141, 

2, 

1884. 

106, 

I,  d, 

1882. 

107, 

4. 

41, 

2, 

1858. 

89, 

2, 

1845. 

208, 

2, 

1887. 

167, 

5,^, 

1877. 

103, 

I, 

1882. 

212, 

9, 

1873- 

27, 

I, 

1881. 

156, 
208, 

4, 
I, 

i860. 

67, 

7, 

1857. 

134, 

I, 

1829. 

110, 

4, 

1847. 

112, 

14, 

1838, 

121, 

9. 

1876, 

180, 

3. 

1873- 

69. 

17, 

1885- 

129, 

I, 

1824. 

84, 

4, 

1856. 

167, 

5,  <?. 

1873- 

76, 

17, 

1885. 

12, 

2, 

1885. 

206, 

2, 

1886. 

59, 

i. 

1873- 

100, 

d, 

1847. 

103, 

5, 

31, 
57, 

I, 
I, 

1876. 

32, 

3, 

1875^ 

100, 

l>. 

1887. 

127, 

f  2,  a, 

U,  «. 

1845- 

12, 

I, 

1872. 

134, 

2, 

1840. 

10, 

II, 

1847- 

156, 

3, 

1874- 

76, 

12, 

1866. 

Ivi. 


Table  of  Cases. 

Tassey  i'.  Church,  6  W.  &  S.  465, 

Taylor,  ex  parte,  2  Rose  175, 

Taylor  v.  Castle,  42  Cal.  367,        -        -        .        . 

Taylor  v.  Coryell,  12  S.  &  R.  243, 

Taylor  v.  Henderson,  17  S.  &  R.  453, 

Taylor  a.  Seelye,  32  La.  An.   11 15, 

Taylor  t/.  Smith,  116  Mass.  363,    -         -         -         . 

Taylor  27.  Webster,  10  Vr.  102,  E.  &  A.,      - 

Teed  za  El  worthy,  14  East  210,     - 

Teel  a.  Howell,  2  Stew.  490,         -        -        .        . 

Tellers  v.  Muir,  Pen.  749,     -         -         -         .         . 

Tellyett  z'.  Markham,  57  Geo.  11, 

Templar  v.   Bank,  26  Fed.  Rep'r.  580, 

Tench  v.  Roberts,  6  Madd.  Ch.  145,     - 

Tenney  z>.   Foote,  95  111,  99,  .        .        .        . 

Tenney  v.  Johnson,  43  N.  H.  144,        -        .        . 

Tenney  z>.  Simpson,  15  P.  Rep'r.  187, 

Terrell,  Ex  parte,  Buck  345,         -         .         .         . 

Tharp  a.  Kingsbury,  28  N.  \V.  R.  74, 

Thaj'er  a.  Wait,  118  Mass.  473,     -         -         -         . 

Thielens  <?.  White,  10  Out.  173,    -         -         -         - 

Thomas  z/.  Brown,  10  Atl.  Rep'r  713, 

Thomas  a.  Calkett,  i  Phil.  463,     -         -         -         - 

Thomas  a.  Chapman,  4  Keyes  210,       -        -        . 

Thomas  a.  Hopkins,  28  N.  W.  Rep'r  147,    - 

Thomas  a.  Lane,  37  Tex.  157,       -        -         -        . 

Thomas  a.  Lloyd,  29  Sm.  68,        -        -         -        - 

Thomas  a.  Nat.  Bank  of  Salem,  47  N.  Y.  15, 

Thomas  a.  Page,  43  Ohio  St.  38,  -        -        - 

Thomas  v.  Pennrick,  28  O.  St.  55,        -        -        . 

Thompson  a.  Brenton,  20  L.  L  133      -         -        - 

Thompson  a.  Brown,  Coxe  2,       -        -  -        - 
Thompson  a.  Edmanson,  8  Jur.  N.  S.  235, 

Thompson  a.  Lynch,  66  Miss.  354,       -  .         . 
Thomson  Z'.  Williamson,  7  Bligh.  432. 
Thrift  a.  Morganstern,  66  Cal.  577, 
Thursby  v.  Lidgerwood,  69  N.  Y.  198, 

Tibbals  v.  Sargeant,  i  McCart.  449,     -  -         - 

Tiffany  v.  Crawford,  i  McCart.  Ch.  278,  - 

Till'sCase,  2   Neb.  261,         -        .        .  .         . 

Tilton  a.  Benson,  58  N.  H.  137,    -        -  -        - 

Todd  z/.  Lorah,  25  Smith  155,       -        -  .        . 

Todd  f.  Rafferty,  3  Stew.  254,       -        -  .        . 

Tolman  z/.  Hanrahan,  44  Wis.  133,         -  .        - 

Tomlinson  z>.    Burke,  5  Hal.  295,           -  .         . 

Tomlinsou  f.  Nelson,  49  Wis.  679,       -  -        . 
Tomson  v.  Campbell,  5  W.  &  S.   16,    - 

Tonroe  a.  Wightman,  4  Taunt.  412,     -  -        - 

Tooke  a.  Bryan,   60  Geo.  437,       -        .  -        . 

Toppan  a.  Coddington,  1 1  C.  E.  Gr.  141,  - 
Topping,  Ex  parte,  4  D.  J.  &  S.  551,    - 

Topping  ('.  Paddock,  92  111.  92,    -         -  -         - 

Torrey  a.  Fowle,  125  Mass.  289,  -        >-  -         - 

Townsend  a.  Auten,  Pen.  744,      -        .  -        . 
Town  send  z/.  Goeway,  19  Wend.  424,    - 
Townsend  v.  Long,  27  Sm.  143, 

Ivii. 


161, 

6, 

1843. 

201, 

2, 

1S14. 

15, 

I, 

1871. 

120, 

a 

,  1824. 

119. 

d 

1828. 

30, 

I, 

1880. 

124, 

5, 

1874. 

69, 

14, 

1878. 

76, 

8, 

1811. 

III, 

1,5. 

1878. 

121, 

4, 

1811. 

32, 

I, 

1876. 

178, 

I, 

1886. 

211, 

2, 

1819. 

139. 

3. 

1880. 

194, 

3. 

1864. 

1  12, 

4, 

18S7. 

201, 

4, 

1819. 

21, 

2, 

1886. 

127, 

I, 

1875- 

150, 

I, 

1884. 

173, 

12, 

1887. 

"3, 

5, 

1853- 

200, 

2, 

1868. 

128, 

I, 

1881. 

2IT, 

I, 

1872. 

184, 

6, 

'875, 

128, 

3, 

1871. 

III, 

10, 

1885. 

167, 

4,^, 

1878. 

102, 

iq6, 

(I, 

5,  «, 

1863. 

130, 

7,  a, 

1790. 

17, 

2, 

1861. 

52, 

1883. 

36, 

5, 

1831. 

47, 

3, 

1885. 

"7, 

I, 

1877. 

182, 

1, 

1862. 

III, 

14, 

1862. 

106, 

5,^, 

1874. 

215, 

3, 

1877. 

169, 

I, 

1874.. 

212, 

7, 

1878. 

124, 

I, 

1878. 

76, 

2, 

1829. 

156, 

3> 

1880. 

36, 

5, 

1831. 

73. 

I, 

1813. 

125, 

5- 

1878. 

lOI, 

I, 

1875. 

199. 

I, 

1865. 

20, 

3, 

1879. 

170, 

4, 

1881. 

76, 

4, 

1811. 

158, 

I, 

1838. 

148, 

4, 

1874- 

Table  of  Cases. 

., ,      1       c     ,-.                -      -      -  67,  12,  1869. 

Tracv  a.  P.dwards,  12  bin.  3/4,     -         -  ''       ' 

Tracy  : .  McManus,  58  N.  V.  257,          -        -        "        '  (.   67,   13,  ^°''*" 

Traphagcn  z.  Burt.  67  N.  V.  30,           -        -        "        "  ^  ^^J  ^4.  1876. 

Treadwell  z'.  Williams,  9  B<  sw.  649,     -        -        "        "  \  171,     4,  '     ^" 

I  100,     5,  jg 

Trcmper  Z'.  Conklin,  44  N.  Y.  61,        -        -        "        "  1^103,     2,  '' 

Trenton  Loc.  &  Mach.  Mfg.  Co.  a.  VanKuren,  2  Beas.  302,    45,  ;86i. 

Trcthewv  a.  Ackland,  2  Saunders  51,           -        -        -  io3.     7,  ioo9- 

Trouhrulger.  Cross,   117  111.    109.       -         "         "         '  J^'     .    A  877 

Trowbridge  <?.  Shaler,  i  Stew.  595,      -        -        '        '  ^^^'   ,^'  ^'  joH' 

Trowbridge:.  Wetherbee,  II  Allen  361,      -        -        -  10,11,  i»b5- 

True  ^.  Sceva,  55  N.  II.  632.         -----  46,     i.  873. 

Tuar.  Carriere,  117U.  S.  R.  201,        -        -        -        -  I75,     3,  i»»b. 

Tucker  a.  Isles,  5  Duer.  393. l^J'     ""'  Jgg- 

Tucker  v.  Oxley,  5  Crancb  34,     -        -        -        -        "  ^°5'     2,  809. 

Tupper  a.  Labouchere,  1 1  Moore  P.  C.  198,         -         -  73,     i.  i057- 

Tupper.Sager,38Mich.   258.     -----  44-     2.  ^1878. 

Turner  v.  Jaycox,  40  N.  Y.  470, \  170,     3,  ^     ^' 

Turner  Z'.  Turner,  5  S.  W.  Rep'r  457,            -        "        '  ^07,     2,  1887. 

Tustin  :•.  Cameron,  5  Wharton  379,     -         -         -         -  ^f'   1°-  ^°f- 

Twisden  a.  Cleather,  28  Ch.  Div.  340,          -        -        -  i4o,      i,  i8»4- 

U.  Insurance  Co.  a.  Holmes,  2  Johns.  Gas.  329,          -  7,     i,  r8oi. 

Uhler  :■.  Browning,  4  Dutch.  79,           '        "        '        '  r  ^^^'     5'  ^ 

rhler  :'.  Semple,  5  C.  E.  Gr.  288.         .        -        -        -  { Jg^^     ^'^  1869. 

riman  :■.  Briggs,  32  La.  An.  657,          .        -        -        -  37,     3.  -*,  1880. 

United  Insurance  Co.  V.  Scott,  i  Johns.  106,       -        -  49,     6,  a,  1806. 

l"niiL<l  States  v.  Lewis,  13  Nat.  Bank'cy  Reg'r  33,      -  204,     3,  1876. 

I'liruh's  listate,  13  Phila.  337, 36,     6,  1880. 


Valentine  v.  Hickle,  39  O.  St.  19,         -        -        -        -  19,  7,  1883. 

Valentine  <7.  Meehan,  29 F.  Re])'r  276,         -         -         .  59^  3,  1886. 

Valjjy  a.  Dickinson,  10  B.  &  C.  128,    -         -         -         .  23,  4,  1829. 

Van  'Brunt  i:  Applegate,  44  N.  Y.  544,        -         -         -  112,  18,  1871. 

Vanderbilt  a.  Briggs,  19  Barb.  222,       -         -         -         .  62,          e,  1855. 

Vanderburgh  v.  Hull,  20  Wend.  70,    -         -         -         -  59,          c,  1838. 

Vanderhorst  a.  Bank  of  New  Y'ork,  32  N.  \'.  553,         -  103,  2,  1865. 

Vanderslice  a.  Commonwealth,  8  S.  &  R.  452,    -         -  103,  8,  1822. 

Van  Kuren  v.  Trenton  Loc.  &  M.  Mfg.  Co.,  2  Beas.  302,     45,  1861. 

I'ainifniaii  a.  iMcCrcdy,  Pen.  870,        -         .         .         .  76,  2,  1811. 

Van  Pelt  a.  Hervey,  4  Bosw.  60,          -        -        .        .  146,  3,  1859. 

Van  Rensselaer  v.  Emer\-,  9  How.  Pr.  135,         -        -      ■[  \°\'  J-  1S54. 

(^  lol ,  I, 

Van  Sycle  v.  RorVjach,  2  Hal.  Ch.  234,        -        -  137,  i,  1847. 

Vice  :'.  Anson,  7  B.  &  C.  409, 23,  5,  1827. 

Vickery  (7.  Carsick,  Douglas  653,          -         -         -         .  6,  i,  17S1. 

Visrhcr  a.  Harris,  57  Geo.  229,    -         -         -         .         -  104,  2,  1876. 

Voohis  r.  Childs,  17N.  Y.  355, 86,  i,  1858. 

Voorheesa.  Hill,  10  Harris68,     -----  69,  17,  1853. 

Iviii. 


Table  of  Cases. 

Voorhees  v.  Jones,  5  Dutch.  270, 

f  L.  R.  7  Ch.  334,      -        -        - 
Vyse  V.  Forster,  -^  L.  R.  8  Ch.  App.  309,     - 

(l.  R.  7H.  ofL.  318.  333.        - 


52, 

1865 

40, 

2, 

1872. 

42, 

3, 

1870 

42, 

2, 

1874 

Waddell  a.   Banco  de  Portugal,  5  Ap.  Cases  161,        -  164,  2, 

Wade  V.  Rusher,  4  Bosw.  537, |  \^^  ^'  ^^ 

Wagner  a.  Sutro,  8  C.  E.  Gr.  388.        -        -        -        -  180',  3', 

Wait  z/.  Thayer,  118  Mass.  473,    -----  127,  i, 

Wakeham,  in  re,  13  Ch.  Div.   43,         -        -        -        -  205,  6, 

Walden  v.  Sherburne,  15  Johns.  409,           -         .        .  57^  4^ 

Walker  v.  Bean,  34  Minn.  437,             .        .        .        .  120,           b. 

Walker  a.  Central  City  Saving  Bank,  66  N.  Y.  425,    -  24,  3, 

Walker  v.  Fitts,  24  Pick.  191, 12,  i, 

Walker  a.  Jones,  103  U.  S.  444, 74,  3, 

Walker  a.  Smith,  57  Mich.  459,  -----  209,  i,  d, 

Walker's  Appeal,  4  Pennypacker  452,          -        -        -  216,  i, 

Wallace  v.  Fairman,  4  Watts  378,        -        -        -        -  |  ^95.  3. 

Wallace  a.  Welker,  31  Ga.  362,           -        -        -        -  41,  4, 

Wallace  a.  Yeager,   7  Smith  565,         -        -        -        -  152,  i, 

Walsh  V.  Adams,  3  Denio  125,     -        -        -        -        -  104,  10, 

Walsh  a.  Henn,  2  Edw.  Ch.  129,          -        -        -        -  173^  6, 

Walsh  V.  Kelly,  42  Barb.  98 ;  27  How.  Pr.  559,            -  106,  9,  b, 

Walsh  V.  Lennon,   98  111.  27,         -        -        -        -        -  118,         c, 

Walsh  a.  Merritt,  5  Tiffany  685,            -         -         -         -  67,  3, 

Walstrom  z/.  Hopkins,  7  Out.  118,         .        -        -        -  \  ^^'  \' 

Walter  v.  Ginrich,  2  Watts  204,  -        -        -        -        -  83,  4, 

Walter's  Appeal,  i  Chester  Co.  R.  278,        -        -        -  |  ^^5,  5.  ^ 

Waltman  a.  Gay,  8  N.  453,           -        -        -         -        -  120,         b. 

Wands  a.  Ensign,   i  Johns.  Cas.  171,           .        .        -  7,  6, 

Ward  a.  Ellis,  21  W.  R.  100, 22,  i. 

Ward  V.  Garnet,  6  Duer  257,         -----  49,  4, 

Warden  a.  Bryant,  2  Exch.  479,           .        .        -        .  161,  4, 

Warner  a.  Wood,  2  McCart.  81, 173,  8, 

Warren  a.  Com.  Bank  of  Buffalo,  15  N.  Y.  577,            -  135,  i,  a, 

Washburn  v.  Bank  of  Bellows  Falls,  19  Vt.  278,         -  |  ^°g'  ^'  ^' 

Waterer  v.  Waterer,  L.  R.  15  Eq.  402,        -        -        -  109,  5, 

Watson  a.  Dunlap,  124  Mass.  305,        ...        -  188,  i, 

Watson  V.  Murray,  8  C.  E.  Gr.  257,     -        -        -         -  211,  2, 

Watson  a.  Smith,  2  B.  &  C.  401,           -        -        -        "  {   48  2' 

Watts  a.  Everit,  10  Paige  82, |  ^^  ^°' 

Waugh  V.  Carver,  2  H.  Bl.  235,    -----  57,  4, 

Waydell  v.  Luer,  3  Denio  410, 184,  5, 

Weaver  v.  Shryock,  6  S.  &  R.  262,     -        -        -        -  86,  4, 

Webb  V.  Helion,  3  Robt.  625, 208,  5, 

(105,  2, 

Webb,  in  re,  16  Nat.  Bank'cy  Rep'r  258,      -         -         -  i  195,  i, 

(196,  I, 

Webber  a.  Lewis,  116  Mass.  450,          -        -        -        -  194,  5, 

lix. 


859 

873 
875 
884 
818 
886 
877 
837 
880 
885 
884, 

835 

860 
868 

846 

833 
864 
881 
865 

883 

S34 

881 

879 

799 
872 

857 
848 
862 

857 

847 

873 
878 

872 

824 

843 

793 
846 
820 
864 

875 
875 


Table  of  Cases. 


Unit  ..  Defor,  S  How.  I'r.  502. 

Webster  11.  KlKif.  5  ^I   &  W.  51S, 

Webster  a.  Maiih.  Ins.  Co.,  9  Sm.  227, 

Webster  a  Taylor,  10  Vr.  102,  E.  &  A. 

Wcfii  <i.  Hlod'^ett,  1 19  Mass.  215, 

Wcissenborn  u.  Sei^hortuer,  5  C.  E.  Gr.  172, 

Welker  ::   Wallace,  31  Ga.  362, 

Wells  I'.  Ellis,  68  Cal.  243,     -        -        -        - 

Wells  I'.  Gates,  18  Harb.  554, 

Wells  <7.  Hoeflinj,'er,  47  Wis.  628, 

Wells  a.  l\irtri<l<.;e,  3  Stew.    176, 

Wemi  a.  Miles,  27  Minn.  56,       - 

Wentworth  :'.  Kaiguel,  9  Ph.  275, 

West  </.  Ross,  2  Bosw.  390,  -         -         -         - 

Westover  a.  Stanton,  loi  N.  Y.  765,     - 

Westbrook  :•.  Mize,  loP.  Rep'rSSi,     - 

Welherbec  <7.  Trowbridge,  11  Allen  361,     - 

Wetherill  v.  Coniuionwealth,  17  \V.  N.  104, 

Wctniore  :■.  Baker,  9  Johns.  307, 

Wetter  :■.  Schlieper,  4  E.  D.  Smith  707,     - 

Wharton  v.  Clements,  3  Del.  Ch.  209, 

Wheat  V.  Rice,  97  N.  Y.  296, 

Wheeler,  Ex  parte,  Buck  48,       -        -        - 

Whitbread  a.  Janes,   11  C.  B.  406, 

Whitcomb  z'.  Converse,  119  Mass.  38, 

White  a.  Currv,  51  Cal.  185,  1875;  531, 

White  V.  Hackett,  20  N.  Y.  178, 

White  a.  Hartley,  13  N.  31,  -         -         . 

White  t.  Jones,   iRob't32i, 

White  a.  Nichols,  85  N.  Y.  531,  -         -         - 

White  z'.  Thielens,  10  Out.  173,    -         -         - 

Whitehead  a.  I'enn,  17  Gratt.  503, 

Whitman  a.  ^lunro,  8  Hun  553, 

Whitman  v.  Porter,  107  Mass.  522, 
Whitney  a.  Muzzy,  10  Johns.  226, 
Whittaker  v.  Collins,  34  Minn.  299,     - 

Whitwell  a.  Menagh,  52  N.  Y.  146,     - 

Wiggenhorn  a.  Parmalee,  6  Neb.  322, 
Wightinan  z:  Tonroe,  4  Taunt.  412,     - 
Wilcomb  a.  King,  7  Barb.  263,     - 

Wilcox  I'.  Kellogg,  11  Ohio  394, 

Wilcox  V.  Matthews,  44  Mich.  192,     - 
Wilcoxon  a.  Andrews,  25  Ch.  Div.  505, 
Wild  V.  Davenport,  7  A.  R,  295, 
Wild  V.  Dean,  3  Allen  579,  -         -         .         . 
Wiley  a.  Lesley,  47  N.  Y.  648.     - 
Wilkes  a.  DaWon,  5  Bosw.  655,    - 
Wilkins  v.  Budd,  i  Hal.  153, 
Wilkins  v.  Pearce,  5  Denio  541,  - 
Wilkinson  a.  Cntes,  65  Cal.  559, 
Wilkinson  :'.  Frasier,  4  Esp.  182, 


i73, 

2, 

1853- 

48, 

2, 

1839- 

103, 

10, 

1868. 

69, 

14, 

1878. 

124, 

2, 

1875. 

173. 

9, 

1869. 

41, 

4, 

i860. 

132, 

2,  a, 

1885. 

24, 

I, 

1854. 

124, 

6, 

1879. 

no. 

2, 

1878. 

91. 

2, 

i88q. 

162, 

I,  a, 

1873- 

"7> 

3, 

1858. 

178, 

5, 

1S86. 

47, 

I, 

1886. 

10, 

II, 

1865. 

106, 

8,  d, 

1885. 

62, 

/, 

1812. 

131, 

1, 

1858. 

40, 

4, 

1868. 

144, 

6, 

1884. 

57, 

4, 

1817. 

58, 

d. 

59, 

n, 

185 1. 

31, 

4, 

1875- 

81, 

2, 

1885. 

37, 

3,/ 

1859- 

167, 

7,b, 

1880. 

209, 

I,  b, 

1S63. 

178, 

3, 

1881. 

150, 

I, 

1884. 

138, 

4, 

1867. 

32, 

57, 

2, 

4, 

1876. 

31, 

5, 

1871. 

59- 

d, 

1813. 

139- 

6, 

1885. 

103, 

4, 

106, 

I,  h, 

107, 

4, 

1873- 

167, 

7,  a, 

144, 

I, 

1877. 

73, 

I, 

1813. 

no, 

7, 

1849. 

194, 
200, 

I, 
I, 

1842. 

57. 

4, 

1880. 

205, 

3, 

1884. 

73, 

I, 

18S6. 

170, 

4, 

1862. 

76, 

12, 

1872. 

147, 

2, 

1859- 

85, 

3, 

1822. 

133, 

I, 

1848. 

"4, 

3, 

1884. 

62, 

d, 

1805. 

Ix. 


Table  of  Cases. 

Wilkinson  a.  Matherson,  8  Atl.  Rep'r  84,     - 
Willett  V.  Blanford,  1   Hare  253, 

Williams  a.  Aspinwall,  i  Ohio  84,        -        -        - 

Williams  rt.  Austin,  2  Ohio  61,     -        -        .        - 
Williams  a.  Cary,  i  Duer  667,      -        .        .        - 


Williams  a.  Crary,  2  Ohio  65, 
Williams  a.  Froude,  56  L.  T.  Rep.  N.  vS.  441,     - 

Williams  i'.  Gillies,  75  N.  Y.  197,  -        -        . 

Williams  Z'.  Hamilton,  i  South.  220,  -         -         - 

Williams  a.  Lane,  2  Vern.  277,     -  -        -        - 

Williams  v.  Lawrence,  47  N.  Y.  462,  - 

Williams  a.  Lewis,  6  Wh.  263,     -  -        .        . 

Williams  v.  McFall,  2  S.  &  R.  280,  - 

Williams  a.  Treadwell,  9  Bosw.  649,    -        -        - 

Williamson  a.  Thomson,  7  Bligh  432,  -  -  . 

Willing  a.  Consequa,  i  Peters  301,       -  -  . 

Willis  V.  Green,  5  Hill  232,          -        .  -  . 
Willoughby  a.  Mayberry,  5  Neb.  368, 

Wills  V.  Simmonds,  8  Hun  189;  51  How.  Pr.  48, 
Wilmont  v.  Ouachita  Belle,  23  La.  An.  607, 
Wilson  V.  Cobb,   2  Stew.  361,  E.  &  A. 
Wilson  a.  Emery,  79  N.  Y.  78,     - 
Wilson,  Ex  parte,  L.  R.  7  Ch.  490, 

Wilson  11.  Pitcher,  3  Stock.  Ch.  71,     -  -  - 

Wilson  (7.  Morse,  4  Term.  353,     -        .  -  . 

Wing  a.  Riugo,  5  S.  W.  Rep'r  787,        -  .  . 
Winslow  a.  Belleville  Saving  Bank,  30  F.  488,     - 

Wise  a.  Putnam,   i  Hill  234,         .         .  .  . 

Wish  V.  Small,  i  Camp.  329,         -         -  .  . 

Wisham  v.  Lippincott,  i  Stock.  353,   -        -        . 

Withers  a.  Hart,  i  P.  &  W.  285, 

Woehr  a.  Hartman,  3  C.  E.  Gr.  3S3,    -        -        - 

Wolbert  v.  Harris,  3  Hal.  Ch.  605, 

Wood  a.  Blair,  12  Out.  278,  -         .         .         . 

Wood  V.  Brush,  13  Pac.  Rep'r  627,      -        .        . 

Wood  a.  Egberts,  3  Paige  Ch.  517, 

Wood  V.  Erie  R.  R.,  72  N.  Y.  196, 

Wood  a.  Homer,  11  Cush.  62,     -        -        -        - 

Wood  V.  Meily,  21  Sm.  488,         -         -         -         . 

Wood  V.  Scoles,  L.  R.  i  Ch.  369, 

Wood  a.  Sheldon,  2  Bosw.  267,     -        -        -        - 

Wood  V.  Warner,  2  McCart.  81, 

Wood  V.  Wood,  I  Harr.  429,         .         .         .         . 

Wood  a.  Woodson,  37  Alb.  Law  Jour.  389, 

Woodling  V.  Knickerbocker,  31  Minn.  268, 

Woodruff  Z'.  King,  47  Wis.  261,     -         -         •         . 

Woodson  V.  Wood,  37  Alb.  Law  Jour.  389, 

Woodward  v.  Clark,  30  Kan.  76,  .        .        . 

Woodward  a.  Curtis,  58  Wis.  499, 

Wookey  a.  Burton,  6  Mad.  Ch.  367,     -        -        - 

Wortley  a.  Reg.,  15  Jur.  1137,       -         -         .         . 


130, 

I,  l\ 

1.SS7. 

43, 

I,  b. 

1842. 

/  17. 
1115, 

I, 
2, 

1823. 

/  44, 
I  76, 

7, 
25, 

1825. 

166, 

2,  a. 

1853. 

76, 

10, 

1825. 

50, 

3, 

1887. 

10, 

I, 

1878. 

130, 

3, 

1818. 

5, 

3, 

1692. 

67, 

3.4, 

1872. 

83, 

2, 

1841. 

81, 

2, 

1816. 

f  112, 
1 171, 

20, 

4, 

1862. 

36, 

5, 

1831. 

85, 

2, 

1816. 

6, 

2, 

1843- 

178, 

7, 

1877. 

59, 

m,q. 

1876. 

122, 

5, 

1880. 

54, 

I, 

1878. 

214, 

2, 

1879. 

205, 

6, 

1872. 

173, 

7,^, 

1855. 

66, 

6, 

1791, 

171, 

I, 

1887. 

85, 

I, 

18S7. 

12, 

I, 

1S41. 

27, 

I, 

1808. 

1  78, 
I  III, 

I, 

4, 

1853- 

135, 

7,  a, 

1830. 

/  19- 
1207, 

8, 
I, 

1867. 

206, 

2, 

1849. 

96, 

I, 

1885. 

156, 

2, 

1887. 

106, 

6, 

1832. 

76, 

16, 

1878. 

167, 

2,  b. 

1853- 

109, 

7, 

1872. 

/  35, 
I208, 

I, 
I, 

1 866. 

212, 

5, 

1857. 

173. 

8, 

1862. 

6, 

2, 

1838. 

184, 

3. 

1888. 

140, 

4, 

1883. 

184, 

4, 

1879. 

184, 

3> 

1 888. 

44, 

3> 

1883. 

193, 

I, 

1883. 

151, 

3, 

1822. 

59. 

k. 

1851. 

IxL 


Table  of  Cases. 


Wray  it.  Ilaiina,  27  Sni.  27, 
Wrcusliall  :.  Cook,  7  Watts  464, 
Wrif^bta.  I'erguson,  11  Sm.  25S, 
Wrij^lit  :.  Hooker,  10  N.  Y.  51,  - 
\Vn>,'lu  ./.  MoAvoy,  137  ]Mass.  206, 
\Vri)^hl  ./.  Niwbokl.  4  Rawle  205, 
Wiij^hl  <;.  Smith,  i  Abb.  I'r.  243, 
Wyiirii-  : .  Millers,  61  Geo.  345,    - 


Yates  i:  Lyon,  61  N.  Y.  344, 
Yeajjer  :■.  Wallace,  7  Sm.  565,     - 
Yeoman  r .  Lasley.  40  O.  S.  190, 
Yoho  i:  McCiOvern,  42  O.  St.  11, 
York's  Appeal,  17  N.  Y.  17,  33,  - 

Yorkshire  Banking  Co.  v.  Beaston,  |  7" 

Young  z:  Axtell,  2  H.  Bl.  242,  ar^.,    - 
Young  I'.  Brick,  Pen.  663,    - 
Young,  Kx  parte,  19  Ch.  D.  124, 
Young,  Ex  parte,  2  Rose  40, 
Young  z:  Frier,  i  Stock.  465, 
Young  V.  Hoglan,  52  Cal.  467,     - 
Young  V.  Hunter,  4  Taunt.  582,  - 


4  C.  P.  D.  204 

5  C.  P.  D.  109, 


Zell's  Appeal,  i  Am.  532,  -  .  . 
Zimmerman  z:  Erhard,  83  N.  Y.  74,  - 
Zug  &  Co.,  In  re.,  34  Legal  Int.  402,  - 


121. 

9. 

1S74. 

130, 

6, 

1838. 

153, 

I, 

1869. 

44, 

8, 

1854. 

47, 

I, 

1884. 

4, 

I, 

1833. 

44, 

8, 

1854. 

J  03, 

12, 

1878. 

137, 

2, 

1874. 

152, 

I, 

1868. 

8, 

2, 

1883. 

84, 

2, 

1884. 

H5, 

2, 

1886. 

'   76. 

19, 

1880. 

'58, 

^ 

1784. 

153, 

3, 

1810. 

77, 

d, 

1881. 

198, 

2, 

1814. 

106, 

5,  c, 

1853. 

156, 

6, 

1877. 

20, 

2, 

1812. 

208, 

I, 

1886. 

76, 

15, 

1880. 

"3, 

I,  a, 

1877. 

Ixii. 


Introduction. 


I  am  astounded  by  the  statement  whicli  both 
LiNDLEY  and  Pollock,  the  leading  authors  who 
have  written  upon  the  subjedl,  concur  in  making, 
that  the  law  of  partnership  is  ripe  for  codification. 
They  intend  by  this  statement  to  convey  the  mean- 
ing. That  the  principles  of  the  relation,  having  been 
fully  established,  can  be  expressed  in  definitions  and 
applied  in  formulas.  How  do  they  succeed  in  demon- 
strating the  feasibility  of  the  proje6l?  They  stumble 
and  halt  on  the  very  threshold.  The  definition  of 
partnership  breaks  them  all  up.  Having  no  guid- 
ing principle  to  start  with,  how  can  they  create  a 
system  ?  Look  at  the  law  of  partnership  as  it  stands 
to-day,  and  try  to  point  out  the  principle  which 
underlies  the  relation.  The  last  English  case 
abandons  the  only  landmark  which  remained  to 
individualize  a  partnership.  *   There  is  no  clue  left  to 

*A  lender  taking  a  deed  for  a  building  contrail,  with  all  the  rights 
preseiit  and  prospective  under  it,  including  stock,  plant  and  fixtures, 
stipulating  for  a  share  of  the  net  profits,  for  the  destination  of  the  fund, 

Ixiii. 


Introduction. 

distiiij^nisli  a  partnership  from  any  other  agency, 
The  Profession  is  thrown  back  on  the  general  dodlrine 
of  Principal  and  Agent.  This  is  like  answering  the 
question.  W'liat  is  an  Englishman?  by  saying,  There 
is  no  snch  person  as  an  Englishman,  distindl  from 
any  other  European.  The  only  way  to  find  out  what 
an  Englishman  is  would  be  to  study  the  general 
type  of  the  European  made  up  from  German,  French, 
Italian,  and  other  stocks,  not  to  mention  Turks,  and 
out  of  the  medley  extrad  the  Englishman. 

The  relation  once  relegated  to  an  abstradion,  the 
subje(5l-niatter  of  partnership  becomes  mythical. 
Property,  the  only  thing  for  which  the  partnership 

for  control  of  the  debtor,  allowing  him  to  drazu  out  a  salary  from  the 
working  capital  before  profits  ivere  estimated,  and  for  taking  his  place, 
do  not,  one  and  all,  reveal  the  traits  of  a  a  co-partner  in  the  business,  but 
are  consistent  with  the  adverse  relation  of  debtor  and  creditor.  By  niort- 
j^aj^c-deed,  4  July,  1878,  A  advanced  money  to  B,  ^1500  at  a  time,  payable 
in  6  months,  lo  carry  out  B's  contra(5l  with  C  for  the  construdlion  of  C's 
railroad.  A  stipulated  for  20  per  cent,  interest  and  i-io  of  the  net  profits 
tnade  out  of  the  building  contract.  B  assigned  in  advance  to  A  all  the 
moncv  and  securities  he  should  receive  from  C,  and  all  his  stock,  plant 
and  fixtures,  and  policies  of  insurance.  B  covenanted  that  he  would  at- 
tend to  the  work,  complete  it  with  due  expedition,  and  employ  the  ad- 
vances exclusively  in  the  construdlion  of  the  road.  A  had  power,  upon 
B's  non-performance  of  any  condition,  or  his  bankruptcy,  to  take  posses- 
sion and  carry  on  the  work  to  completion,  and  B's  contradls  with  C  enured 
to  A.  A  also  had  a  power  of  sale.  B  was  entitled  to  draw  out,  for  his  ser- 
vices, /"loco,  in  quarterly  instalments,  before  profits  were  computed,  and 
.\'s  share  was  charged  as  an  advance.  The  correspondence  between  A  &  B 
called  the  advances  'working  capital,'  and  A  waived  repayment  until  the 
completion  of  the  contradl.  Diredlors  of  C,  in  1881,  induced  D  to  advance 
money  to  carry  on  the  work,  and  guaranteed  C's  bonds  for  ^16000.  In 
1882  E  recovered  judgment  against  B,  and  attached  C's  debt  to  B.  Notice 
of  A's  claim  had  not  then  been  given  to  C.     In  1883  other  creditors  at- 

Ixiv. 


Introduction. 

exists,  and  in  which  it  deals,  is  discarded  as  a 
constituent  of  the  relation.  But  the  disputes  which 
arise  are  in  reference  to  the  property  of  the  firm,  and 
they  cannot  be  adjusted  unless  the  title  is  located. 
Think  of  formulating  the  propositions  which  embody 
the  doctrines  of  partnership  without  reference  to  the 
original  principle  out  of  which  the}^  are  all  evolved, 
and  which  give  coherence  to  the  relation !  It  takes 
something  more  than  a  man,  although  he  has  been 
admitted  to  the  Bar,  to  make  a  world  of  partnership 
out  of  nothing. 

The  instant  the  notion  of  firm  property  is  brought 
forward,  the   material  is  furnished  for  an  explanation 


tached  the  debt.  B's  claim  against  C  was  adjusted  at  ;^38,ooo,  for  which 
B  should  take  debenture  stock  and  have  C's  bonds  returned.  C  repaid  D 
the  sum  advanced  B,  who  was  bankrupt.  A  sued  all  parties,  and  claimed 
priority.  Defence :  A  the  partner  of  B. — A  a  creditor,  not  a  partner,  of  B. 
The  exclusive  application  of  the  advances  to  the  business  did  not  make  A 
a  partner,  because  he  had  B's  personal  obligation  for  repayment,  although 
the  evidence  showed  that  A  did  not  rely  upon  it.  The  destination  of  the 
capital  increased  the  security !  The  control  of  the  debtor's  use  of  the 
money  borrowed  may  be  peculiar,'  but  it  does  not  make  a  loan  to  the 
business.  The  power  to  take  jDOSsession  and  complete  the  contract  en- 
forces the  security,  and  makes  it  effecftual.  The  debtor  nmst  efface  him- 
self, and  let  the  creditor  manage  the  business,  in  order  not  to  impair  the 
security !  The  stipulation  for  profits  after  the  loan  should  be  refunded, 
though  unusual,  is  nothing  but  a  bonus  for  making  the  loan.  A  could, 
after  he  had  been  paid  off  both  principal  and  interest,  still  diredl  and  con- 
trol B  in  his  condu(5t  of  the  business,  in  order  to  gain  the  stipulated  share 
of  profits ;  but  this  was  a  part  of  the  creditor's  security  !  The  allowance  to 
B  of  /"looo  a  year  for  his  services  is  not  drawing  out  of  a  common  fund 
by  the  working  partner,  but  a  provision  made  by  the  creditor,  in  order 
to  enable  the  debtor  to  devote  himself  exclusively  to  the  business,  and 
thereby  perfecft  the  security  !  Badley  v.  Consolidated  Bank,  34  Ch.  D.  536 
(1886) ;  38  Ch.  D.  238  (1886). 

Ixv. 


Intkodiction. 

c)t  die  relation  in  all  its  bearings.  As  a  common 
propc-rlv  is  the  distinclive  charadleristic  of  partner- 
ship, the  fundamental  principle  of  the  relation  can  be 
established.  The  typical  trait  of  partnership  has 
been  lost  sight  of,  and  no  basis  is  left  for  the  relation. 
The  Profession  has  groped  about  in  search  of  the 
principle  for  the  last  half-century.  Not  having 
succeeded  in  re-discovering  it,  many  have  come  to 
believe  that  there  is  nothing  distin6live  abont  the 
relation,  and  they  proclaim  the  absence  of  principle 
as  the  ideal  of  partnership. 

The  title  to  the  property  being  the  first  thing  to 
engage  the  attention,  presents  itself  in  two  stages 


Sharing  the  profits  disclosed  a  property  right  in  A.  He 
might  negative  the  title,  and  show  that  he  claimed  under  B, 
who  had  the  exclusive  proprietorship.  Then  B  would  be 
sole  proprietor,  and  his  powers  would  correspond  to  his  title. 
A  could  not  deprive  him  of  the  right  to  exert  his  preroga- 
tives of  ownership.  Every  attribute  of  a  proprietor  taken 
away  from  B  and  given  to  A  shows  that  he  is  sharing  the 
projirietorship  with  B.  The  control  and  destination  of  the 
funds  are  the  characteristic  of  an  owner,  and  contra-distin- 
guishes  him  from  a  creditor,  who  abandons  his  control  when 
he  parts  with  his  title.  The  debtor  becomes  the  owner, 
and  the  creditor  has  no  control  over  him.  The  attempt  to 
control  the  debtor  shows  that  the  relation  of  debtor  and  cred- 
itor is  superceded  and  replaced  by  a  co-proprietorship.  The 
provision  for  a  management  by  the  creditor  if  the  debtor  does 
not  succeed  reveals  the  position  of  the  parties,  and  proves 
that  the  creditor  is  a  proprietor,  and   dire<5tly  interested 

Ixvi. 


Introduction. 

First,  the  nature  of  the  partner's  contribution  has 
to  be  determined.  Inconsistent  theories  have  been 
advanced  to  account  for  the  right,  and  define  the 
extent  of  the  firm's  ownership.  In  facl,  but  one  State 
has  worked  out  the  true  theory  of  the  contribution, 
and  all  the  others  vacillate  between  conflidling  theo- 
ries, maintaining  positions  which  are  self-destru(5live. 
The  next  thing  to  consider  is  the  effe(51:  of  the  com- 
bined contributions  made  b}^  the  different  partners. 
It  is  the  joint  estate  thus  created  which  forms  the 
basis  of  partnership.  Until  the  title  by  which  the 
partners  hold  the  property  of  the  firm  is  ascertained, 
no  adjustment  can  be  made  of  any  right  or  liability 

in  the  business.  The  survival  of  the  relation  of  debtor 
and  creditor  after  the  debt  has  been  paid,  and  the  control 
or  management  of  the  business  in  order  to  secure  the  profits 
stipulated  as  a  bonus  for  the  loan  is  a  rediiflio  ad  absurdum. 

The  Hindu  Rajah's  case  (§64,  n.  4,  8)  is  no  precedent  for 
this  decision.  That  was  an  undoubted  loan  at  the  start. 
Tlie  subsequent  restridlion  which  the  creditor  put  upon 
the  debtor,  in  order  to  realize  the  debt  or  enforce  its  collec- 
tion, was  in  the  nature  of  execution  or  sequestration,  and 
did  not  change  the  original  chara6ler  of  the  transa(5tion. 
Here,  on  the  contrary,  the  transa(5lion,  at  its  origin,  is  in 
question,  and  can  be  ascertained  only  by  the  legal  effe(?t  of 
all  the  provisions,  without  the  aid  derived  from  a  relation 
already  established. 

The  abandonment  of  property  which  furnishes  the  stand- 
ard of  partnership  destroys  the  indicia  of  the  relation.  No 
clue  is  left  for  establishing  a  partnership,  except  the  ac- 
knowledgement of  the  parties. 

Ixvii. 


Introduction. 

between  the  partners,  nor  can  either  joint  or  separate 
creditors  establisli  ;i  claim  against  them.  The  nature 
of  the  property  must  be  understood,  or  the  principles 
of  partnership  will  remain  unsettled.  The  Professi(m 
does  not  exhibit  the  confidence  which  springs  from 
conviction,  based  upon  knowledge  of  the  underlying 
principles  of  partnership,  but  trifles  with  first  prin- 
ciples. The  failure  to  comprehend  the  chara6ler  of 
firm  property  has  produced  an  interchange  of  confu- 
sion among  the  different  States.  States  which 
consider  the  title  joint  upon  one  point  treat  it  as 
separate  upon  another,  and  although  the}^  exchange 
places  without  rhyme  or  reason,  no  State  consistently 
adheres  to  the  joint  title  in  every  aspedl. 

The  property  measures  the  capacit}-  of  a  partner. 
He  pledges  the  property  by  each  firm  transa6lion, 
and  thus  creates  a  right  in  the  firm  creditor.  This 
principle  clears  up  the  mystery  of  marshalling  assets, 
one  of  the  grand  bugbears  of  partnership.  Every 
country  has  had  to  acknowledge  in  pra(5tice  a  prefer- 
ence of  the  firm  over  the  separate  creditor,  but  no 
legal  system  has  furnished  a  justification  for  the 
privilege  except  the  Common  law,  and  that  has 
achieved  the  result  by  unconscious  cerebration. 

The  failure  to  master  the  fundamental  principle 
of  the  relation  has  left  every  question  of  partnership 

Ixviii. 


Introduction. 

open  for  revision.  The  trait  which  constitutes  a 
partner  has  been  the  enigma  of  partnership  for  half 
a  century.  The  nature  of  the  contribution  made  by 
a  partner  to  the  firm  stock,  though  not  the  subje(5l  of 
such  an  endless  chain  of  talk,  has  been  none  the  less 
a  riddle.  The  nature  of  the  joint  estate,  and  how  it 
has  modified  partnership  at  the  Common  law,  has 
never  been  apprehended.  The  effedt  of  the  estate  in 
creating  for  a  partner  the  capacity,  which  the  Com- 
mon law  refused  to  acknowledge,  deserved  attention, 
but  attracted  none.  The  consequence  of  the  estate 
upon  the  do6lrine  of  marshalling  the  assets  also 
passed  unobserved.  Nothing  but  the  principle  will 
serve  to  reduce  these  main  heads  of  partnership  to 
certainty,  and  through  them  to  transmit  certainty  to 
the  multitude  of  minor  points  which  depend  upon 
them  for  correal  adjudication. 

The  property  alone  is  sufficient  to  make  the  pro- 
prietor a  partner,  although  he  takes  no  part  in  the 
management  of  the  business.  It  is  this  feature  which 
distinguishes  the  Common  law  from  the  Civil  law 
partnership.  It  is  the  property  which  extends  the 
private  bargain  of  the  Civil  law,  and  converts  it  into 
the  business-establishment  of  a  Common  law  partner- 
ship. The  dormant  partner  is  the  typical  Common 
law  partner.      The  failure  to  apprehend  the  charac- 

Ixix. 


Introduction. 

teristic  of  the  Coiniiioii  law  type  has  led  to  covert 
attacks  upon  the  dormaut  partner.  As  he  could  not 
be  dislodi^cd  by  himself,  the  attempt  was  made  to 
throw  tlic  undisclosed  principal  overboard.f  The  at- 
tempt failed,  and  the  dormant  partner,  the  commer- 
cial type  of  the  undisclosed  principal,  stands  as  the 
liyiuij  embodiment  of  property  as  partnership. 

Next  to  the  principles  inherent  in  partnership,  it 
is  important  to  understand  what  foreign  elements 
have  been  permitted  to  intrude  themselves  into  the 
relation,  and  to  interfere  with  its  normal  functions. 
In  this  respe(5l  partnership  has  had  to  undergo  radi- 
cal changes.  The  dual  position  of  a  partner,  (a  sur- 
vival of  the  socic/as  honoruvt  universorum^)  who  is 
charged  with  unlimited  liability,  in  spite  of  the  fa(5l 
that  he  contributes  but  a  portion  of  his  estate,  creates 
a  collision  of  rights  at  the  start.  The  law  adheres  to 
tradition,  and  enforces  the  liability.  Equity  recog- 
nizes that  the  liability  should  be  limited  to  the  con- 
tribution, and,  where  its  principles  apply,  controls 
the  firm  creditors  who  seek  to  enforce  the  liability 
against  the  separate  estate  in  competirion  with  the 
separate  creditors.  Both  the  legal  right  and  the 
equitable  control  of  its  exercise  must  be  apprehended, 
in  order  to  appreciate  the  exadl  limits  of  each.     The 

tEdmunds  :-.  Bushell,  \  26,  n.  i. 
Ixx. 


Introduction. 

want  of  a  clear  understanding  of  the  difference  be- 
tween the  position  of  the  firm  and  of  the  separate 
creditors  has  introduced  a  combat  of  opinion  which  a 
statement  of  the  right  and  of  the  equity  is  sufficient 
to  terminate. 

The  Common  law  has  a  mode  of  procedure  pecuh'ar 
to  itself  for  enforcing  the  unlimited  liability  of  a  part- 
ner. The  dogma  of  an  indivisible  contrail  was  taken 
as  the  standard  of  the  commercial  contract  which  the 
partners  make  in  transacting  the  business  of  the  firm, 
and  the  partners  were  classified  with  joint  contra6l- 
ors.  Had  the  process  for  the  enforcement  or  the 
breach  of  a  joint  contrail  been  pra6lical,  the  interpre- 
tation of  the  business  contrail  and  of  the  remedies  to 
enforce  it  would  have  been  adequate  to  the  require- 
ments of  the  business,  and  no  mischief  would  have 
resulted  from  identifying  partners  with  joint  contract- 
ors. But  the  crochet  of  an  indivisible  contrail  and 
the  technical  trifling  of  medieval  procedure  conflidled 
with  and  transformed  the  business  contrails  of  the 
firm.  The  remedy  was  a  pitfall,  and  seemed  designed 
to  prevent  the  attainment  of  satisfadlion,  the  obje6l 
of  the  process.  Partnership  has  had  to  submit  to 
these  restridlions,  and  to  work  at  a  disadvantage  from 
its  introduction  into  England  up  to  the  present  day. 
There    has  been    a    long  struggle,  and  it  has  been 


Introduction. 

carried  on  against  the  inveterate  iDrejudice  of  the 
Profession,  to  provide  partnership  with  the  legal 
machinery  which  is  adapted  to  its  requirements.  It  is 
only  now,  and  in  America,  that  the  desired  result  has 
al  last  been  worked  out.  In  England,  the  partnership 
procedure  has  been  codified  upon  the  model  of  the 
Civil  law  pra(5lice,  and  a  discretion  has  been  lodged 
with  the  judges  to  mould  the  procedure,  in  order  to 
carry  out  the  enactment.  But  our  Profession  at  the 
old  homestead  still  worships  the  Fetish  of  an  indivi- 
sible contradl.  The  judges  have  disregarded  the 
legislative  mandate,  and  ignored  the  Civil  law  process. 
They  have  read  the  conceit  into  the  Civil  law,  and 
vitiated  its  process,  as  they  did  the  procedure  of  the 
Common  law. 

The  law  of  commercial  paper  has  injected  itself 
into  partnership,  and  created  a  partial  revolution. 
By  means  of  commercial  paper  a  partner's  implied 
power  is  extended  beyond  the  scope  of  the  partner- 
ship business.  At  first,  where  the  form  of  the  paper 
indicated  an  individual  transaction,  the  first  taker  at 
least  could  not  hold  the  firm ;  but  the  use  of  commer- 
cial paper  did  not  correspond  to  its  form,  and  no 
notice  is  now  suggested  by  the  way  in  which  the 
paper  is  drawn.  The  partner  may  employ  commer- 
cial paper  for  his  individual  account,  and  charge  his 


Ixxii. 


Introduction. 

firm.  There  is  no  limit  to  a  partner's  power  in  deal- 
ing witli  commercial  paper.  The  important  thing  to 
remark  is,  that  this  is  an  exceptional  power,  and  that 
it  stands  isolated  from  ever}-  other.  The  failure  to 
observe  that  this  power  conflicts  with  partnership 
principles,  and  supercedes  them  for  the  nonce,  has 
induced  a  habit  of  arguing  b}-  analogy  which  has 
no  justification.  The  admitted  power  of  a  partner  b}- 
means  of  commercial  paper  to  make  his  co-partners 
share  his  individual  debts  is  assumed  to  be  derived 
from  partnership  principles,  and  thence  it  is  argued 
that  other  exertions  of  power  should  be  countenanced, 
because  the}'  do  not  exceed  the  power  of  a  partner  b}^ 
commercial  paper. 

From  this  outline  of  principles,  it  is  obvious  that 
partnership  has  not  been  anahzed  and  reduced  to  its 
constituent  elements,  much  less  have  the  principles 
been  worked  out  in  detail,  and  classified  according  to 
their  prominence  in  the  relation.  Without  such 
analysis  and  elaboration,  an  embodiment  of  partner- 
ship would  not  be  complete.  The  proposed  code  by 
Prof.  Pollock  contains  no  hint  of  such  requirements. 
Austin,  the  great  advocate  for  a  code,  insisted  that  it 
should  embody  a  system  of  principles.  The  qualifica- 
tions he  specified  for  a  codifier  should  be  recalled  by 
those  who  invoke  his  name.     Think  of  his  standard 


Introduction. 

in  comparison  with  modern  projeAs!   The  organizing 
faculty  of  Aristotle  should,  he  said,  be  combined 
with  the  knowledge  of  the  Common  law  possessed  by 
CoKK   or   ELDON..t       Superior   qualifications    could 
hardly  be   conceived,  and  yet  they  are  not  equal  to 
the  requirements  demanded  for  a  codifier.     The  pro- 
gress of  the  human  mind  is  made  in  stages,  and  not 
all  at  once.     Xo  man,  though  an  Aristotle  and 
Eldon  rolled  into  one,  possesses  all  the  wisdom  of  his 
epoch,  much  less  of  all  time.    An  attempt  to  put  into 
definite  propositions  all  the  provisions  of  law%  would 
of  necessity  be  imperfect.     Principles  would  be  over- 
looked, misunderstood,  or  not  brought  into  co-ordina- 
tion with  the  system.     The  reasoning  from  the  code 
would  be  based  upon  a  comparison  of  all  the  parts. 
The  construdlion   is  e  complexu^  and  thus  the  tares 
would  grow  up  together  with  the  wheat.     Austin's 
criticism  of  the  French  Code,'-'  and  Pothier'S  idiosyn- 
cracies   incorporated    in   the  Code  Napoleon ,t    illus- 
trate the  cffe^l.    This  process  of  interpretation  vitiates 
not  only  the  corpus  juris,  but  also  the  lawyers  who 
are  trained  to  reason  from  arbitrary  premises,  with- 
out taking  thought  whether   they  are  true  or  false. 

X  3  .^fSTiN's  Jurisprudence  377-8  ;  2  lb.  362-3. 
♦Austin  Jurispruflence,  293,  205. 

t  {  34.  n.  I.     2  Bonjean,  Traitd  des  Actions  102-3,  cites  an  instance  and 
states  the  habit. 

Ixxiv. 


Introduction. 

The  statutor}^  provisions  are  theoretically  remediable 
by  subsequent  legislation,  but  the  work  of  a  code  is 
not  performed  by  the  legislators ;  it  is  thrust  upon  the 
legislature  from  without,  and  when  once  enabled  is 
not  easily  rectified.  The  change  of  a  part  involves  a 
readjustment  of  the  whole,  because  the  basis  of  con- 
strudtion  extends  to  all  parts.  But  if  the  code  were 
remediable  by  subsequent  legislation,  a  legislature 
would  be  required  to  sit  like  a  court  without  interrup- 
tion. What  advantage  would  be  gained  by  substitut- 
ing a  legislature  for  a  court?  The  legislature  has 
broken  down  even  in  its  appropriate  province.  Mr. 
Carter  has  marked  out  the  sphere  of  legislative 
a6lion  with  unequalled  discrimination.'''  The  State 
takes  charge  of  the  common  welfare,  but  does  not 
interfere  with  the  relations  between  the  citizens, 
unless  thej^  disturb  the  public  good.  It  is  under  this 
rule  of  non-interference  that  the  citizens  of  Rome  and 
of  England  built  up,  according  to  their  needs,  the  only 
two  great  systems  of  law  which  the  world  has  seen. 

Judge  Strong,  in  a  remarkable  address  delivered  to 
the  law  students  of  the  University  of  Pennsjdvania, 
showed  how  the  system  of  popular  legislation  had 
failed  to  perform  its  function,  and  had  thrown  back 

*The  Proposed  Codification  of  Our  Common  Law. 
Ixxv. 


iNTRCa^UCTION. 

its  work  upon  the  courts. t  It  is  not  simply  the  cor- 
ruption of  legislative  bodies  which  accounts  for  the 
failure,  but  it  is  the  want  of  intelligence.  The  legis- 
lature is  not  made  up  of  experts,  who  know  what  the 
law  is,  and  how  it  can  be  improved.  Austin  always 
regretted  that  he  had  not  been  bred  to  the  law.J  He 
felt  that  the  source  of  his  legal  inspiration  had  been 
cut  off,  and  that  he  did  not  master  the  materials 
whicli  lie  would  fain  have  worked  up  into  the  frame- 
work of  a  code.  His  organizing  mind  craved  order, 
and  he  thought  nothing  would  bring  it  about  in  law 
but  a  code.  It  seems  strange  that  he  should  have 
distrusted  in  law  the  process  which  he  made  the  key- 
stone to  his  system.  He  demonstrated  how^  the  mind 
appropriates  a  principle,  and  assimilates  it  in  all  its 
details.  Xo  better  explanation  could  be  given  of  the 
reliance  upon  principle  for  guidance.=-=  Had  the  sug- 
gestion been  made  to  Austin  that  the  principle  of 
utility  should  be  codified,  with  what  astonishment 
would  he  have  regarded  the  projeA?  Judge  CoOLEY 
has  recently  illustrated  the  process  in  reference  to 
the  principles  of  law.||     What  is  simpler  than  part- 

tIntro<luaory  .Address  to  Uie  Law  Students  of  the  University  of  Penn- 
lylvania,  oaober,  1879. 

tThc  Pro\-ince  of  Jurisprudence. 
•AiSTfN's Jurisprudence,  vol.  i. 
347-"o.'S."  ""'''''^  '"''''  Uncertainty  of  the  Law,"  ..  Am.  Law  Rev. 

Ixxvi. 


Introduction. 

nership?  A  partner  is  nothing  but  a  co-proprietor 
in  the  business.  The  recognition  of  this  trait,  in  any 
aspe6l  in  which  it  may  present  itself,  is  a  difficulty 
only  in  the  sense  that  the  instance  may  be  compli- 
cated by  other  traits  which  conflict  with  a  proprietor- 
ship, and  make  its  existence  doubtful.  No  obscurity 
arises  from  the  principle,  though  its  application  un- 
der the  diversified  phases  of  life  may  not  always  be 
simple. 

The  impifttation  cast  upon  judges  by  BenTHAM  and 
his  school  is  groundless.  They  have  never  usurped 
any  prerogative.  The  fundlion  which  they  exercise 
is  the  normal  process,  and  the  only  intelligent  method 
ever  yet  devised  to  meet  the  wants  of  a  community. 
The  Roman  course  differed  only  in  having  free  trade 
in  jurisconsults^  which  was  letting  the  parties  choose 
their  judge.  The  judicial  utterance  is  the  original 
method  which  has  prevailed  from  the  earliest  times. 
It  is  pre-eminently  the  Common  law  process.  The 
Anglo-Saxons  were  the  embodiment  of  their  law. 
Bach  member  of  the  commune  was  an  exponent  of 
the  law,  and  testified  to  its  terms.*  The  court  and 
jury  of  the  present  day  do  but  represent  the  com- 
munity and  continue  the  legal  tradition  which  has 
endured  from  the  days  of  the  markmen.      Whether 

*2)r.  Slarl  2luguft  Slogge.     Ueber  bag  (55end)t'SUicK'n  bor  (Ma-manen. 

Ixxvii. 


Introduction. 

the  tluory  of  HoLMKS,t  that  the  court  is  educated  by 
the  jury,  be  adopted  or  not,  the*  judges  formulate  the 
principles  for  tlie  common  weal,  and  have  been  found 
by  ages  of  experience  to  be  the  only  body  which  can 
give  adequate  expression  to  the  will  of  the  commu- 
nity.    The    slur  of  "judge-made"  law    has    not  de- 
terred the  judges  from  exerting  their  faculties,  nor 
will  it  make  them  abnegate  their  fundlion.       They 
should  not  be  intimidated   and  seek  to  conceal  the 
process  by  a  false  pretext.     The  maxim  of  stare  de- 
cisis is  a  meaningless  phrase,  and  should  not  be  used 
as  a  blind.     Mill  charges  lawyers  with  the  fault  of 
arguing  as  if  a  proposition  were  general  when  it  has 
but  a  restricted  meaning.      The  charge    accurately 
describes  the  use  made  by  lawyers  of  the  maxim  stare 
decisis.     It  does  not  mean    what    the  words  stridlly 
import,  that  a  judicial  blunder  must  be  perpetuated 
forever.     The  history  of  the  Common  law  negatives 
such  an  absolute  sense.     Bracton  seleAed  his  cases 
mainly  from  the  rolls  of  Pateshull  and  RalEIGH, 
disregarding  the  rolls  of  all  the  other  judges,||  and 
yet  his  book  has  been  taken  as  a  statement  of  the 
law.     It  is  the  only  original  source  of  early  Case-law, 
and  he  wrote  in  order  to  bring  the  decisions  to  the 

tHoLMRs'  Common  Law.  1 13-14,  123-9. 

IIBracton's  Note  Book,  by  Maitland. 

Ixxviii. 


Introduction. 

attention  of  judges.  The  vast  accumulation  of  rolls 
were  evidently  not  consulted  by  any  one.  REEVES, 
in  his  history  of  the  Common  law,  recapitulates  the 
changes  made  in  the  law  of  England  during  succes- 
sive reigns,  and  no  legal  writer  can  be  consulted  who 
does  not  show  how  the  do6lrines  of  his  subje6l  have 
been  modified  at  different  times.  The  maxim  does 
not  mean  what  it  says.  It  must  be  interpreted  in 
connedlion  with  its  complement,  which  provides  that 
a  precedent,  when  superceded,  never  was  law.  This 
shows  that  it  is  only  sound  law  which  obtains  in  the 
long  run,  because  principle  is  the  only  safe  guide  for 
human  a6lion.  Why,  it  might  be  asked,  take  any 
exception  to  the  maxim  if,  when  corredlly  under- 
stood, it  coincides  with  principle?  The  answer  is, 
that  this  co-incidence  is  not  recognized,  and  the 
maxim  is  never  invoked,  except  to  exclude  the  opera- 
tion of  a  principle.  A  precedent,  it  must  be  borne  in 
mind,  is  nothing  but  an  experiment.  If  the  proposi- 
tion justifies  itself,  the  principle  stands,  but  if  subse- 
quent investigation  shows  that  the  proposition  is 
unsound,  it  is  set  aside  and  replaced  by  the  true 
principle.*     Any  attempt  to  stifle  investigation,  and 

*"In  stridlness  the  decision  of  a  judge  is  not  law  for  succeeding  cases ; 
"  it  is  only  evidence  of  the  law.  It  is  the  testimony  of  a  witness  who  is  pre- 
"sumfedto  be  learned  and  capable,  explaining  what  the  law  actually  is 
"on  the  point  in  question.     It  decides  the  particular  case,  but  it  does  not 

Ixxix. 


IXTROnrCTION. 

bolster  up  an  incorredl  statement  of  the  law,  causes 
more  mischief  than  undoing  the  wrong  at  first.  The 
repeated  decisions  aggravate  the  case  until,  in  the 
end,  a  wliole  mass  of  decisibns  has  to  be  overthrown, 
instead  of  a  single  precedent. 

It  is  the  process  of  testing  the  cases  at  every  recur- 
rence bv  the  touchstone  of  principle  which  makes  the 
law  a  science.  This  is  the  method  of  natural  science. 
The  opportunity  is  afforded  for  verification  or  revi- 
sion ])y  the  court  after  the  most  searching  investiga- 
tion and  discussion  by  the  lawyers.  A  history,  if  it 
existed,  of  legal  do(ftrines  at  the  Common  law  would 
show  how,  and  when,  the  different  groups  of  cases 
were  generalized  and  brought  into  consistency  with 
the  system.  No  one  familiar  with  legal  thought  can 
fail  to  recall  instances  where  lawyers  have  unearthed 
and  framed  the  principle  which  serves  to  reconcile  a 
given  line  of  cases,  and  have  put  the  class  upon  its 
true  basis  of  principle.  The  wisdom  of  the  Common 
law  arrangement  consists  in  its  providing  for  the 
coKjperation  of  the  Bar  in  making  the  law.  The 
provision  liberates  all  the  latent  resources  of  the 
Profession,  and  makes  them  available  at  all  times  for 

• '  rl^"?!r'?'  '^^■"'^^  ''"""  °°^'  ^^^*  ^'^"°^-    The  succeeding  judge  may 
reica  the  test.mony  of  his  predecessor  as  erroneous ;  he  may  find 

Z.^IT..?.!:'^  ''''^\^^^  predecessor  declared  it  to  be;  he 
ision.' 

Ixxx. 


rejca  the  test.mony  of  his  predecessor  as  erroneous;  he  may  find  that 

••  hl^forr  "°'  ;"  '^'^  "''"'  ""''  predecessor  declared  it  to  be ;  he  may 
therefore  ozrrrule  the  prior  decision.-    Hadi^ev's  Roman  Law,  p.  68-9 


Introduction. 

the  development  of  the  law.  The  ranks  of  the  Pro- 
fession may  be  all  but  filled  with  ordinary  and  com- 
mon-place judges  and  pradlitioners.  It  needs  but 
one  original  mind  to  dete^l  the  latent  principle  which 
explains  a  congeries  of  cases,  and  to  combine  princi- 
ples in  their  related  order  in  the  system.  The  in- 
stant the  principle  is  announced,  and  its  position  in 
the  hierarchy  of  principles  disclosed,  the  truth  is  es- 
tablished. The  discovery  is  recognized,  like  a  truth 
of  natural  science,  without  debate  or  argument,  and 
the  revelation  illuminates  the  mind  with  convi(5lion. 
It  is  the  free  play  of  original  thought  which  infuses 
life  into  the  law  and  keeps  it  from  stagnation.  The 
perversion  of  the  maxim  stare  decisis^  and  the  adher- 
ence to  precedent  without  reference  to  principle,  pro- 
duce the  same  effe6l  as  a  code.  The  reasoning  from 
an  arbitrary  premiss,  vitiates  the  faculty  of  reason, 
cutting  it  off  from  the  source  of  its  inspiration,  and 
the  arbitrary  element  introduced  into  the  law  helps 
to  fix  the  basis  of  construdlion  for  the  whole  corpus 
juris. 

The  meaning  of  the  common  saying,  that  periods 
of  codification  mark  epochs  of  decay,  is  simply  that 
a  code  excludes  the  co-operation  of  the  Profession  in 
making  or  developing  the  law.  The  creating  force 
is  turned  off.     Any  science  would  die  out  which  pre- 

Ixxxi. 


Introduci^ion. 

vented  the  closet  student,  the  pra(5lical  operator,  the 
experimentalist,  or  any  other  follower,  from  contrib- 
uting to  the  general  fund  of  knowledge.  No  one  can 
foretell  from  whom  may  come  the  inspiration  which 
will  advance  the  knowledge  of  all,  and  the  co-opera- 
tion of  every  disciple  is  solicited.  No  one  is  driven 
away. 

By  enacling  a  proposition,  or  adhering  blindly  to 
a  precedent,  the  process  of  sifting  and  purifying  the 
law  by  snbj celling  it  to  reason  is  arrested,  and  the 
law  becomes  a  dead  mass  which  succeeding  genera- 
tions of  lawyers  cannot  utilize,  as  it  admits  of  no 
assimilation. 

When  I  took  possession  of  my  chair  at  the  Univer- 
sity of  Pennsylvania,  in  1874,  I  announced,  in  an 
introductory  lelure,  the  plan  of  instruAion  which  I 
should  pursue,  and  I  have  endeavored  to  follow  the 
course  which  I  then  marked  out.  The  present  book 
is  the  producl  of  my  work  upon  one  topic  of  the 
course,  and  will  illustrate  my  method  of  handling 
the  law. 

The  point  to  which  I  direded  the  attention  of  the 
students  is,  that  cases  are  the  exponents  of  principle, 
and  that  back  of  the  fads  lies  the  reason  which 
explains   them.      The   occupation    of  watching   the 

Ixxxii. 


Introduction. 

a<5ling  forces  of  the  law  as  they  mould  its  provisions, 
captivates  and  absorbs  the  mind.  The  students 
become  interested  in  the  process  which,  while  it  is 
open  only  to  the  initiated,  explains  what  they  see 
going  on  before  their  eyes  in  the  courts.  They 
learn  to  appreciate  a  principle  when  they  witness  the 
transformations  which  it  effe6ls.  One  who  starts 
with  the  reason  for  a  proposition  has  the  inside  view. 
His  mind,  guided  by  the  principle  acfts  under  its 
inspiration  and  working  according  to  its  nature, 
comprehends  the  exadl  extent  and  limit  of  its  appli- 
cation. It  is  the  weakness  of  statutory  law  that 
reason  is  excluded  in  interpreting  its  provisions. 
The  ipse  dixit  of  the  legislature  mocks  reason. 

The  charadler  of  the  instru(5lion  which  a  ledlurer 
gives  will  depend  upon  the  obje6l  he  has  in  view. 
If  he  says  the  Common  law  is  a  case-system,  the 
important  thing  is  to  take  up  the  mechanism  of  a 
case,  and  teach  the  class  how  it  is  constru6led.  He 
would  then  dissedl  cases  and  think  no  valuable  time 
lost  which  was  consumed  in  putting  the  inexpe- 
rienced students  through  the  gymnastics  of  a  case.* 
The  result  of  such  a  method  would  be  to  turn  out  a 

*This  is  the  method  expounded  aud  advocated  by  Sidney  G.  Fishek, 
Esq. ,  in  an  article  entitled,  ' '  The  Teaching  of  Law  by  the  Case-System. ' ' 
27  Am.  Law  Reg'r  416-26.  He  treats  the  class-room  as  a  clinic  for  the 
dissection  of  cases,  and  .seems  to  think  this  is  the  Harvard-System. 

Ixxxiii. 


Introduction. 

case-lawvcr,  whose  aim  would  be  to  familiarize  him- 
self with  as  many  cases  as  possible.  If  he  could 
classify  them  in  series,  the  segregation  would  enable 
him  to  memorize  theux  with  greater  ease,  and  he 
would  accordingly  start  with  what  are  called  leading 
cases.  The  subsequent  decisions  would  be  grouped 
under  the  first,  but  as  the  combination  of  fa^ls  does 
not  recur,  the  process  would  be  imperfedl,  and  with 
the  succession  of  cases  become  more  and  more  con- 
fused. Sub-divisions  would  keep  up  only  the  show 
of  classification.  Cases  spring  up  everywhere  which 
admit  of  no  such  grouping.  They  are  indexed  as 
novel  points,  and  soon  fill  a  digest.  In  the  end  the 
digests  and  text  books  are  over^vhelmed  with  a  mass 
of  unassorted  cases. 

It  is  needless  to  say  that  no  Law  School  adopts 
this  course  of  instru6lion.  It  is  the  want  of  the 
training  given  by  Law  Schools  that  accounts  for  this 
plan  of  case-juggling.  Even  a  'mast-fed'  la^vyer,  as 
Lincoln  jocosely  said  he  was,  would  not  follow  such 
a  plan,  if  he  had  the  mental  aptitude  to  reason  for 
himself 

To  try  and  fit  one  case  to  another  without  recur- 
ring to  the  principle  which  conne(5ls  them  to  a  com-  , 
raon  system  is  to  make  a  patch-work  or  mosaic  of  the 
law.    The  course  of  instrudion  at  Harvard,  if  Judge 

Ixxxiv. 


Introduction. 

Holmes'  bookf  and  Prof.  Ames'  articles^  disclose  the 
process,  is  the  historical  method.  The  early  cases 
are  studied  in  order  to  discover  the  origin  of  each 
principle  at  the  Common  law,  and  when  it  is  detedled 
the  course  of  its  subsequent  development  is  pointed 
out. 

There  is,  however,  a  method  of  instruc^tion  which 
disregards  first  principles,  and  adheres  to  secondary 
ones.  The  principle  immersed  in  the  fa6ls  of  a  case 
must  always  be  extra(5led  and  stated  in  the  form  of  a 
proposition.  The  analysis  of  a  case  is  the  prelimi- 
nary step  in  reaching  the  proposition.  The  lawyer 
represents,  or  assumes  to  represent,  the  logical 
faculty.  The  case  having  been  reduced  to  its  con- 
stituent elements  and  stated  in  the  form  adapted  for 
reasoning,  becomes  a  starting  point.  No  inquiry, 
however,  is  made  into  the  origin  of  the  rule,  or  its 
connedlion  with  any  other  branch  of  the  law.  The 
dedudlions  made  from  the  premises  may  be  stri(5lly 
accurate  and  logical,  but  the  failure  to  connedl  them 
with  each  other  in  a  system  destroys  the  inter- 
dependence of  the  parts  in  the  whole.  By  severing  a 
principle  from  its  stock,  the  life  of  the  limb  is  taken 
away,  and  the  proposition  becomes  an  arbitrary  state- 

t  The  Common  Law,  by  OLIVER  W.  Holmes,  Jr.,  i88i. 
X  "The  History  of  Assumpsit."  2  Harvard  Law  Rev.  54-69,  1S88. 

Ixxxv. 


Introduction. 

niciit.  The  reasoniug  faculty  is  perverted  by  making 
it  tlcal  with  counters  instead  of  with  principles.  It  is 
this  eccentric  feature  which  gives  to  so  much  of  legal 
reasoning  its  anomalous  character.  The  sweeping 
language  of  lawyers  is  misleading.  They  affedl  to 
to  be  reasoning  on  general  principles,  when  the 
language  is  in  fa6l  confined  to  an  abbreviated  propo- 
sition, and  does  not  comprehend  what  its  terms 
import. 

The  true  method  of  instruction  involves  the  histori- 
cal, the  dogmatic,  and  the  comparative  study  of  law. 
The  origin  of  a  principle  must  be  investigated,  its 
development  traced  from  its  first  appearance  down  to 
its  last  manifestation,  and  the  changes  noted  which  it 
has  produced,  as  well  as  the  principles  which  have  met 
and  counteradled  it.  The  principle  may  be  latent, 
and  require  side  lights  to  make  its  presence  visible. 
The  interdependence  of  the  parts  in  a  system  must 
be  understood,  in  order  to  realize  the  relative  force  of 
any  given  principle.  The  instruaion  includes  a 
comparative  study  of  other  systems  of  law,  which 
have  had  the  same  problems  to  solve,  in  order  to 
ascertain  how  best  the  purposes  of  law  can  be  accom- 
plished. 

The  direction  given  to  the  course  of  thought  when 
the  student's  mind  is  first  awakened  to  the  idea  of 

Ixxxvi. 


Introduction. 

law  controls  him  throughout  his  subsequent  career. 
The  students  of  the  University  of  Pennsylvania  have 
been  led  to  approach  the  study  of  law  in  the  scientific 
spirit,  and  have  carried  the  original  impetus  into 
their  subsequent  work.  The  law,  they  see,  is  a 
science,  and  its  process  conforms  to  the  scientific 
method  both  of  investigation  and  verification.  The 
graduates  of  the  University  of  Pennsylvania  exhibit 
the  advantages  of  studying  the  law  in  the  scientific 
spirit,  and  would  not,  it  is  safe  to  predial,  exchange 
the  method  which  they  acquired  at  that  University 
for  any  competitive  scheme  of  legal  education. 

JAMES  PARSONS. 

142,0  ^o.  Penu  Square, 

PhiIvADEIvPhia.,  Pa. 


IxxxvH. 


THE 


PRINCIPLES  OF  PARTNERSHIP. 


THE   PRINCIPLES  OP 


PARTNERSHIP. 


The  subjedl  of  partnership  naturally  divides  itself  into 
three  parts: 


1.  Assuming  \\)t  position  of  a  partner,  or  iol)at  conatitutea 
a  partner. 

2.  (3:i)e   prindpks   vo\]\c\)  regulate  partnersl]ip  buring  its 
existence;  anb 

3.  Qllje  principles  bn  m[)k\)  tl)e  busineBS  is  tuonntr  up. 


Part  I. 

n'jiiuiiuna  tl)c  position  of  a  partner,  or  m\)ai  constitutes  a 
partner 


CHAPTER  I. 

TIIK   ORIGIN    AND    GROWTH    OF    PARTNERSHIP. 

tilic  relation  of  tl)e  partueru  betiueen  tliemselocs  mas  tl)c  leinal 
aspcit  ol"  tl)c  snbjcrt  at  tl)e  Ixoman  lain,  n)l)ile  at  tl)e  Conimon 
law  tl)c  effect  upon  tljirir  persons  of  one's  acting  as  a  partner  is 
tl)e  question  for  iiiscussion. 

Partnership  existed  at  the  Roman  law,  which  de- 
fined the  relations  of  the  partners  among  themselves. 
Being  founded  upon  confidence,  the  ideal  of  good  faith 
was  enforced.  The  partners  became  mutual  trustees 
in  the  business.  Fairness  required  that  each  should 
share  the  profits  in  proportion  to  the  contribution  he 
made  to  the  business,  and  the  law  prescribed  an  ad- 
justment of  the  interests  upon  this  basis. ^ 

The  Common  law  leaves  the  domestic  equation  to 
the  agreement  of  the  parties,  and  sanAions  any  ar- 
rangement they  see  fit  to  make  among  themselves. 
It  IS  only  in  the  absence  of  any  contract  that  the  law 
supplies  its  place  and  regulates  the  status  of  the 
partners.  The  main  discussion  of  partnership  in- 
volves the  rights  of  third  persons  against  a  firm,  and 
upon  this  point  the  Roman  law  was  almost  silent. 


Pt.  I,  Ch,  !.  Origin  and  Growth.  §i. 

Partnership  at  the  Roman  law  antedates  contracl.  The 
origin  of  the  relation  goes  far  back  to  the  worship  of  ances- 
tors, patrem  'ct  matrem  vciierari  oportet.    D.  ^y])  I5>  i;  2. 

The  parents  and  children  form  a  partnership,  secla^  socie- 
tas.  It  is  a  tie  of  blood,  and  binds  the  kin  together,  con- 
sorfes^  by  sacred  rites.  The  family  partnership  executes 
blood  vengeance,  siias  siioriiniqiie  injiirias  perseqititur. 

The  joint  property  results  from  the  union  of  persons, 
herSliiin  non  citimi^  and  accounts  for  the  partnership  of  all 
property  rights,  societas  omnium  bojiorum^  and  explains  Ul- 
pian's  description  of  partnership  as  a  kind  of  brotherhood, 
cii7n  societas  jus  qiiodaminodo  fraternitatis  in  se  habcat^  D. 
17,  2,  63,  which  exadls  the  utmost  good  faith  from  its  mem- 
bers, fratres  consortes.  The  reciprocal  obligations  were 
enforced  by  t\].e/aniiliae  Jicrcisaindae  aflio. 

The  patron  and  client  enlarged  the  relation  and  intro- 
duced the  voluntary  element.  This,  in  time,  became  the 
distin(5live  trait  of  a  partnership.  A  joint  possession  or 
ownership  which  did  not  arise  from  a  contra(5l  was  called  a 
co7)imunitas^  to  denote  the  specification  which  had  been 
made,  but  the  only  difference  between  them  lay  in  the 
method  of  acquisition.  Co-owners  or  co-tenants  of  land 
might  be  partners  in  it,  not  because  they  converted  the 
land  into  merchandise  for  traffic,  but  simply  because  they 
effefted  a  joint  purchase,  and  without  reference  to  any  use 
or  disposition  they  might  make  of  the  land.  Two  monks, 
who  bought  a  saddle-horse  for  each  to  ride,  were  partners 
in  the  animal.  The  a^io  pro  socio  was  confined  to  the 
partnership  by  contrail. 

The  trade- partnership  arose  from  farming  the  public 
revenues,  which  overtaxed  the  administrative  resources  of 
the  Republic,  and  was  committed  to  private  individuals." 

The  purpose,  which  induced  the  partners  to  enter  the  re- 
lation, ser\^ed  as  a  basis  for  a  classification  of  partnership. 
Gain  being  the  leading  impulse  for  action,  made  the  grand 
di\nsioii  a  partnership  for  gain,  societas  ex  quaes tu.,  or  a 
partnership  not  for  gain.'' 

5 


§2^  Origin  and  Growth.  Pt.  i,  Ch.  i. 

TIk-  only  kind  which  corresponds  with  the  trade-part- 
ncrsliip  of  modern  times  is  the  societas  ex  qiiaestu. 

1.     l.-»  (Hliicf*  (Slautmuui  ber  ^anbectcn  304-26.  ^.966. 

I.     A^yjx  (vJcjdMcbtc  bcr  jHomifc^cn  Societal  Don  ®r.  33.  SB.  2eift,  ^ena,  1881. 


§2. 

|JartncrGl)ip  ciisteLi  before  lontract  regulated  its  terms,  anb 
tlif  pnmitioc  relation  is  not  reinoLielei^  bn  tl)e  boctriue  of  consid- 
eration. 

Partuership  grew  up  in  the  middle  ages,  and  there 
assumed  its  modern  form.  The  history  of  the  various 
firms  wliich  flourished  during  that  period  has  been 
investigated,  and  the  partners  seem,  generally,  to 
have  been  related  as  members  of  a  family.  The 
headquarters  were  at  the  family  seat,  and  branches 
were  established,  or  travelling  members  sent  out, 
when  occasion  required,  to  extend  the  business.'  It 
needed  the  intimacy  and  trust  of  kinship  to  carry 
on  trade  in  a  predatory  period,  and  the  necessity 
added  new  force  to  the  canon  of  the  Roman  law,  that 
partnership  is  a  relation  of  the  strictest  confidence. 

When  tlie  question  arose  in  our  law:  May  the 
family  relation  serve  as  the  basis  of  a  partnership?  a 
collision  of  theories  presented  itself,  owing  to  the 
fad  that  with  us  the  element  of  consideration  had 
become  the  controlling  fadlor  in  contractual  relations. 
It  was  assumed  that  the  contract  of  partnership,  like 
all  other  contracts,  required  a  consideration  to  uphold 
It.  The  family  relation  of  the  partners  rebuts  the 
presumption  of  a  consideration  between  members,  and 
pr-vents  a  contract  from  being  implied  by  law.      But 


Pt,  I,  Ch.  I.  Origin  and  Growth.  §3. 

the  argument  overlooks  the  medieval  practice  of  fam- 
ily partnerships,  and  makes  the  modern  graft  of  con- 
sideration sap  the  trunk  of  the  partnership  tree. 
Without  reference  to  either  history  or  consideration, 
the  question  was  settled  in  conformity  with  medieval 
tradition.^ 

1.  ^anbelggefellfdiaften  in  ben  beutfdjen  Stabtrcc^tSquellen  be§  SJJittelalter^S 
bon  5-riebri4  ©ujta»  2tbotf  ©djmibt,  1883. 

2.  Family  relatio7i  don'' t  rcbtit  inference  of  partnership  arising  from 
joint  transafliofis.  Joseph  Ratzer,  in  1865,  bought  carts  and  started 
business  as  a  carter.  In  1866,  his  father,  John,  began  buying  brew- 
ers' grain,  and  FeHx,  his  son,  joined  them;  followed  by  John,  a 
third  son,  in  1867.  From  1866  to  1868  they  traded  as  J.  &  F.  Ratzer; 
then  changed  to  Ratzer  Bros.  The  proceeds  of  bvisiness  went  to  the 
mother,  who  supported  them  and  supplied  them  with  pocket-money. 
John  and  Joseph  brought  bill  for  account.  Defence  :  No  partnership, 
but  plaintiffs  obtained  support  for  their  services.  Felix'  testimony, 
that  original  firm  was  John,  Sr.,  and  Felix,  negatived  bj- his  admis- 
sions, confirmed  by  change  of  name  to  Bros,  when  third  brother 
entered,  and  by  father's  admission  that  sons  owned  the  business. — 
Account.  Transacftiug  business  together,  though  without  an  agree- 
ment, implies  a  partnership,  and  entitles  each  member  to  share  the 
profits  equally.   Ratzer  v.  Ratzer,  i  Stew.  137(1877). 


§3. 

tDl)£n  partiursljip  urns  intro^ucELl  as  a  fuurtiou  of  trabc, 
property,  beinci  tl)c  subject-matter  of  trabe,  mas  becmcti  to 
cljargc  tl)c  proprietor  iul)o  contributcii  to  tl)e  tirm  roitl)  i\)t  im- 
liiuitcLi  liabiliti)  of  a  partner,  altl)outil)  l)c  took  no  part  in  i\]t 
management  of  tl)c  business. 

Partnership  entered  the  Common  law  through  trade 
or  commerce,  and  the  Law  Merchant  governs,  it  is 
said,  the  relation.  But  this  is  true  only  of  a  few 
principles  adopted  apparently  at  haphazard.  The 
earlier  statutes  of  the  various  sea-port  towns  on  the 
continent  of  Europe  have  been  collated,  and  they  es- 
tablish the  law  of  the  then  commercial  world.     The 

7 


(53.  Origin  AND  (iROWTH.  Pt.  1,  Ch.  i. 

result  of  the  enadments  is  that  in  medieval  times 
the  test  of  general  liability  as  a  partner  was  his  join- 
ing as  a  proprietor  in  the  management  of  the  busi- 
ness. He  must  be  both  an  owner  and  a  manager. 
The  Coiuvioida^  or  property  contributed  to  a  business 
conducted  by  others,  did  not  of  itself  personally 
charge  the  contributing  partner,  who  took  no  part  in 
the  management,  for  any  liability  incurred  in  the 
transa(5lion  of  the  business.  He  staked  his  contribu- 
tion in  the  venture,  and  that  was  all  he  could  lose,  if 
the  enterprise  failed.'  The  Common  law  did  not 
adopt  tlie  Law  Merchant  upon  this  point,  but  modi- 
fied it  by  interje6ling  a  feudal  notion  into  the  trade 
relation  of  partnership.  The  joining  in  trade  was 
not  interpreted  according  to  its  natural  form  and  ef- 
fect, simply  as  the  co-operation  of  proprietors  in  the 
management  of  a  business,  but  the  element  of  prop- 
erty was  made  the  dominant  fa(5lor,  and  property  em- 
barked in  trade  became  itself  a  sufficient  basis  for  the 
relation. 

lender  the  Feudal  law  all  the  rights  and  duties  of 
tlic  individual  took  root  in  the  possession  of  property. 
Land,  the  most  usual  and  important  form  of  property, 
became,  in  effedl,  though  not  in  name,  a  legal  person, 
and  the  man  a  mere  incident  or  locum  tcnens.  Per- 
sonal property  never  had  this  independent  legal 
status,  but  the  habit  of  mind  acquired  in  dealing  with 
real  estate  led  the  common  lawyers  to  personify  the 
contribution  of  a  partner.  Starting  with  the  physical 
fact  of  contribution,  the  rights  and  responsibiliries  of 
the  contributor  were  the  result  of  its  commercial 
movement.  The  joinder  of  property  was  deemed  suf- 
ficient to  charge  the  owner,  although  he  did  not,  as  a 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §4. 

person,  join  in  the  business,  or  take  part  in  its  man- 
agement or  dire(5lion. 

This  novelty  in  i^aw  has  effected  a  revoi^ution  in  partner- 
Ship,  AND  MADE  THE  COMMON  LAW  TYPE  A  DISTINCT  SPECIES,  UNLIKE 
THE  PARTNERSHIP  OF  THE  LAW  MERCHANT.  ThE  CHANGE  RESULTED 
FROM  THE  UNCONSCIOUS  ADHERENCE  TO  FEUDAL  TRADITIONS  WHILE 
PROFESSING  TO  ADOPT  THE  PRINCIPLES  OF  TRADE.  ThE  METAMOR- 
PHOSIS IS  SO  COMPLETE  THAT  THE  NORM.\L  TYPE,  NOW  INTRODUCED 
BY  STATUTE  UNDER  THE  NAME  OF  SPECIAL  P.^RTNERSHIP,  IS  NOT 
RECOGNIZED  BY  THE  PROFESSION,  BUT  IS  MISTAKEN  FOR  A  MONGREL 
CROSS   BETWEEN   A   LOAN   AND   A    PARTNERSHIP. 

I.  Das  5tecf)t  ber  ©ommanbitgejeUjdjaften  Don  3t d) i lies  31  en  a u b,  Ginlcitung, 
Sei^gij,  1881. 


§4. 

^\]t  contribution  £stablisl)c^  tl)c  position  of  a  proprietor, 
inl)icl)  in  turn  became  tl)e  measure  of  a  partner's  preroi^atiues 
anil  liabilities  totoarii  tl)irii  persons. 

The  contribution  identifies  a  partner,  because  it 
shows  that  he  is  a  proprietor  of  the  business.  The 
contribution  might  consist  of  skill  or  service  as  well 
as  of  money.  If  the  parties  chose  to  consider  influ- 
ence, experience,  or  address,  equivalent  to  a  money 
consideration,  the  law  accepted  what  the  parties  had 
agreed  upon,  and  gave  effedl  to  the  contrail,  which 
invested  the  contributing  partner  with  the  rights  of 
a  proprietor. 

The  result  is  not  changed  if  the  contribution  is 
waived,  for  third  persons  judge  only  b}^  the  effe<5l, 
which  invests  the  partner  with  the  rights  of  a  pro- 
prietor. The  waiver  of  any  contribution  is  a  private 
arrangement  between  the  partners,  which  does  not 
affe(5l  outsiders. 

9 


^^  Origin  and  Growth.  Pt.  i,  Ch.  i. 

It  is  because  a  share  of  the  profits  indicated  a  pro- 
prietor's rights,  that  the  sharing  was  made  the  test 
of  a  partner.  It  is  essential  to  make  the  partner  a 
proprietor,  in  order  to  invest  him  with  his  necessary 
prerogatives,  becaur,e  at  the  Common  law  the  posses- 
sion of  property  does  not  imply  any  power  of  disposi- 
tion, property  being  tenure,  or  the  right  to  hold,  not 
the  right  to  sell. 

As  property  at  the  Common  law  partakes  of  the 
nature  of  a  bailment,  the  power  to  sell,  which  is  the 
highest  right  of  dominion,  does  not  carry  with  it 
everything  less  than  an  absolute  disposition,  on  the 
principle  that  the  greater  includes  the  less.^ 

On  the  contrary,  the  power  of  bailees  is  restricted 
to  the  grant,  although  strangers  are  ignorant  of  any 
limitation  of  its  extent."  In  a  joint  business  venture, 
the  possession  of  property  by  a  partner  must  be  coup- 
led with  a  proprietar}'  right  to  it,  or  no  one  could 
safely  deal  with  the  possessor. 

I.  There  w;i.s  ;i  struggle  between  the  competing  principles  of  property 
aii<l  of  bailment.  It  is  asserted  that  the  Common  law  did  recognize  the 
,!..,|i,,  tion,  and  held  that  the  right  to  sell  carried  any  right  less  than  a 
•  .  g..  to  pledge.  Mkrkdith  ari^iicndo.  Newboid  v.  \\'right,  4 
■  205-6.  I'a.  (1833).  The  inference  was  extended  to  a  peculiar  spe- 
ll*. -.'  .1  flisposition.  The  right  to  emancipate  and  enfeoff  a  villain  was 
ili>  i^n.und  adopted  to  sustain  the  lord's  contracts  with  him  ;  by  which 
<'i]>vliolils  were  created.  "Quia  si  domimis  potest  villanum  tnanu- 
i>t..:cic  it  jcoffare,  multo  potius  poteril  ei  qtiandani  conventionetn 
Jditic,  it  quia  si  potest  id  quod  plus  est,  potest  multo  fortius  id  quod 
minus  est.  Bracion,  De  Legibus,  lib.  iv,  cap.  28.  fol,  209. 

^       "     '        '  rapacity  to  sell.     If  authority  by  a  dijferent  capacity,  proof 

llir  sale  was  made  en  autre  droit.     .\  stored  a  piano  with  a 

d  dealer,  who  sent  it  to  the  auctioneer  and  had  it  sold. 

icf|uired  no  title.     Though  the  dealer's  business  was  to 

;d  at  au<ftion.  he  received  the  piano  on  storage.     The  stor- 

■i.'    A.i.->  simply  a  bailment,  and  did  not  authorize  the  bailee  to  sell, 

atis  more  Uian  leaving  a  watch  to  be  repaired  would  authorize  the 

jeweler  to  sell  it.  Quin  v.  Davis,  28  Sm.,  15.    Pa   (1875) 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §5. 

§5. 

^\)t  Cato  iHcrfljant  rrmttti  tl)c  potucr,  rul^icl)  a  partner  pos- 
sesses, to  buu/  sell,"  or  make  am  contract  in  tlje  course  of  trak.-' 

The  Common  law  recognized  joint  ownership  and 
joint  possession,  but  neither  owner  nor  possessor 
could  alien  or  mortgage  his  co-tenant's  share,  for 
only  the  holding,  whether  of  title  or  of  possession, 
was  in  common.  A  partner  acquired  the  right  to  sell 
or  pledge  his  co-partner's  share,  because  the  partner- 
ship was  an  organ  of  trade.  If  the  partners  were  re- 
quired to  join  in  transa6ling  business,  the  firm  would 
be  an  obstacle,  not  a  facility,  to  trade.  The  courts,  to 
meet  the  trade  necessit}^,  dispensed  with  a  joinder, 
and  allowed  partners,  or  joint  traders,  to  sell  or  pledge 
each  other's  share,  declaring  that  the  Law  IMerchant 
w^as  part  of  the  Common  law.*  It  follows,  as  the 
greater  includes  the  less,  that,  being  a  joint  proprie- 
tor, the  partner's  power  to  sell,  which  is  the  badge  of 
dominion,  carries  with  it  the  right  to  make  au}^  con- 
trail ^vith  reference  to  a  sale,  and  that  the  correlative 
power  to  buy  for  a  co-partner  involves  the  right  to 
contrail  for  a  purchase.  Any  contract,  therefore,  with 
reference   to  trade  is  within  a  partner's  power. 

1.  Partner  may  buy  merchandise  and  bind  co-part)ier  for  the  price. 
Hoi^T :  "If  there  be  two  partners  iu  trade,  and  one  of  them  buys 
goods  for  them  both,  and  the  other  dieth,  the  survivor  may  be  charged 
by  indebitatus  assioiipsit  generally,  without  taking  notice  of  the 
partnership,  or  that  the  other  is  dead  and  he  survived.  Hyat  v.  Hare, 
Comb,  383  (1609J. 

2.  Partner's  sale  is  also  his  co-partner's.  A  &  B  partners.  A,  by  differ- 
ent contracts,  sold  merchandise  to  C,  and  sued  him  for  balance  due 
on  the  various  contracts. — Suffered  non-suit  to  avoid  C's  wagtr  of  law 
iu  debt.  "And  in  this  case  it  was  agreed  by  the  Court,  that  the  sale 
by  one  partner  is  the  sale  of  them  both  ;  and  therefore  although  one 
of  them  selleth  the  goods,  or  merchandizeth  with  them,  yet  the  adlion 
must  be  brought  in  both  their  names  ;  and  in  such  case  the  defendant 
shall  not  be  received  to  wage  his  law,  that  the  other  partner  did  not 


§6.  Oric.ix  and  Growth.  Pt.  i,  Ch.  i. 

sell  the  goods  unto  him,  as  is  supposed  in  the  declaration."     Lam- 
IkmI's  Case,  Godbolt,  339  (1614) 

3.  Paiincr  viav  borroTC,  and  bind  co-partner  for  loan  by  contrail  in 
form  of  contincrcial  paper.  B  &  C  partners.  B  borrowed  money 
of  A,  and  gave  bim  a  note  signed  B  &  C.  A  brought  bill  to  charge 
C's  estate.— Liable.  Note  charged  both.  Lane  v.  Williams,  2  Vem. 
277  (1692). 

"If  there  be  three  joint  trailers  for  the  common  stock  and  benefit 
of  all  three,  and  their  factor  draws  a  bill  on  them,  the  acceptance  of 
one  will  ohlige  the  residue  of  the  company."  Molloy,  279. 

"If  it  (the  bill  of  exchange)  be  on  joint  traders,  the  acceptance  by 
one  will  conclude  and  bind  the  other."  lb.  279,  282. 

"If  there  be  two  merchants  or  partners,  and  one  of  them  accepts  a 
bill  of  exchange,  the  same  shall  bind  the  other ;  and  an  acflion  on  the 
case  on  the  custom  may  be  maintained  against  him,"  lb.  284. 

4.  Co.  Litt.,  II  b.  note  (m) 


3f  fommcrcial  paper  l)ait  been  fonfu^e^  to  trabe,  tl)£ioinb£r  of 
paiicc5  idouIli  l)ane  constitiiteLi  tl)eiu  partners  in  \\]t  tiocumcnt. 

At  first,  when  commercial  paper  wavS  used  only  as 
an  instrument  of  trade,  a  joinder  as  payees  was  a  joint 
ad  of  trade,  and  was  proof  of  a  partnership  in  the 
document.'  This  ruling  was  displaced  by  the  fa6l 
that  commercial  paper  outgrew  the  limits  of  trade,  on 
account  of  its  convenience,  passing,  as  it  does,  a  claim 
from  hand  to  hand,  and  making  it  the  least  of  all  con- 
tracts open  to  dispute.  Being  used  by  persons  not 
engaged  in  trade  on  account  of  its  availability,  and 
no  longer  confined  to  trade,  a  joinder  on  commercial 
paper  is  not  proof  of  a  joint  a6l  in  trade.  A  payee, 
therefore,  could  not,  for  instance,  endorse  for  his  co- 
pay  ee.- 

'■  Kilf' "'^-1'^",^^'^  bill  are  partners  in  the  instrument.  B  &  C  drew  a 
^l?"f  l''^^'''-"'''^^'''  '''"^  ^  endorsed  it  to  A,  who  sued  D.— Judg- 
^^  1  f  i  ^'''■'''''^  '■•  Pickery.  Douglas  653.  { 1 781 ).  Tpon  a  second 
w^  in  f"  """.^  P''°X^'^  t^^t  ^>'  a  custom  of  I^ondon  the  endorsement 
waj,  inadequate,  and  obtained  a  verdicl 


Pt.  I,  Ch.  I,  Origin  and  Growth.  §7. 

The  verdicl  established  a  local  exception  to  the  law .  The  exception 
has  become  the  rule. 

2.  The  joint  payee  of  a  pi-ojiiissoiy  note  is  not  entitled  to  deal  zvith  it 
as  a  partner.  B  &  C  made  a  promissory  note  for  fiooo,  payable  to  E 
&  F.  E  endorsed  it  in  his  own  name,  and,  as  attorney  in  fa<5l  for  F, 
to  G,  who  endorsed  it  over  to  A.  He  sued  the  makers.  Plaintiff  ar- 
gued that  payees  were  partners  in  the  note,  and  that  either  was  enti- 
tled to  endorse  it  in  the  names  of  both  ;  the  endorsement  by  attorney 
being  surplusage ;  that  bill  drawn  by  two  to  their  order,  and  endorsed 
after  acceptance  bj-  one  of  payees  would  have  been  sustained,  except 
for  custom  of  London,  and  endorsement  by  one  payee  of  a  bill  was 
sufficient. — Non-suit.  Joint  payee  no  more  power  than  joint  owner  of 
a  horse.  If  endorsement  of  bill  by  one  of  payees  before  acceptance, 
the  acceptor  is  estopped  from  denying  pa3-ee's  right,  but  no  implica- 
tion of  partnership  from  the  commercial  instrument  between  the  co- 
owners  of  it.    Wood  V.  Wood,  I  Harr.  429.    NJ.  (1S38). 

JVor  does  a  Joint  endorsement  by  the  payees  make  thein  partners. 
Joint  endorsers  not  being  partners,  notice  to  one  of  protest  is  insuffi- 
cient. Promissory  note  to  B  &  C's  order.  Each  joined  in  endorsing 
it  to  A.  He  sued  notar}',  D,  on  his  bond  for  failure  to  notify  C  of 
protest. — ^Judgment  for  D.  Notice  to  B  sufficient,  as  joint  endorse- 
ment made  them  partners. — Reversed.  Sayre  v.  P'rick,  7  W.  &  S. 
3S3,  Pa.  (1844);  Shepard  v.  Hawley,  i  Conn,  367  (1S15);  Willis  v. 
Green,  5  Plill  232.  N.  Y.  (1843). 


^7- 

^\)z  trausformatiou  of  tratie  iVom  its  startiiu]  point,  in  tl)e 
ciTl)ange  oC  coinniotiitics,  to  its  triunipl)  in  tl)c  coimntrcial  antJ 
intiustrial  state,  l)as  maiic  partnersljifi  co-£itcnsit)e  iDitl)  business. 

Is  partnership  still  an  organ  of  the  trade,  and  are 
its  fun(5lioiis  defined  by  the  nature  of  trade?  If  so, 
could  a  partnership  be  formed  to  do  any  business 
which  did  not  consist  of  the  double  operation  of  buy- 
ing and  selling?  Neither  the  a(5l  of  buying^  nor  the 
a6l  of  selling,"  apart  from  each  other,^  constitutes 
trade;  both  a(5ls  are  required  to  complete  the  transac- 
tion. This  is  the  primal  type  of  trade.'  Has  there 
been  no  departure  from  the  primitive  notion  of  trade  ? 
Has  not  its  scope  been  enlarged  by  the  modem  de- 
velopement  of  commercial  and  industrial  enterprise? 
Undoubtedly!   trade  has  undergone  a  transformation. 

13 


§7.  ()Ki(;ix  AND  Growth.  Pt.  i,  Ch.  i 

The  word  'business'  indicates  the  extension  which 
tlic  notion  has  received.  The  original  constituents 
of  buying  and  selling  need  no  longer  co-exist  in  the 
business.  There  may  be  a  partnership  in  manufac- 
turing, which  is  not  a  trade,  but  an  industry.  A 
firm  might  manufa6lure  in  partnership,  and  sell  the 
manufactured  produ6l  on  separate  account.  Each 
partner  would  become  a  debtor  to  the  firm  for  the 
price  of  goods  sold  by  him,  and  the  ultimate  profits 
would  be  divided  between  them.^  In  fadl,  neither 
buying  nor  selling  need  be  an  element  of  the  partner- 
ship business.  A  capitalist,  who  furnished  the  means 
to  eredl  a  fa(5lory  and  stock  it  with  machinery,  would 
be  a  partner  with  the  manufadlurer,  who  contributed 
his  skill  and  labor  to  manufacfture  the  goods,  although 
they  should  not  be  sold  by  the  firm.  The  sales  might 
be  made  by  independent  faAors,  and  the  raw  produA 
supplied  by  either  partner,  without  affedling  the  rela- 
tion of  the  partners  in  the  manufacT;uring  business. 

I.  So  partturahip  in  biiyina;.  A  and  four  others,  unconne<5led  in 
])usiiifss,  made  shipments  abroad  iu  one  cargo.  Return  cargo  to  be 
divided  among  tliein  in  proportion  to  ownership  of  proceeds  of  out- 
w.ird  cargo.  ,\  insured  his  quota  in  unvalued  policy,  and,  on  ascer- 
tainment of  value,  sued  for  excess  of  premium.  Defence :  that  policy 
covered  whole  cargo  as  partnership  property,  in  which  A  could  have 
no  separate  nisurable  interest.— Association  for  buying  merely,  and 
not  a  partnership,  because  no  joint  sale  contemplated.  Holmes  v. 
I..  Ins.  Co.,  2  Johns.  Cas.  329.  N.  Y.  (1801). 

An  agreement  to  share  merchandise  bought  bv  another,  does  not 
make  the  sharers  partners.  B,  C  &  D  agreed  to  take  aliquot  shares  of 
grxHls  winch  H  should  buy  in  his  name.  A,  the  seller,  sued  C  &  D,  as 
partners,  for  the  whole  price.— Not  liable,  because  no  re-sale  with  a 
stianng  of  the  profits,  but  a  division  of  the  merchandise  among  the 
Duyers.  Hie  division  is  a  sub-contracl,  not  a  joint  purchase.  Coope  v. 
tyre.  I  H.  m.  39(1788).  '  J         1^  v 

Qui  noliinl  inter  se  contendere,  solent  per  nuntium  emere  in  com- 
mune quod  a  societate  longe  remotiim  est.    D.  17,  2,  33. 

./  purchase  in  common  not  partnership.  B,  a  merchant,  at  Leeds, 
^rJu'V"  "^  of  dealing  with  A,  at  Hamburgh,  ordered  a  cargo 

nLr.  r'!-''T-""^  '?'"  hini.self  and  C,  and  directed  bills  to  be  drawn 
u^J  li  J  Ills  moiety.  The  correspondence  described  the  adven- 
T«id  f^.-'i?  "  I.  ^  ^^^^"^  ^'^^  shipped,  and  each  took  his  half.  B 
paid  Jor  hih  share,  and  A  sued  him  for  balance  of  price  due  from  C, 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §8. 

who  had  become  bankrupt. — Not  C's  partner,  because  no  sharing  of 
profit  and  loss,  but  a  separate  purchase  by  each.  Gibson  v.  Lupton, 
9  Bing.  297  (1832). 

2.  All  partners  must  join  in  aRion  for  goods  sold  and  delivered. 
Joint  sale  a  constituent  of  partnership.  A  &  B  partners.  B  and  C  em- 
ployed D  to  build  a  saw-mill,  and  made  payments,  with  C's  knowledge, 
in  the  goods  of  A  &  B.  B  charged  them  on  the  books  to  D.  A  &  B 
dissolved,  and  B  assigned  firm  claims  to  A,  and  promised  to  pay  A 
whatever  he  owed  D,  but  denied  any  indebtedness  to  D.  A  sued  B 
&  C  in  assumpsit. — No  recovery  in  a6lion  against  both.  C's  promise 
not  absolute,  and  B's  did  not  bind  him  as  a  partner,  because  no  joint 
sale  of  mill  contemplated,  and  B  a  necessary  plaintiff  on  a  count  for 
goods  sold  and  delivered.  Porter  v.  McClure,  15  Wend.  187  N.  Y.  (1836). 

3.  Purchase  by  broker,  though  joint,  for  undisclosed  principals,  with  a 
right  to  pledge  the  goods  and  to  sell  each  one's  quota,  does  not  make 
the  purchasers  partners.  B  bought  tea  as  a  broker,  at  India  Co. 's 
sales,  for  himself  and  for  undisclosed  principals,  who  also  authorized 
him  to  sell.  He  pledged  the  warrants  to  A,  for  a  loan.  A  sued  C,  a 
purchaser  of  2-16,  as  a  partner  with  B  and  the  other  purchasers. — Not 
a  partner.  Though  the  tea  was  sold  by  the  Co.,  in  a  block,  B  bought 
for  separate  purchasers,  and  sold  their  quotas  for  them  as  individuals. 
The  negotiation  of  the  warrants  was  a  pledge  of  the  tea,  but  not  of  the 
owners'  credit.     Hoare  v.  Dawes,  1  Douglas  371  (1780). 

4.  Fhiying  and  selling.  Judgmentagainst  A  &B,  as  endorsers.  Debtor 
indemnified  them,  by  giving  them  salt.  A  sold  the  salt  on  joint  ac- 
count, and  applied  proceeds  in  discharge  of  judgment.  He  had  given 
a  note  of  A  &  B  for  freight  to  defendant,  w'ho  transferred  it  to  plaintiff, 
with  giiarantee  oi  colletlion  (not  payment).  Plaintiff  never  enforced 
payment,  supposing  B  was  not  a  partner,  and  hence  not  liable.  B  had 
since  become  insolvent.  Plaintiff,  to  excuse  laches,  denied  partner- 
ship.— B  held  a  partner,  because  a  joint  purchase  and  agreement  to 
share  profit  and  loss  of  sale.  Cumpstou  v.  McNair,  i  Wend.  457.  N.  Y. 
(1828). 

5.  ,'oanbbudi  be§  .fani'ffSrerfjts  lUMt  ^r.  £' .  ©olbf  rfimibt,  1864.  Bk.  2, 
Ch.  I,  s.  41,  p.  299. 

6.  /;/  uianufaHuring  ivithout  selling.  A  &  B  were  joint  owners  of 
paper-mill,  and  partners  in  manufacSiure  of  paper.  No  sales  made  on 
joint  account.  Whatever  sales  were  made  by  either  partner,  were  on 
his  separate  account,  and  he  became  a  debtor  to  firm  for  price ;  the 
profits  were  shared  between  them.  A  sold  paper  to  C  expressly  on 
basis  of  arrangement,  and  sued  him  for  price.  Defence  :  Non-joinder 
of  B. — Recovery,  because  partnership  limited  to  manufa<5lure  and  di- 
vision of  ultimate  profits.  Ensign  v.  Wands,  i  Johns.  Cas.  171,  N.  Y. 
(1799)- 


§8. 

£anb  tttag  bt  mabe  an  article  of  trafi5c,  anb  a  partnersl^ip 
formeti  for  bealinci  in  it  as  mcrdianliisc. 


15 


§s. 


()KU;iN   AND  CxROWTH.  PT.  I,    Ch.  I. 


As  the  province  of  partnership  is  co-extensive  with 
the  area  of  business,  where  are  its  confines?  Unless 
withdrawn  from  the  will  of  man  by  the  authority  of 
tradition,  there  are  no  limits  to  the  boundless  trad, 
whicli  is  open  to  his  energy.  Land  was  not,  at  the 
Common  Liw,  a  natural  subjeA  of  commerce,  and  if 
parties  traded  in  land  the  buying  and  selling  remained 
distinA  acl:s,  unconnedled  in  spite  of  the  intention  to 
unite  tlicm  in  a  single  transaction,  by  reason  of  what 
Lord  Cork  calls  the  '  perdurability '  of  land/  The 
clod  could  not  be  moulded  by  man,  but  shattered  his 
will  to  pieces.  In  plain  English,  land  was  withdrawn 
from  trade  under  the  Feudal  regime,  and  the  seclusion 
became,  in  time,  a  privilege  of  distin6lion.  The  spirit 
of  trade,  however,  which  levels  all  distin6lions  but 
money,  is  gradually  affeding  land,  and  bringing  it 
into  the  market  as  an  article  of  commerce.  Tradi- 
tion has  yielded  to  the  innovation,  and  a  partnership 
may  exist  for  dealing  in  land.'- 

I.  Huyiiiff  and  selling  land  did  not  constitute  a  partnership.  Associa- 
tion foniiffl  to  buy  and  sell  real  estate.  Two  members  acfled  as 
trustees.  ])uyiiij(,  sellins^  and  mortgacriner  in  their  own  name,  and  ex- 
eculiuj.;  declarations  of  triist  to  associates.  Trustees  bought  of  A,  and 
jjavc  him  a  mortgage  and  their  own  bond  for  the  purchase-money. 
A  l)rouglit  bill  in  equity  against  other  members  as  partners. — No 
parlncrshii)  in  buying  and  selling  laud,  though  there  might  be  in 
fanning  or  mining  it.  vSale  on  credit  of  trustees.  If  A  ever  had  a 
claim  against  the  members,  he  lost  it  by  taking  trustees'  bond.  Pat- 
terson V.  Hrewster,  4  Ed.  Ch.  352,  N.  Y.  (1844). 

Trading  in  land  no  partnership.  Speculators  in  land  under  arti- 
cles, employed  a  book-keeper,  who  sued  one  occupying  position  of 
dormant  partner,  for  salary.  Defence  :  No  partnership  in  land  specu- 
lations.— Triable,  without  ])artnership,  for  services  incidental  to  pur- 
clia.se  and  sale,  on  basis  of  joint  ownership.  Benners  v.  Harrison,  19 
Barb.  53,  N.  Y.  (,854). 

A  &  B  bought  land  of  C  on  joint  credit,  to  be  paid  for,  in  part,  with 
strangers'  promissory  notes,  which  A  &  B  were  to  endorse,  if  required. 
A  endorsed  A  &  R  in  partnership  form.  C  endorsed  to  plaintiff,  who 
6ue«l  A  cS:  B  as  partners.— B  not  liable,  because  not  partner,  but  joint 
owner.    Ballou  v.  vSpencer,  4  Cowen  163,  N.  Y.  (1825). 

(^clMdjmict'o  ,v»anbclerec^t,  Bk.  2,  Ch.  i,  s.  41,  pp.  310-12. 


16 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §9. 

2.  Trading  in  land  makes  the  traders  partners.  B,  C,  and  five  others 
made  a  venture  in  buying  and  selling  Western  lands.  C  was  pur- 
chasing agent.  Deeds  to  be  taken  to  B,  as  trustee,  and  payments 
made  in  drafts  on  B.  Drafts  not  accepted.  A  sued  the  five  for  the 
purchase-money. — All  liable,  as  partners,  for  the  price  of  lands.  Sage 
V.  Sherman,  2  N.  Y,  417  (1849). 

Buying  and  selling  land  does  constitute  a  partnership.  A  joint 
stock  company  was  formed,  to  deal  in  land.  The  land  was  levied 
upon  and  sold  by  the  separate  creditor  of  a  partner.  The  purchaser, 
with  notice  that  the  sale  was  made  for  a  separate  debt,  was  postponed 
to  a  subsequent  purchaser,  who  bought  the  firm's  interest.  The 
partner's  title  was  not  a  tenancy  in  common,  but  a  contingent  own- 
ership of  the  stock  and  profits  after  a  dissolution.  Kramer  v.  Arthurs, 
7  Barr.  165,  Pa.  (1847). 

Partnersh  ip  tJi  buying  land  on  joint  account.  Secret  price  to  co-buyer 
for  effeFling  sale  at  higher  rate  vitiates  transa^ion.  B,  who  owned 
a  farm  supposed  to  contain  coal,  arranged  to  give  C  an  option  to  buy 
for  the  ostensible  price  of  I85  per  acre,  but,  at  the  same  time,  gave  C 
a  private  option  for  I70,  C  induced  A  et  al.  to  buy  the  farm  with 
him.  After  the  settlement,  B  returned  C  the  difference  between  1^70 
and  $85  per  acre.  A  et  al.  sold  half  the  tract,  for  an  advance,  to  D. 
Coal  was  not,  but  the  scheme  of  B  and  C  was  discovered.  A  et  al. 
re-purchased  the  tracfl  from  D,  and  tendered  the  farm  to  B,  in  order 
to  rescind  the  sale  and  reclaim  the  purchase-money. — Recovered  the 
price  and  interest.    Yeoman  v.  Lasley,  40  O.  S.  190  (1883). 


19. 

(!ll]e  title  to  lan^,  if  not  Dtsteb  in  t!)c  finii,  is  controUeii  bp  it, 
anb  tl)e  titk-l)oiLi£r  is  its  trustee. 

Land  does  not,  of  course,  pass,  like  merchandise,  as 
a  staple  of  commerce,  or  by  a  bill  of  sale.  The  ob- 
stacle, however,  to  dealing  in  land  is  merely  formal. 
The  title  must  be  manifested  by  deed,  and  cannot  be 
conveyed  without  the  joinder  of  all  the  co-proprietors. 
The  deed  must,  where  statutes  require  it,  be  recorded; 
when  creditors  may  rely  upon  the  record-title.  The 
partnership  deals  in  land  subje6l  to  the  forms  which 
regulate  the  disposition  of  real  estate.  But  the  pre- 
scribed forms  do  not  prevent  the  title  from  being  put 
in  one,  or  all,  of  the  partners,'  or  in  a  third  person,  for 

17 


(tio.  Origin  and  Growth.  Pt.  i,  Ch.  i. 

the  benefit  of  the  firm;  which,  then,  has  the  equitable 
title.  The  legal  title  is  a  mere  instrument  controlled 
by  the  firm,  which  may  compel  the  trustee  to  adl  at  its 
di(5lati()ii. 

Or  the  legal  title  may  be  vested  diredlly  in  the  firm.^ 

1.  /'aro/  evidence  competent  to  shoiv  firtn  title.  In  the  course  of  a 
buildinj^  operation,  partners  in  brickmaking  traded  houses,  which 
they  owne<l,  for  a  lot,  to  improve.  The  title  was  taken  in  the  name 
of  one,  and  conveyed  by  him  to  a  stranger,  who  created  the  mort- 
j^'ages,  and  he  then  conveyed  to  the  other  partner.  The  rents  of  the 
buildings  were  entered  in  the  firm  books.  The  first  partner  failed, 
and  assigned  for  creditors  in  August,  and  the  second  in  0(5tober. 
I'arol  eNndence  was  admitted,  to  show  that  the  firm  owned  the  prop- 
erty, and  the  joint  creditors  availed  themselves  of  the  partners' 
equity,  in  order  to  exclude  the  separate  creditors  from  the  firm  as- 
sets. Black  V.  Seipt,  34  L.  I.  66.  If  the  attempt  was  made  to  prove 
that  the  title  in  one  partner  was  held  as  to  a  moiety  for  his  co-part- 
ner, as  a  tenant  in  common,  the  evidence  could  surely  be  rebutted 
by  proof  that  the  title  was  held  for  the  firm,  for  it  is  competent  to 
establish  title  in  the  firm,  independently  of  any  counter-offer.  Black's 
Appeal,  8  Nor.  20J,  Pa.  (1879). 

2.  Itced  to  partners  trading  as  a  firm  puts  the  legal  title  in  the  firm. 
Deed  of  land,  made  in  1870  to  B,  C  &  D,  'doing  business  under  the 
style  of  R,  C  &  Co.,'  their  heirs  and  assigns.  Each  signed,  in  1872, 
judgment  note  to  A,  with  the  addition,  'doing  business  under  the 
style  of  B,  C  &  Co.'  Deed  recorded  in  1874.  Subsequently  lots  sold 
to  R  et  al.  A  brought  sci.  fa.  to  revive  judgment.— Revived.  Terre- 
tenants  took  subjedt  to  lien  against  firm  property.  Lauffer  v.  Cavett, 
6  Nor.  479,  Pa.  (1878). 


§10. 


u:iic  Statute  of  fraubg  bocs  not  interfere  mX\\  a  partner sl)ip 
m  la^^,  but  bocs  picncnt  tl)c  enforfcincnt  of  m  oral  agreement 
between  partners  to  ^eal  in  lan^,  so  long  as  tlje  contract  is 
crccutorn. 

The  Statute  prohibits  dealing  in  land,  except  by  a 
writing;  and  since  partnership  may  arise  from  an  oral 
contrad,  the  Statute  operates  as  a  restridion  upon 
the  formation  of  a  partnership  for  trading  in  land. 
The  obvious  application  of  the  Statute  is  to  the  con- 

18 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §io. 

tra(ft  between  vendor  and  vendee;  but  in  a  partner- 
ship to  buy  and  sell  land  a  further  question  arises: 
Does  the  Statute  also  apply  to  the  agreement  between 
the  joint  purchasers?  The  vendor,  in  a  written  con- 
tradl,  may  seek  by  oral  proof  to  enforce  the  contradl 
of  sale  against  the  partner  of  the  vendee/  or,  under 
like  circumstances,  the  vendee's  partner  may  seek  by 
oral  proof  to  avail  himself  of  the  written  contrail,  and 
to  compel  a  conveyance  from  the  vendor."  So  long  as 
the  contrail  between  the  vendee  and  his  partner  is 
executory,  both  of  these  cases  are  within  the  purview 
of  the  Statute.  Should  the  partner  who  was  not 
named  in  the  contrail  of  sale  assert  his  interest  in 
the  land,  by  a  suit  against  his  co-partner,  the  vendee^ 
the  right  to  recover  depends  upon  the  payment  of  his 
contribution.'^  If  it  has  been  paid,  the  vendee  becomes 
a  trustee  for  the  plaintiff  to  the  extent  of  his  interest.^ 
If  the  contribution  is  partially  paid,  the  plaintiff  re- 
covers an  interest  proportionate  to  his  payment.*^  If 
the  vendee  sues  his  partner  for  the  whole  contribution, 
or  for  an  unpaid  balance,  the  defendant  is  not  liable 
without  a  writing."  This  principle  of  a  resulting  trust 
arising  out  of  an  executed  contradl  between  the  part- 
ners, that  is  to  say,  out  of  the  payment  by  one  partner 
of  his  contribution  for  the  price  of  the  land,  underlies 
the  rule,  subsequently  discussed  (Part  II,  Ch.  VII)  ,.that 
whoever  holds  title  to  land  purchased  with  firm  funds 
becomes  a  trustee  for  the  firm.  It  follows,  therefore, 
that  wherever  the  partner  who  was  not  named  in  the 
contrail  of  sale,  has  a  complete  remedy  against  the 
vendee,  he  may  enforce  the  firm  title  in  an  adlion 
against  the  vendor,  although  the  partnership  relation 
is  proved  by  oral  testimony.       On  the   other  hand, 

19 


§io.  Origin  and  Growth.  Pt.  i,  Ch.  i. 

whenever  an  oral  partnership  in  land  has  been  fully 
executed,  the  members  of  the  firm  incur  all  the  lia- 
bilities, and  acquire  all  the  rights,  of  partners.' 

An  oral  agreement  by  the  owner  of  land,  to  take  a 
partner  and  admit  him  to  an  interest  in  the  land,  is 
within  the  Statute,  although  the  purchase-money  may 
have  been  paid  in  part,  and  the  firm  business  con- 
dueled  on  the  land.  The  possession  of  the  partner 
vendee  is  not  exclusive  of  his  vendor,  and  is  ambigu- 
ous, because  he  may  be  on  the  land  not  as  owner,  but 
merely  to  take  part  in  the  firm  business.** 

Where  an  agent,  appointed  to  purchase  land,  takes 
the  title  in  his  own  name,  will  he  be  treated  as  a 
trustee  for  the  principal?  Upon  this  question  the 
authorities  divide.  It  has  been  held,  on  the  one  hand, 
that  the  agent  does  not  become  a  trustee,  unless  he 
bought  the  land  with  the  money  of  his  principal.  On 
the  other  hand,  it  has  been  decided  that  a  trust  arises 
by  operation  of  law  from  the  violation  of  confidence, 
even  where  the  agent  paid  for  the  land  with  his  own 
funds."  This  question  does  not  arise  between  partners. 
Conceding  the  correctness  of  the  view  last  stated,  the 
doctrine  of  agency  can  not  be  invoked  to  force  the 
vendee  of  land  to  admit  another  as  his  partner  in  the 
purchase.  The  vendee  is  himself  a  principal,  and  his 
agency  for  his  partner  does  not  commence  until  after 
the  formation  of  the  partnership.  The  undertaking 
rests  entirely  on  contrail,  and  the  vendee's  refusal  to 
admit  his  alleged  partner  to  share  the  title  with  him  is 
nothmg  more  than  a  refusal  to  enter  into  partnership 
with  him.'" 

\\  here  no  effort  is  made  to  assert  title  to  any  land, 
but  the  contention  arises  between  the  partners  over 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §io. 

the  distribution  of  the  proceeds  of  land  bought  and 
sold  on  joint  account  under  an  oral  partnership,  the 
Statute  of  Frauds  has  no  application/^ 

1.  Vendor  has  no  recourse  against  vendee's  co-purchasers  under  an 
oral  contra^  to  buy  and  sell  land  on  joint  account.  B  orally  agreed 
with  C  &  D  to  buy  and  sell  land,  lie  to  contribute  half  the  capital, 
and  the}'  each  a  quarter,  and  to  share  the  profits  in  the  same  propor- 
tion :  D  to  take  title  and  give  his  bond  and  mortgage  for  the  unpaid 
purchase-money,  which  he  did,  with  B  and  C's  authority  and  con- 
sent ;  each  paid  his  quota  of  the  cash  consideration  and  of  interest 
on  the  bond.  Mortgagee  foreclosed,  and  proceeds  being  insufficient 
to  pay  the  debt,  recovered  judgment  against  C  for  the  deficiency. — 
Judgment  reversed.    Williams  v.  Gillies,  75  N.  Y.  197  (1878), 

Suppose  the  defendant  had  paid  his  part  of  the  pur- 
chase-money to  his  partner,  the  vendee,  would  the  de- 
fendant have  been  liable  for  an  unpaid  balance  of  the 
price  resulting-  from  the  failure  of  the  vendee  either  to 
pay  up  his  contribution  in  full  or  to  pay  over  to  the 
vendor  the  contribution  received  from  the  defendant, 
on  the  ground  that  as  the  contrail  of  partnership  had 
been  executed  as  to  the  defendant,  he  incurred  the 
liability  of  a  partner,  and  became  responsible  for  the 
price  of  the  land  bought  on  behalf  of  the  firm?  The  de- 
fendant, it  seems,  would  not  be  liable,  because  the  part- 
nership in  land  is  always  specific,  that  is,  a  partnership 
in  a  particular  transaction.  And  a  partner's  obligation 
for  the  price  of  the  land  will  not  exceed  the  liability  of 
a  co-purchaser.  The  purchase  not  being  joint  in  form, 
the  partner  is  liable  only  for  his  quota,  and  he  is  not  lia- 
ble to  the  vendor  for  that,  because  he  is  not  a  party  to  the 
written  contra(5l  of  sale.  His  only  obligation  was  to  his 
partner,  the  vendee,  and  that  has  been  discharged.  A 
purchase  of  the  land  complete  in  all  its  parts  is  prelim- 
inary to  the  establishment  of  an  oral  partnership,  with 
its  attendant  responsibilities,  and  the  attempt  to  charge 
the  defendant  by  oral  proof  for  any  portion  of  the  price 
would  forestall  the  relation. 

2.  A  partner,  having  paid  his  contribution,  may  compel  the  vendor 
of  his  co-partner  to  convey  to  the  firm.  A  &  B  formed  a  partnership 
to  buy  land,  ere6l  a  mill,  and  carry  on  the  business  of  sawing  lumber. 
B,  as  his  contribution,  bought  the  lot  in  his  own  name  for  fooo,  by 
written  contract,  paid  ;^ioo  on  account,  and  gave  his  own  notes  for 
the  balance.  They  took  possession,  and  A  put  up  the  mill,  worth 
111500,  as  his  contribution.  They  continued  the  business  until  B  died. 
Then  A  took  up  B's  notes,  and  brought  a  bill  against  the  vendor  and 
B's  representatives  for  a  conveyance  to  himself  and  the  representa- 
tives of  B. — Decree.     The  payment  by  B  was  made  with  funds  de- 


5io.  Origin  and  Growth.  Pt.  i,  Ch.  i. 

vote<l  to  fimi  purposes,  although  never  a^ually  in  the  firm  treasury. 
Scruggs  V.  Russell,  McCahou  39,  U.  S.  C.  C.  (1858). 
3  Oral  cotttrail  to  buy  land  in  common  not  binding  if  executory.  B 
agreed,  orally  with  A,  to  bid  at  public  sale  for  land,  take  title  to  them 
in  common,  advance  the  cash  payment  required  by  terms  of  sale  ;  and 
A  agreed  to  repay  V>  his  quota  of  cash  advanced,  and  join  with  him 
in  the  bond  and  mortgage  for  balance.  B  took  title  in  his  name.  A 
tendered  pavment,  and,  upon  B's  refusal  to  convey  a  moiety,  de- 
manded specific  performance.  Defence :  Statute  of  Frauds.— No 
pjirtnership,  but  agreement  for  joint  purchase.     No  trust  resulted  to 

A,  liecause  contradl  executor^'.    Levy  v.  Brush,  45  N,  Y.  589  (1871). 

4.  Trust  results  to  partner  on  oral  contra^  of  partnership  in  land, 
when  executed.  A  &  B  agreed,  orally,  to  buy  and  sell  farms  in 
partnership.  Without  A's  knowledge,  B  took  title  to  a  farm.  Sub- 
.se<iuentlv,  A  paid  his  share  of  the  price  and  improvements,  and  both 
treated  the  farm  as  joint  property.  Upon  discovery  that  title  was 
not  in  both,  A  called  for  a  conveyance  of  his  moiety.  Defence : 
Agreement  void  by  Statute  of  Frauds,  and,  if  a  valid  partnership, 
remedy,  account.— Trust  resulted  to  A  on  executed  contradl  of  part- 
nership.   Account  unnecessary.  Traphagen  v.  Burt,  67  N.  Y.  30  (1876). 

5.  A  trust  arises  upon  a  partial  payment  of  the  consideration.  B  & 
C  bought  land,  each  orally  agreeing  to  pay  half  the  purchase-money, 
I500.     Deed  made  to  B.     C  paid  I75  on  account,  and  balance  paid  by 

B,  who  conveyed  to  A  to  reimburse  himself  the  advance.  A  brought 
ejeAment  against  C's  tenant. — Recovered,  because  C  did  not  tender 
balance  of  his  purchase-money,  or  ask  for  conditional  verdicl.  Cs 
part-payment  raised  a  trust,  independent  of  B's  breach  of  contra(5l, 
and  gave  him  an  equitable  title,  which  corresponded  to  his  payment. 
Chadwick  v.  Felt,  11  Ca.  305,  Pa.  (i860). 

Unless  the  State  decrees,  as  Michigan  has  done,  that 
a  trust  shall  not  result  from  payment  of  the  considera- 
tion: 

"When  a  grant  for  a  valuable  consideration  shall  be  made  to  one 
"person,  and  the  consideration  therefor  shall  be  paid  by  another,  no 
"  use  or  trust  shall  result  in  favor  of  the  person  by  whom  such  pay- 
"  nient  shall  lie  made  ;  but  the  title  shall  vest  in  the  person  named  as 
"alienee  in  such  conveyance."  Gen.  Stats,  of  Michigan,  s.  5569. 

Trust  does  not  result  to  vendee' s partner  who  pays  part  of  the  price. 
A  brought  account  against  B  for  a  share  of  the  profits  made  by  the 
purcha.se  and  sale  of  a  lot,  averring  an  oral  contra(5l,  by  which  each 
should  pay  half  the  purchase-money  and  share  the  profits  equally. 
The  conveyance  made  10  B,  who  furnished  most  of  the  money.  A 
contributed  but  a  small  portion.— Dismissed.  Michigan  Statute  pre- 
vents a  trust  from  resultnig  from  part  payment  of  the  price.  Pulford 
V.  Morton,  28  X.  W.  R.  716,  Mich.  (1886). 

A  sued  B  for  breach  of  tnist  on  oral  contract  to  buy  timber-land, 
an<l  to  manufacture  aud  sell  lumber.  A  agreed  to  seleA  land,  B  to 
buy  them,  put  title  to  1-3  in  A  and  to  take  2-3  ;  A  to  re-imburse  B  1-3 
lue  purcha.se-money,  by  sawing  a  given  amount  of  timber  at  a  speci- 
liecl  rate.  B  bought  for  himself.  A  averred  performance  of  his  part. 
iJelence :  Statute  of  I-rauds.- Contradl  void.  Raub  v.  Smith,  28  N. 
^^.  R.  676,  Mich.  (1.S66). 

*■  «l  ''r^u^'^"  -^f  <^^'^^''f^"lion  tinder  oral  contraR  to  deal  in  land.  .^ 
t^  Ti,  -V^  ,  ^  ^"^^  ^  ^o*"  fiuota  of  price,  offering  oral  agreement, 
to  the  effea  that  A  &  B  were  to  buy  the  land  for  A,  B  &  C,  and  divide 


Pt.  I,  Ch,  I.  Origin  and  Growth.  §io. 

the  profits  of  a  sale  as  partners. — B  an  incompetent  witness.  Since 
C  could  not  enforce  the  contra<5t  against  A  &  B,  they  could  not  make 
him  contribute.  They  could  not  say:  "Heads  we  win;  tails  you 
lose."  Meason  v.  Kaine,  13  Sm.  335,  Pa.  (1869). 

7.  Land  bought  and  sold  tmder  an  oral  contra^  of  partnership  charges 
the  partners,  irrespeRive  of  title  and  the  Statute  of  Frauds.  B,  C  &  D 
agreed,  orally,  in  September,  to  buy  and  sell  land  in  B's  name,  on  joint 
account.  They  purchased  land  in  Odlober,  and  reduced  the  agreement 
to  writing  in  November,  In  December  B  sold  to  A,  as  oil-producing, 
land  on  which  he  had,  with  C's  knowledge,  poured  petroleum,  in 
order  to  deceive  A.  D  was  ignorant  of  the  scheme.  A  brought  ac- 
tion against  B,  C  &  D  for  deceit.  D's  defence:  No  partnership  in 
land,  at  least,  without  a  writing ;  hence  not  liable  for  co-speculator's 
fraud. — Liable.  Partnership  in  land  differs  from  partnership  in  mer- 
chandise only  in  mode  of  conveying  title.  The  Statute  of  Frauds 
does  not  exclude  proof  of  an  interest  in  land  already  bought  under 
an  oral  agreement.    Chester  v.  Dickerson,  54  N.  Y.  i  (1873). 

Dealing  in  land  under  an  oral  contrail  of  partnership  gives  a  part- 
ner title,  without  reference  to  the  Statute  of  Frauds.  B,  C  and  D, 
trading  as  D  &  Co.,  owned  mills,  which,  with  adjoining  land,  they 
used  in  the  business.  By  oral  agreement  A,  in  1875,  joined  the  firm, 
and  his  1-4  interest  in  firm  property,  estimated  at  f  12,000,  was  en- 
tered on  the  books.  A  acfled  as  a  partner  in  transa<5ling  the  firm 
business  until  1882,  when  his  co-partners  exchided  him.  He  brought 
account  against  B,  C  and  D  for  his  share  of  the  firm  property,  which 
had  increased  to  130,000.  Demurrer  on  account  of  Statute  of  Frauds, 
— Decree.  The  oral  contrail  having  been  carried  out,  A  became  a 
partner,  and  shared  the  real  estate  of  the  firm,  no  matter  who  held 
the  legal  title.    Marsh  v.  Davis,  33  Rand,  326,  Kan.  (1885). 

8.  Possession  by  vendee,  under  oral  contrail  of  partnership  with  ven- 
dor, insufficient  to  satisfy  Statute  of  Frauds.  D,  the  owner  of  land, 
orally  agreed  to  take  B  and  C  into  partnership  in  consideration  of 
^^5,700  for  their  two-thirds,  12,000  cash,  balance  payable  out  of  the 
profits.  Cash  paid,  and  B  and  C  went  into  possession  with  D.  The 
firm  built  a  saw-mill,  and  made  other  improvements  on  the  land  for 
the  lumber  business.  A  claimed,  as  separate  creditor  of  D,  a  lien 
paramount  to  firm  creditors. — Judgment  against  D  bound  the  title. 
Statute  of  Frauds  prevents  a  transfer  of  title  to  the  firm,  B  and  C's 
entering  into  possession  did  not  exclude  D,  and  was  not  equivalent 
to  the  feudal  investiture  for  which  the  vStatvite  makes  writing  a  sub- 
stitute. The  possession  might  be  for  a  purpose  apart  from  the  pur- 
chase ;  for  example,  to  condudl  business  on  the  land,  which  would 
explain  the  possession  to  the  neighborhood.  McCormick's  Appeal,  7 
Smith  54,  Pa.  (1868). 

9.  A  trust  results  to  principal  from  agent's  violation  of  confideiice. 
A  employed  B  to  purchase  a  lot.  B  entered  into  negotiation  with  the 
owner  and  bought  the  lot  for  himself,  with  his  own  money,  and 
took  title  in  his  own  name.  A  brought  ejectment.  Defence  :  Statute 
of  Frauds. — Recovered.  Trust  arises,  by  operation  of  law,  from  the 
violation  of  confidence,  without  payment  of  the  consideration.  Rose 
V.  Haydeu,  35  Rand,  106  (1886). 

10.  An  oral  partnership,  to  deal  in  land  without  paymettt  of  contribu- 
tion, does  not  constitute  the  vendee  a  trustee  for  his  partner.  A 
brought  a  bill  against  B,  alleging  an  oral  partnership  to  buy  and  sell 
land  and  lumber  ;  B  to  take  title  and  sell  on  joint  account,  the  pay- 
ment by  A  of  certain  sums  by  way  of  contribution,   asked  for  an 


§io.  Origin  and  Growth.  Pt.  i,  Ch.  i, 

nrcouiil  of  previous  sales  and  the  conveyance  to  him  of  his  share  in 
such  lands  iis  remained  unsold.  B  denied  the  partnership,  treated 
the  advances  as  loans,  and  set  up  the  Statute  of  Frauds. — Dismissed. 
The  fact  of  an  oral  partnership  is  not  clearly  established,  and  cer- 
tainlv  there  was  no  partnership  fund,  but  the  Statute  is  a  bar  in  any 
eveui.  An  oral  partnership  for  the  purchase  and  sale  of  lands  on 
joint  account  is  clearly  the  case  of  an  oral  contradl  respecftiug  an  in- 
terest in  lands,  and  is  invalid  under  the  Statute  as  a  conveyance,  con- 
tract or  trust,  unless  it  be  i.  trust  arising  or  resulting  by  implication 
or  construction  of  law.  It  is  not  the  case  of  an  estate  created  in  lands, 
but  rather  of  a  declaration  or  creation  of  a  trust,  or  confidence  in 
lands  not  arising  or  resulting  by  implication  or  operation  of  law. 
This  trust  arises  on  the  purchase,  if  at  all,  and  it  arises  dire<5lly  ex 
cotilmilu,  and  not  by  operation  of  law.  To  this  latter  result  it  is 
necessary  that  the  plaintiff,  i,  shall  have  paid  the  price,  or,  2,  have 
owned  the  funds,  either  in  whole  or  in  part,  from  which  the  purchase- 
monev  was  taken.  The  first  is  the  case  of  an  agent,  the  second  is  the 
case  of  a  j)urchase  with  firm  or  trust  funds.  Or  there  must  have  been 
some  fraud.  The  lands  were  not  purchased  with  firm  funds,  for  there 
were  no  funds ;  there  was  no  fraud,  but  a  violation  of  a  promise,  and 
the  alleged  partner  can  not  be  charged  as  an  agent  who  has  vio- 
lated the  trust  reposed  in  him,  because  the  plaintiff  paid  no  portion 
of  the  price.  Even  if  an  agent  could  be  made  a  trustee  when  he  has 
l)ought  \s-ith  his  own  money  land  which  he  orally  agreed  to  purchase 
for  his  principal,  it  would  be  a  case  distinguishable  from  the  present, 
because  the  defendant  made  the  purchase  as  a  co-principal,  and  prop- 
erly in  his  own  name.  The  plaintiff  cannot  avoid  the  Statute  by  defin- 
ing the  alleged  partnership  as  a  contra<5l  to  share  the  profits  made  by 
dealing  in  land,  and  not  as  a  contra6l  for  an  interest  in  the  land  itself. 
The  i)rofits  are  an  increment  to  the  partnership  fund,  and  pre-suppose 
an  interest  in  the  land.  Smith  v.  Burnham,  3  Sumner  435,  U.  S.  C.  C. 
(.83S). 
Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  458,  Mass.  (1852). 

1 1.  Oral  partnership  and  real  estate  as  assets.  A  &  B  agreed,  orally, 
to  buy  a  foundry  site,  erecfl  buildings,  and  carry  on  the  business. 
Kiich  ])aid  in  his  contribution  in  full,  and  B  took  title  to  the  land. 
The  land  was  sold,  and  the  firm  dissolved.  A  brought  bill  for  an 
account,  and  enjoined  B  from  disposing  of  the  firm  assets.  B  moved 
to  dissolve  iujuncftion,  on  the  ground  that  as  the  partnership  contem- 
plated the  purchase  of  real  estate  it  was  invalid,  because  oral. — Motion 
refused.  Smith  v.  Tarlton,  2  Barb.  Ch.  336  (1847). 

.-/  amlracl  to  divide  the  profits  arisins:  from  a  sale  of  land  is  not 
prohthitcd  by  the  Statute.  B,  in  1866,  advanced  C  I250  to  buy  a  traA 
of  land,  upon  his  oral  agreement  to  divide  the  profits  of  a  sale  between 
them.  C  gave  his  note  for  the  loan,  and  mortgaged  the  tra<ft  as  se- 
curity. In  consideration  for  a  re-conveyance  of  part,  B,  in  1S68,  relin- 
quished his  claim  for  profits.  In  1872,  B  and  C  submitted  their  ac- 
counts to  an  arbitrator,  and  he  awarded  B  I96.  A,  et  al.,  terre- 
tenaiiLsof  land  not  re-conveyed,  brought  bill  against  B.  Claim:  i. 
Loan,  including  principal,  interest  and  profits,  usurious;  2,  Statute 
o!  I-rauds  ;  3,  Redudion  of  debt  enured  to  plaintiffs.— Judgment  for 
».  Contract  not  within  Statute  of  Frauds.  Mahagan  v.  Mead,  6^  N. 
H.  130(1884).  ^  '    -^ 

i^  1"*^^^  &  C  on  oral  contradl  for  1-3  profits  of  land  purchased  and 
sold  by  them.  Defence  :  Statute  of  Frauds.— Recovered.  Perform- 
ance waives  the  Statute.  Trowbridge  v.  Wetherbee,  1 1  Allen  361,  Mass. 

24 


Pt.  I,  Ch,  I.  Origin  and  Growth.  §ii. 

Oral  contraR  for  proceeds  or  prod  u  ft  of  land  not  affcfled  by  Statute. 
A  and  B  agreed,  orally,  to  cultivate  a  farm  and  to  buy  and  sell  land 
in  partnership,  sharing  the  profit  and  loss  equally.  A  brought  a  bill 
for  half  the  profits  of  the  farm,  and  of  the  real  estate  trausadtions. 
Defence  :  Statute  of  Frauds. — Decree  for  a  share  of  profits  made  by 
real  estate  operations,  because  land  converted  and  claim  for  proceeds, 
which  were  personal  property  ;  for  a  share  of  profits  made  in  cultivat- 
ing the  farm,  because  the  title  to  land  was  not  involved  in  the  issue. 
Everhart's  Appeal,   lo  Out.  349,  Pa.  (1884). 


§11. 

J)artncrsl)i|j  ma«  tiist  for  improniug,  as  uicll  as  ior  buning 
ani)  sellinci,  lauti. 

The  business  may  consist  of  a  building  operation, 
undertaken  for  the  improvement  of  land,  and  for 
bringing  it  into  the  market  by  means  of  the  strudl- 
ures  ere(5led  upon  it;^  or  the  business  may  be  limited 
to  the  erection  of  buildings,  without  any  ulterior  view 
of  selling  the  premises.^ 

1.  A  building  operation  on  joint  account  is  a  partnership.  Land  was 
let  to  B,  who  condu6ted  a  building  operation.  C  advanced  the  money. 
Title  held  by  C,  though  in  equity  tenant  in  common  with  B.  Funds 
realized  by  sale  of  houses  deposited  to  joint  credit,  upon  which  either 
entitled  to  draw.  After  advances  and  outlays  reimbursed,  profit  and 
loss  divided  equally  between  B  &  C,  A  sued  C  for  building  materials. 
— Liable,  because  transadlion  was  by  B  as  C's  agent  on  behalf  of  both. 
Noakes  v.  Barlow,  26  L.  T.  136,  s.  c. ;  20  W.  R.  388  (1872). 

The  title  belongs  to  the  firm.  B  &  C  were  partners  in  Isrick-making. 
They  traded  two  lots  held  by  them  in  common,  and  two  in  severalty, 
for  a  lot  which  was  conveyed  to  B  for  a  building  operation.  He  put 
title  in  D,  who  executed  mortgages  and  conveyed  to  C.  The  mort- 
gages were  never  negotiated.  B  assigned  for  creditors,  to  A,  and  C 
subsequently  assigned  for  creditors,  to  E.  A  sought  to  make  E  re- 
convey  a  moiety,  on  the  theory  of  a  tenancy  in  common  by  B  &  C. 
E  offered  to  show,  by  parol,  that  land  belonged  to  the  firm, — Evidence 
admitted,  because  contest  between  partners.  Black's  Appeal,  8  Nor. 
201,  Pa.  (1879). 

2.  A  partner'ship  in  building.  A  &  B  were  associated  for  building, 
but  not  for  operating,  a  mill.  A  bought  mill-stones  for  firm,  on  in- 
dividual credit.  Plaintiff  sued  both  for  price. — Recovered,  because 
partnership  in  building,  and  purchase  incident  to  business.  Reynolds 
v.  Cleveland,  4  Cowen  282  (1825). 


25 


5j2.  Origin  and  Growth.  Pt.  i,  Ch.  i. 

§12- 

Z\)t  onlti  close  left  iv\)k\)  business  bocs  not  penetrate  is  farm 
lanii. 

The  relic  which  survives  of  the  traditionary  epoch 
is  the  custom  of  fanning  on  shares.  The  relation  of 
landlord  and  tenant  gives  expression  to  agricultural 
habits,  which  would  not,  it  was  thought,  adapt  them- 
selves to  the  transa6lions  of  business  men.^  But  the 
exception  is  becoming  rather  a  presumption  of  fa6l 
than  a  dogma  of  law,  and  if  the  parties  mean  to  farm 
land  in  partnership,  the  law  will  not  prevent  them.^ 

Fanning  on  shares  does  not  constitute  an  agricultural 
partnership,  bnt  establishes  the  relation  of  landlord  and 
tenant,  according  to  inveterate  tradition. 
I.  Fannitii^  on  shares  no  partnership.  By  agreement,  B  farmed  land 
of  A  for  1-2  the  produdl,  each  furnishing  1-2  the  stock,  but  B  the 
impleiiients,  working-stock  and  labor,  and  also  paying  road-tax  and 
1-2  of  other  taxes.  B  confessed  judgment  to  C,  who  levied  on  and 
sold  H's  interest  in  the  farm  to  D.  Claim  of  A's  devisee:  Sheriff's 
vendee  bought  only  balance  due  B  after  account  with  A. — Judgment 
for  C.  No  partnership,  and  A's  failure  to  distrain,  or  notify  sheriff 
of  claim  for  rent,  devested  his  right.  Brown  v.  Taquette,  i^  Norris 
113,  I'a.  (i8,So).  J   H  ,     J 

.\  rented  B  a  farm  for  1-2  produce,  and  a  tavern  for  1-2  profits,  and 
sued  for  use  and  occupation. — A(5lion  lav,  as  agreement  created  no 
partnership.   I'errine  v.  Hankinson,  6  Hal.  181  (1829). 

H,  who  owned  a  farm,  furnished  and  provided  for  the  horses,  C  for 
the  laborers  eni])loyed  to  raise  tobacco,  for  half  the  produce.  C  sold 
the  crops  to  A,  who  sued  B  and  C  for  its  non-delivery.— Judgment 
for  A  reversed.     No  partnership.   Day  v.  Stevens,  88  N.  C.  79  (1883). 

//  ork III ff  farm  on  shares  no  partnership.  A  covenanted  with  B  to 
work  his  farm  for  1-2  the  crop.  A  brought  covenant.  Defence  :  A, 
partner,  an<l  should  have  brought  account.— A  was  a  servant,  neither 
tenant,  tenant  m  common,  nor  partner.  Patton  v.  Heustis,  2  Dutch. 
293(iH57). 

A  ^T,"''%  ""  -^^'^^^-^  no  partnership,  althomrh  agreement  to  share 
profit  and  loss.  A  &  B  let  farm  partially  stocked  to  C,  sharing  speci- 
hed  produds  and  profit  and  loss.  A  &  B  sued  C  for  their  share. 
ueicnce  :    Account  nece.ssary.     On  trial,  question  put  to  defendant : 

N\  Mat  was  general  result,  profit  or  loss  ? '—Question  immaterial,  not- 
>*unstanrling  agreement.  Plaintiffs  entitled  to  a  share  of  produce. 
Gregory  v.  Brooks,  i  Hun   404  (1874). 

1  he  tenant  is  entitled  to  the  possession  during  the 
tenn  of  his  lease. 

f^Zm"'^'  7  ^\'^'''^^^^'^'^^  farmer  possession.  B  let  moietv  of  a  farm 
lor  one  jear  to  A,  who  agreed  to  haul  and  spread  manure,' and  keep 

26 


Pt.  I,  Ch.  I.         Origin  and  Growth.  §12. 

the  fences  in  repair,  to  plant  fields  with  specified  seeds,  and  to  pay 
taxes.  B  bargained  for  half  the  com  and  grain,  and  A  for  all  the  hay 
and  for  pasturage.  A  sued  B  for  failure  to  give  possession. — Recov- 
ered.   Steel  V.  Frick,  6  Sm.  172,  Pa.  (1867). 

Title  to  the  crop  is  incident  to  the  possession,  and  is 
vested  in  the  tenant. 

Owner  no  title  to  crop  until  set  apart.  B  rented  his  farm  on  shares 
to  C  et  al.  A  attached  the  growing  grain  in  their  possession  for  B's 
debt. — Valid.  No  levy  until  rent  in  kind  set  apart  for  B,  but  attach- 
ment lay  for  it  against  tenants,  as  owners.  Howard  v.  Kyte,  28  N.  W. 
R.  609  (1886). 

The  interest  of  the  landlord  in  the  growing  crop  is 
not  severed  by  execution  and  sale  under  a  judgment 
against  him. 

Execution  against  the  landlord  does  not  sever  the  crop.  B  let  his 
farm  on  shares  to  C  from  year  to  year.  During  the  term,  the  growing 
grain  was  sold  under  a  judgment  against  B  to  A.  Subsequently  the 
land  was  levied  on,  and  sold  to  D.  C,  as  tenant  of  D,  delivered  to 
him  the  harvested  grain.  A  sued  D. — Recovered.  Levy  severed  the 
shares,  and  sale  passed  B's  share  to  A. — Reversed.  Long  v.  Seavers, 
7  0ut.  517,  Pa.  (1883). 

A  cropper  shares  the  produ(5l,  but,  as  he  is  not  a 
tenant,  he  has  no  right  to  the  possession,  which  remains 
in  the  owner,  and  he  acquires  no  title  to  the  crop. 

A  cj^opper  has  no  way-going  crop.  B  agreed  with  C  that  he  should 
put  out  25  or  30  acres  in  wheat,  and  have  2-3  of  the  crop.  The  farm 
was  sold  by  the  sheriff  to  A,  who,  in  January,  sold  it  to  D,  and  subse- 
quently entered  up  judgment  for  the  purchase-money.  C  paid  D  1-3 
of  the  crop,  and  retained  2-3  of  it.  D  claimed  to  set-off  the  2-3  against 
A's  judgment. — Disallowed.  As  C  not  a  tenant,  but  only  a  cropper, 
there  was  no  way -going  crop  for  C  to  claim,  or  D  to  set-off.  Adams  v. 
McKesson,  3  Smith  81,  Pa.  (1866). 

Cropper  has  only  a  claim  for  his  share.  B,  who  held  land,  bar- 
gained to  plow  and  sow,  A  to  fence  and  irrigate  it,  and  to  harvest  the 
crop  on  shares.  Upon  disagreement,  B  cut  off  water,  took  charge  of 
crop,  and  promised  to  pay  A  |io  a  ton  for  his  half;  for  which  A  sued 
B.  Demurrer,  because  remedy  account. — A  simply  a  cropper,  who 
had  no  interest  in  land,  but  a  share  of  crop  for  his  work.  Romero  v. 
Dalton,  II  Pac.  R.  863  (1886). 

In  Massachusetts,  and  in  New  York,  the  disposition 
is  to  treat  the  farmer  on  shares  neither  as  a  tenant  nor 
as  a  cropper,  but  as  a  co-occupant,  with  an  undivided 
share  of  the  crops  and  a  qualified  interest  in  the  land. 

Fanning  on  shares  gives  the  fanner  a  joint  title  to  the  crop.  By 
agreement,  B  should  work  A's  farm  on  shares  for  one  year,  each 
furnishing  half  the  seed.  A's  creditor  attached  and  removed  his 
quota.  A  sued  B  for  half  the  crop. — ^Judgment  for  B,  Though 
remedy  against  officer  by  both  co-occupants,  who  had  undivided 
shares  of  the  crop,  yet  the  duty  to  a6t  was  upon  A,  because  the  tres- 
pass was  committed  for  his  private  debt.  His  negledl  waived  pursuit 
of  the  officer  for  the  trespass,  and  for  recovery  of  the  quota.  Walker 
V.  Fitts,  24  Pick.  191  (1837). 


27 


Ui. 


Origin  and  Growth.  Pt.  i,  Ch.  i. 

Available  af^ainsl  his  co-occupaul,  owner  of  the  land.  Agreement 
bv  A  iind  H  to  farai  on  shares,  each  furnishing  half  the  seed  and 
manure,  A  doing  hand  and  B  team  work,  and  A  harvesting  the  crop. 
H  exchuled  A,  and  consumed  the  crop.  A  sued  B  for  the  conversion. 
—Recovered.'  Tenants  in  common  of  the  crop,  and  trover  lies,  in 
MiussachusetLs,  against  co-tenant  for  conversion  of  undivided  half. 
Delanev  v.  Root,  99  -Mass.  546  (1868). 

(>:c>irrs,  occupants  and  laborers,  farming  on  shares,  are  tenants  tn 
common  of  produRs,  and  muy  join  in  suit  for  price.  C  &  D  took  A 
&  H's  farm  on  shares.  D  divided  his  share  with  E  &  F,  in  considera- 
tion for  working  the  farm.  D  sold  wheat,  and  all  six  sued  for  the 
price.  Defence:  Contracfl  with  D  alone. — Suit  maintained.  Though 
not  partners,  owners  tenants  in  common  with  occupants  and  laborers 
of  products.  As  all  must  join  in  tort  to  common  property,  they  may 
waive  the  tort  and  sue  in  assumpsit.  Putnam  v.  Wise,  i  Hill  234  N.  Y. 

Until  or  unless  a  division  is  made. 
The  agreement  may  provide  for  a  division,  and  exclude  a  joint  in- 
terest. .Agreement :  A  to  work  B's  dairy  farms,  deliver  9,600  pounds, 
and  retain  the  residue  of  cheese  manufacflured  and  sold  by  the  fadtory. 
.\  sued  D,  its  treasurer,  for  proceeds  he  had  paid  B. — Judgment  for 
D.  Title  to  first  9,600  pounds  manufa<5lured  in  A  ;  balance  only  in  B. 
W'ilber  v.  Sisson,  54  N.  Y.  121  (1873).  Or  the  value  of  a  share  may  be 
bargained  for,  and  that  indicates  a  cropper.  Tanner  v.  Hills,  48  N.  Y. 
662(1872.) 

Farming  on  shares  by  owners  constitutes  a  partnership.  A  &  B 
jointly  bought  lands,  for  the  purpose  of  farming  them,  and  eventually 
of  selling  them.  By  subsequent  agreement,  Aconducted  the  farming 
oj)cratioiis,  and  B  attended  to  the  sale  and  shipment  of  produce, 
l>earing  equally  the  expenses,  and  after  an  allowance  to  A  for  his  ser- 
vices, and  for  the  use  of  his  teams  and  implements,  sharing  equally 
the  net  proceeds.  A  sued  B  for  his  portion.— Judgment  for  B.  Part- 
ners, and  only  remedy  account.  Fishery.  Sweet,  67  Cal.  228  (1885). 


§13. 

^t  is  tl)c  act  of  tl)c  parties,  ant)  not  of  tl)e  lato,  ml)icl)  makes 
loni)  K\\\  article  of  tratic. 

The  conversion  of  land  into  merchandise  is  a  posi- 
tive aa,  which  must  be  performed  by  the  parties  who 
wish  to  effeA  the  transformation.  The  land  retains 
Its  natural  state  until  some  ad  is  done  which  changes 
the  normal  condition,  and  converts  it  into  merchan- 
dise.    The  law  does  not  work  the  effeA  of  its  own 

28 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §14.; 

motion,  but  follows  in  the  wake  of  the  parties,  and 
ratifies  their  a(5l  when  it  is  an  accomplished  fa6l/ 

At  first,  mutual  covenants  by  the  partners  were  re- 
quired, in  order  to  convert  the  land  into  merchandise.^ 

But  the  intention  is  now  sufficient.'^ 

1.  Owners  of  la7id,  mill  and  machinery  are  tenants  in  common,  unless 
they  intended  to  use  or  sell  the  plant  as  partners.  A,  B  and  C  agreed 
to  jointly  buy  and  hold  land,  erecT;  a  steam  saw-mill,  and  eqxjip  it 
with  machinery.  They  agreed  to  share  equally  the  profits,  either  of 
selling  or  letting  the  plant,  and  to  reimburse  any  over-advance  by 
either.  B  died,  and  A  brought  bill  for  account  and  over-advance. — 
Decree.  Lien  enforced  upon  the  cotitradl,  but  parties  co-tenants,  not 
partners.   Farrand  v.  Gleason,  56  Vt.  633  (1884). 

This  is  also  the  Civil  L/aw:  "Supposons  que  deux  personnes  se 
"  sont  reunies  pour  acheter  un  immeuble :  seront-elles  en  etat  de  so- 
"ciete  ou  de  communaute?  Pour  resoudre  la  question,  on  doit  cher- 
"  cher  le  but  que  se  sont  propose  les  parties.  Est-ce  pour  revendre  et 
"  faire  un  benefice  qu'elles  ont  achete?  C'est  une  societe  qui  exist 
"  eutre  elles.  Mais  dans  le  doute  sur  leur  intention,  la  presomption 
"  de  communante  doit  I'emporter."  Traite  des  Societes  Civiles  et 
Commerciales,  par  A.  Vavasseur,  s.  28,  2d  ed.,  Paris,  187S. 

2.  Partners  would  hold  real  estate  as  tenants  in  common.  A  &  B 
were  partners  in  working  a  distillery,  which  they  owned.  They  sold 
the  premises,  and  B  recovered  the  price.  A's  representatives  brought 
assumpsit  for  his  quota.  Defence:  Should  have  brought  account. — 
Recovered,  because  partners  are  tenants  in  common  of  real  estate, 
which  could  be  devoted  to  the  firm  purposes  only  by  means  of  mutual 
covenants.   Coles  v.  Coles,  15  Johns.  159  (1818). 

3  Title  to  firm  real  estate.  Partnership  held  land.  No  mutual  cove- 
nants, but  intention  to  use  it  for  firm  purposes.  A  died,  and  B  as- 
signed for  firm  creditors.  Land  sold  on  mortgages  executed  by  the 
partners.  Wife  of  A  joined  in  the  mortgages.  The  surplus  was 
claimed  by  assignee,  and  by  A's  heir,  and  by  his  widow. — Widow  al- 
lowed dower  in  a  moiety,  though  husband  had  a  two-thirds  interest 
in  the  firm.  Each  partner's  title  was  subje6l  to  a  co-partner's  equity, 
but  proceeds  remained  realty,  and  hence  widow  took  dower.  Smith 
V.  Jackson,  2  Ed.  Ch.  28  (1833). 

Intention  of  partners  sufficient  to  put  title  in  firm  A,  B,  C  &  D, 
co-partners,  bought  laud,  biit  D  took  title  in  his  name.  A,  B  and 
representatives  of  C  claimed  purparts. — Recovered.  Purchase  by 
firm  makes  laud  its  assets.  Fairchild  v.  Fairchild,  64  N.  Y.  471  (1878). 


But  a  modification  is  to  be  noted,  which  results  from 

an  extension  of  the  partnership  area. 

29 


5i«^.  Origin  and  Growth.  Pt.  i,  Ch.  i. 

ijllf  priiuiplfs  ml]ifl)  oiroui  out  of  trabe  anb  regulate  tta  trans- 
attiona  uniifrao  a  d)ange  u)l]cu  partn£rsl)ip,  au  organ  of  trak, 
10  fitfULiCLi  to  a  business  nil)irl)  is  not  a  trabe,  anb  bocs  not 
fonsist  of  buningi  ant>  selling  mercl)anbise. 

The  extension  of  partnership  to  all  branches  of 
business  has  led  to  the  recognition  of  a  new  class, 
styljed,  by  way  of  contrast,  non-commercial  partner- 
ships. Their  powers  are  defined  by  the  special  busi- 
ness undertaken  by  the  firm,  and  not  by  trade.* 

I.  Shefp-raisitifr  is  inconsistent  with  partner's  agency  to  sell.  A  &  B 
were  partners  in  sheep-raising.  B,  during  A's  absence,  and  without 
his  consent,  sold  out  the  ranch  to  defendants,  but  subsequently  in- 
duced them  to  restrici  the  sale  to  1-3  of  the  flock.  B  died,  and  A 
sued  to  recover  possession  of  the  sheep. — Recovered.  Sheep-breed- 
ing involved  no  authority  by  a  partner  to  sell.  The  business  of  in- 
creasing and  improving  the  stock  would  be  destroyed  by  a  sale.  The 
only  purchases  incident  to  the  business  are  of  breeding  sheep,  and 
the  only  sales  of  culls.    Blaker  v.  Sands,  29  Kan.  551  (1883). 

T/iratre  hnsincss  does  not  justify  commercial  paper.  B  &  C,  part- 
ners for  conducling  a  theatre.  Without  C's  knowledge,  B  gave  firm 
note  for  a  loan,  to  D,  who  endorsed  it  to  A.  A  knew  the  business 
was  not  for  trade.  The  note  being  given  shortly-  after  the  partnership 
was  formed,  no  custom  was  established  of  the  firm's  giving  notes. 
The  proceeds  were  not  traced  beyond  B,  and  no  firm  necessity  was 
shown  for  the  note.  A  sued  firm.— Judgment  for  plaintiff  set  aside. 
I'resumjHion  against  partner's  authority  to  make  commercial  paper 
in  non-trading  partnership.  Each  partner  is  not  general  agent  for 
firm,  except  in  a  commercial  partnership.  Semble :  Firm  bound  if  it 
received  proceeds.   Pease  v.  Cole,  53  Conn.  53  (1885). 


§15. 

^  mining  partnersl)ip  forms  a  distinct  species.  In  it  tl]ere 
is  no  drlcclus  pcrsonae,  but  a  sl)are  inrests  tlje  Ijolber  mitl) 
mnnbcrsljip,  cucu  against  tl)e  mill  of  l]is  fo-partners.  Ncitljer 
tl)f  bcatl)  of  a  partner  nor  tl)e  assicinmcnt  of  l)is  sl]are  bissolncs 
tlie  firm.' 

The  partnership  results  from  a  co-operation  in  the 
working  of  a  mine,  whether  it  is  owned  by  the  firm, 


30 


Pt.  I,  Ch.  I.  Origin  and  Growth.  §15. 

by  the  partners  as  tenants  in  common,  or  by  tbird 
persons  who  make  leases  to  the  firm.^  The  nature 
of  mining  property,  and  the  requirements  for  its  de- 
velopement,  led  to  the  abandonment  of  contraA  as  the 
basis  for  the  relation.  Mining  operations  demand 
uninterrupted  exertions,  and  would  be  imperilled  if  a 
dissolution  of  the  firm  resulted  from  a  change  of  part- 
ners. Moreover,  the  amount  of  capital  required  to 
undertake  and  condudl  extended  works  furnished  an 
additional  reason  why  the  firm  should  not  depend  for 
its  existence  upon  the  mutual  contradl  of  its  constitu- 
ents.^ 

The  personal  confidence  which,  in  ordinary  partner- 
ship, results  from  the  choice  made  by  the  partners 
of  their  associates  does  not  exist  in  a  mining  partner- 
ship, where  the  connexion  with  each  other  is  only 
through  the  common  business.  Each  partner  repre- 
sents the  business,  but  he  does  not  represent  his  co- 
partners, and  his  implied  authority  is  defined  by  the 
nature  and  necessities  of  the  business.*  His  liability 
springs  from  the  same  source.'^ 

The  normal  type  of  partnership,  however,  reverts, 
and  will  exist  in  a  mining  business,  if  there  is  a  de- 
leSJus  personae^ 

I.     II  Morrison's  Mining  Rep.  223-607. 

Partners  by  purchase,  right  to  assets.  Superintendent  of  mining 
partnership  bought  for  its  hydraulic  diggings  ditches  upon  which  A 
had  a  lien.  Of  original  partners,  some  died,  and  all  the  others,  except 
B,  were  succeeded  by  A  et  al.,  who  knew  that  purchase-money  was 
unpaid  when  they  purchased  shares.  A  brought  account.  Defence : 
B  survivor,  aud  retired  partners  not  joined. — Decree.  No  dissolution 
by  death,  or  substitution  of  partners.  Retired  partners  not  necessary- 
parties.   Jones  V.  Clark,  42  Cal.  iSo  (1871J. 

Share-holder  a  partner  in  mining  Jinn.  B  bought  out  an  original 
partner,  who  had  1-16  interest  in  a  mining  partnership,  and  sold  1-2 
to  C.  Neither  was  known  as  a  partner  in  the  business,  or  took  part 
in  its  management.  A  erecfted  a  rock-crushing  mill  under  contracfl 
with  the  firm,  and  sued  B  &  C  for  contract  price. — Recovered.  Holder 
of  share  a  partner  in  mining  firm,  although  he  is  not  held  out,  and 

31 


jjc  Origin  and  Growth.  Pt.  i,  Ch.  i. 

Ukcs  no  part  in  uianaj^iug  the  business.  Taylor  v.  Castle,  42  Cal.  367 
(I.S71J 
2  Partiur  has  lien  for  advaJiccs  made  in  working  mines.  A  bought 
out  tlu-  uiterests  of  5  who,  with  15,  worked  mining  property.  The 
linn  IjoukIU  with  its  funds  other  mining  land  and  a  ditch  to  supply 
the  works  with  water.  There  was  no  contracSl  of  partnership,  but 
tlu-  profits  and  losses  were  shared  according  to  the  interests.  The 
firm  incurred  debt  by  construdling  a  tunnel.  Account  showed  B  in- 
debted to  -V  ^^1,572.55.  B,  insolvent,  sold  his  1-5  to  C  and  D,  inform- 
ing C.  but  not  D,  of  A's  claini. — C  and  D  took  subjedl  to  A's  lien. 
Duryea  v.  Burt.  28  Cal.  569  (1865). 

3.  Kcf filer  appointed  only  upon  interference.  A  &  B,  solicitors  in 
partnership,  bought  part  of  a  coal  mine,  and  worked  the  colliery. 
\'\yo\\  a  disagreement.  A,  while  adlually  condu(5ling  the  operations, 
brought  a  bill  for  account  and  for  the  appointment  of  a  receiver. — 
Dismissed.  No  such  interference  as  broke  up  the  business.  The 
refusal  of  partners  to  co-operate  is  like  the  aisagreement  in  an  ordi- 
nary partnership,  but  there  must  be  such  an  interference  by  a  part- 
ner as  prevents  a  continuance  of  the  business,  in  order  to  justify  a 
court  in  undertaking  its  management.  Roberts  v.  Eberhardt,  i  Kay 
'48  1 1 853)- 

4.  The  partner  is  not  an  agent  to  bind  the  firm  by  commercial  paper. 
rnder  the  fa<5ls,  B  was  appointed  agent  by  one  of  the  proprietors,  to 
erec^  a  smelter  and  carry  on  smelting  works  for  the  association.  A 
solil  coal  for  the  business,  and  sued  the  members  as  partners. ^Re- 
covered. A  mining  partnership  results  from  the  co-operation  of  own- 
ers in  working  a  mine.  The  partner  has  authority  to  do  a(?ts  neces- 
sjiry  or  usual  in  transa(5ting  such  business,  though  not  to  make  com- 
mercial paper,  or  employ  counsel  to  litigate  the  title  to  a  mine. 
Sluire  may  be  assigned  to  stranger  without  consent  of  co-partners, 
and  finn  not  dissolved  by  a  partner's  death.  Higgins  v.  Armstrong, 
lu  Pac.  Rep.  232,  Col.  (1886). 

Mining  firm's  pre-emption  right  of  retiring  partiier''  s  interest  does 
not  prevent  him  from  selling  his  title,  if  the  mines  are  owned  by  the 
partners,  and  not  by  the  firm.  A,  B,  C  &  D,  each  owned  one-fourth 
of  two  lead  mines.  While  A  and  B  were  negotiating  for  the  firm  to 
buy  out  D,  B  and  C  closed  with  1),  and  took  his  title  for  themselves. 
A  discovering  the  purchase,  claimed  for  the  firm  the  proceeds  depos- 
ited ni  bank.— Judgment  for  B  and  C.  B  not  a  trustee,  as  he  repudi- 
ated^ agency,  and  bought  for  himself  with  his  own  funds.  Mining 
firm's  riglit  of  ])re-eniption  is  confined  to  retiring  partner's  interest 
in  firm  j.roperty,  and  does  not  extend  to  his  individual  title.  The 
partnership  for  working  the  mines  did  not  include  the  ownership  of 
the  i)roperty.  I-irst  Nat.  Bank  v.  Bissell,  2  McCrary  73,  U.  S.  C.  C 
AOirmed.  s.  c,  Bissell  v.  Foss,  114  U.  S.  252  (1885). 

A  partner's  authority  in  a  mining  partnership  is  defined  by  require- 
f>ir>it<;  of  the  business.  B,  C,  etal.,  partners  in  mining.  Articles 
•n/.ed  purchase  and  sale  of  lauds,  or  leases,  but  prohibited  any 
'  r  from  contraaing  any  debt  without  consent  of  his  co-partners. 
■  •  m;,  Nv  on  C,  m  favor  of  A  for  purchase-money  of  mineral  land.  C 
relused  to  accept,  and  A  sued.— Judgment  for  C.  Authority  to  bor- 
row l,y  commercial  paper  necessary  for  a  trading,  but  not  for  a  non- 
trading  partnership.    Judge  V.  Braswell,  13  Bush.  67,  Ky.  (1887). 

^  .,!i''"''Z'''^  '"  a'or/t/;/?-  quany.  Partner  liable  for  tort  of  co-part- 
worwir^  ■^'''''■'-  ^''  ''^"'■'^  ^  ^"^""y-  shipped  and  sold  the  stone  C 
worked  the  quarry,  and  his  men  assisted  B's  men  in  loading.     B  &  C 

32 


Pt.  I,  Ch.  2.  Antecedents.  §i6. 

paid  for  blasting  powder,  and  divided  profits  in  equal  parts.  Cs  men 
injured  A  on  adjoining  premises,  by  negligent  blasting,  and  A  sued 
B. — Recovered.  B  &  C  partners.  Cotter  v.  Bettner,  i  Bosw.  490,  N.  Y. 
(1857). 

6.  Mining  does  not  differ  frotn  trading  partnership  if  a  delectus  per- 
sonae.  B,  a  pra<5lical  miner,  contributed  his  skill,  and  C  the  money, 
with  which  they  bought  and  worked  a  mine.  A  sued  firm  on  its  note 
made  by  B  for,  and  used  in,  the  business. — Recovered.  Ordinary 
partnership,  though  for  mining.  DeleHus personae.  Decker  v.  How- 
ell, 42  Cal.  636(1872). 


-O- 


CHAPTER  II. 

THE    ANTECEDENTS    OF    A    PARTNERSHIP. 

§16. 

(l[l)£  object  of  trabc,  antr  also  ofpartnersljip  as  an  instrument 
of  trabt,  is  gain,  anb  unless  a  business  is  unbertaken  tl)cre  can 
be  no  partncrsljip.' 

Gain  means  a  positive  acquisition  of  property.  Mu- 
tual prote(5lion  against  loss  does  not  add  any  new 
produ6l,  but  simply  provides  security  for  retaining 
what  is  already  possessed.  A  mutual  protection,  or 
mutual  insurance,  association  does  not  amount  to  a 
partnership."  As  Straccha  puts  it:  "Assecuratus 
"  non  quaeret  lucrum,  sed  agit  ne  in  damno  sit."^  Nor 
does  a  tontine  involve  a  partnership  as  the  agent  of 
produAion.  The  right  to  succeed  upon  the  death  of 
a  member  to  his  share  does  not  result  in  a  gain,  but 
in  a  division  among  the  contributors  of  the  fund,  which 
they  possessed  at  the  beginning.^     But  insurance  may 

33 


$i6. 


Antecedents.  Pt.  i,  Ch.  2. 


be  carried  on  as  a  business,  and  then  a  partnership 
would  result  from  the  undertaking,  unless  the  insur- 
ers organized  as  a  corporation,'  for  any  business  un- 
dertaken for  gain  is  a  partnership,  unless  transacted 
under  a  corporate  franchise." 

Thf  French  law  does  not  limit  the  partnership  to  the 
profits  made  in  a  business,  but  enlarges  the  scope  of  the  re- 
lation, .so  that  it  comprehends  any  association  producing  a 
benefit  which  can  be  estimated  in  money.'''  The  pleasure 
and  advantage  derived  by  the  citizens  from  frequenting  a 
park  would  be  sufficient,  it  is  said,  to  make  them  partners 
in  buying  it,  the  value  of  recreation  being  equivalent  to 
monc\-.''  The  Commercial  Code,  however,  regulates  the 
affairs  of  business,  and  hence  arises  the  distindlion  which 
is  made  between  Civil  and  Commercial  partnerships. 

The  authors  of  the  Code  Napoleon  adopted  the  definition 
j^iven  by  F'elicius  of  a  partnership  :''  ^'' Societas  est  con- 
^'  tract  us  qui  consensu^  rcbiis^  vel  operibiis^  vel  indiistna 
^'  intci-'cnimtihus^  ad  coniinuneni  quaestiim^  sen  hia'iim^ 
''  pcrfuitiiry^ 

I.  riiih  for  titiiliiaf  benefit,  tlwuffh  possessed  of  property,  is  not  a  part- 
iicrsliip.  IndejieiulcMit  order  of  '  Rechabites, '  organized  as  the  'Wash- 
inj^on  Tl-iiI,'  for  teiiiperauce,  justice,  relief  in  sickness,  and  observ- 
aiu-e  of  obsequies.  The  association  acquired  |4,6oo.  A,  alleging 
disagTeement  and  praAical  exclusion  of  members,  accompanied  by- 
diversion  of  funds,  but  not  averring  that  he  had  first  appealed,  as  re- 
quireclby  the  Constitution,  to  the  '  High  Chief  Ruler,'  or  to  the  '  High 
Tc-nl,'  moved  to  dissolve  the  association,  although  its  Bj^-Laws  for- 
bade a  dissolution  while  ten  members  remained,  unless  by  tmanimous 
consent. —Motion  refused.  Association  not  a  partnership,  because 
not  for  gain,  and  property  merelv  an  incident  to  the  main  purpose. 
Lafond  v.  Deenis,  8i  N.  Y.  507  (iSSo). 

An  association,  ivhich  is  not  for  ^ain,  is  no  partnership,  and 
ptaiutiff  need  not  join  representatives  of  deceased's  joint  obligor. 
Lo'lge  of  Ancient  Masons  appointed  committee,  B,  to  provide  for 
erection  of  a  temple.  B  obtained  loans  on  sealed  certificates  of  the 
Uxlge,  A  huh  had  never  before  issued  them,  except  to  attest  mem- 
bership or  to  communicate  with  other  lodges.  B  reported  proceed- 
ings to  Lodge,  which  approved  his  course.  Temple  was  constructed. 
I.of  gc  occupied  a  third  floor  room,  and  rented  out  the  rest  of  the 
building.  A,  who  lent  lioo,  brought  assumpsit  against  over  a  hun- 
flred  members,  as  partners,  on  a  certificate.  On  trial  A  testified  as  to 
the  loan,  and  examined  defendants.— Verdidl  for  A  set  aside.  Asso- 
ciation no  partnership,  because  not  for  gain.     No  members  except 

34 


Pt.  I,  Ch.  2.  Antecedents.  §i6, 

those  who  authorized  the  constru(5liou  were  Uable  to  A.  He  was 
competent,  because  AS.  25  May,  1878,  P.  L.  153,  equitably  extends 
to  joint  debtors,  and  A<51  22  March,  1S61,  P.  L.  186,  don't  require 
substitution  of  deceased  member's  representatives,  and  therefore  lia- 
bility only  of  survivors  at  issue.  A  might  prove  his  case  by  defend- 
ants under  Act  27  March,  1865,  P.  L.  38,  Ash  v.  Guie,  i  Out.  493, 
Pa.  (1S81). 

Association,  unless  for  gain,  not  a  partnership.  A,  one  of  twenty 
Christian  converts  associated  to  promote  spiritual  and  mental  de- 
velopment, was  convidled  under  31  and  32  Vic.  c.  116,  s,  i,  for  em- 
bezzling the  "partnership"  funds. — Convidlion  reversed.  Association 
not  a  partnership,  because  not  for  gain.  Queen  v.  Robson,  16  O.  B. 
137  (1885). 

2.  Subscription  to  mutual  proteRion  fund  no  partnership.  Society 
formed,  by  annual  subscription  of  its  members,  for  proteAion  of  their 
interests  in  trade,  adled  through  a  committee,  which  it  stipulated  to 
indemnify  out  of  the  funds  raised  by  subscription,  or  by  an  assess- 
ment. Committee,  upon  A's  qualif^nng  himself  by  becoming  a 
member,  appointed  him  printer  and  stationer  for  the  society.  He 
sued  the  committee  for  materials  and  services.  Defence  :  A  their  co- 
partner, who  gave  credit  to  the  fund.  A  obtained  verdicSt. — Sus- 
tained, because  no  finding  that  A  looked  only  to  fund  for  payment, 
and  exonerated  committee  from  liability  for  its  acfls.  Subscribing  to 
the  fund  didn't  make  A  a  partner.   Caldicott  v.  Griffiths,  8  Exch.  898 

(1853)- 

H/utual  insurance  not  partnership.  B,  a  mutual  insurance  Co., 
wdth  members  in  different  States,  insured  A,  of  Georgia.  His  widow 
claimed  that  the  war  prevented  him  from  paying  the  premiums,  and 
asked  to  have  the  policy  reinstated  upon  payment  of  the  arrears. 
Defence  :  B  a  partnership,  and  dissolved  by  the  war. — Not  a  partner- 
ship ;  but  if  so,  A  entitled  to  a  share  of  the  assets  at  the  date  of  dis- 
solution. Cohen  v.  N.  Y.  Mut.  Life,  50  N.  Y.  611  (1872). 

3.  De  assecur.  gl.  20,  No.  4,  cited,  Troplong,  Societes  Civiles  et  Com- 
merciales,  vol.  i,  p.  21,  Paris,  1843. 

4.  Bravard-Veyrieres,  Traite  des  Societes  Commerciales,  pp.  15,  26, 
Paris,  1S62. 

5.  Vavasseur,  s.  23. 

6.  Any  association  for  gain,  not  a  corporation,  is  a  partnership.  Car- 
trust  a  partnership.  Association  formed  to  buy  rolling-stock,  and  to 
sell  and  let  it  to  R.  R.  Co.,  which  agreed  to  pay  in  ten  annual  instal- 
ments the  price,  which  should  lie  sufficient  to  cover  principal,  interest 
and  expenses.  Members  furnished  money,  and  received  certificates 
for  principal  and  interest  at  6  per  cent.,  but  payable  only  out  of  net 
rentals.  Trustee  held  title,  issued  certificates,  and  executed  leases. 
Association  taxed  as  partnership. — Liable.  Ricker  v.  Am.  Loan  and 
Trust  Co.,  140  Mass.  346  (1885). 

a.  "  Que  doit-on  entendre  par  benefice?  Faut-il  necessairement  qu'il 
"  consiste  en  uue  somme  d' argent  a  partager?  Evidemment  non. 
"  II  suffit  que  ce  soit  un  avantage  commun  appreciable  a  prix  d'ar 
"gent."  Rousseau,  Societes  Civiles  et  Commerciales,  s.  64,  Paris,  1878. 

b.  Rousseau,  s.  66. 

c.  De  Societate,  c.  i,  No.  4,  cited  Troplong,  p.  9. 

d.  "  La  societe  est  un  contrat  par  lequel  deux  on  plusieurs  personnes 
"  convennent  de  mettre  quelque  chose  en  commun  dans  la  vue  de 
"partager  le  benefice  qui  pourra  en  resulter. "   C.  C,  s.  1832. 

35 


§17.  Antecedents.  Pt.  i,  Ch.  2., 

§17. 

(I  lie  commcncf incut  of  a  partnersl)ip  is  fiieb  bri  tl)c  toill  of  tl)c 
parties. 

When  docs  the  partnership  begin?  If  not  at  once/ 
the  date  may  be  fixed  at  the  outset/  or  left  open  for 
subsequent  determination  by  the  partners,  or  by  a 
third  person;    or  it  may  depend  on  a  contingency. 

The  commencement  of  partnership,  if  made  to  de- 
pend upon  a  condition,  which  would  prevent  the  part- 
nership from  coming  into  existence  unless  the  condi- 
tion had  been  performed,  will  not  be  suspended  where 
the  partners  proceed  to  carry  on  the  business,  and  do 
not  wait  for  the  performance  of  the  condition.  They 
will  be  deemed  to  have  waived  the  jDerformance  by 
transacting  the  business  as  if  there  had  been  no  con- 
dition.' 

The  unauthorized  a(5l,  however,  of  a  party  does  not 
commit  the  firm  and  establish  the  business.^ 

I.  Partucrship  dates  from  agreement,  not  from  beginning  business 
iiNdn-  //,  and  the  purchase  by  a  partner,  though  for  his  quota,  if  made 
on  joint  credit,  binds  all  in  a  name  which  he  adopts,  B  agreed  to 
crca  a  .listillery  on  liis  land  and  let  it  for  15  years  from  date  of  the 
agreement.  C  &  D  to  fit  up  the  establishmeiiit,  stock  it,  and  adjust 
each  partner's  quota  by  his  contribution.  C  &  D  to  condu(5l  the  busi- 
ness in  consultation  with  B.  All  to  share  the  cost  of  distillery,  and 
jointly  own  stock  and  establishment.  D,  on  strength  of  B's  credit  in 
N.  \  .,  Ixniglit  merchandise,  for  which  he  gaye  a  note  in  B,  D  &  Co.'s 
name.  Nolhing  was  done  to  carry  out  the  agreement,  and  the  busi- 
ness never  began.  Defence :  Purcha.se  by  D  for  his  contribution  and 
paitnersliip  a  projecfl  not  realized,  because  the  conditions  preliminary 
to  Us  existence  were  not  performed. -Judgment  for  A.  The  defend- 
ants were  jointly  interested  in  the  business,  and  were  co-owners  of 
«^,l r  l'\"  ,''■•  i?'^'''  'V'>«  t''  ^^e  sold  for  their  mutual  benefit.  The 
fhl  n,  frc  7-  e'Tea  on  us  execution,  and  empowered  each  to  bind 
n  nwil  V  whi"  "'^  of;-*  ".'-^''le  implied  its  adoption  by  B  and  D.  As- 
pinwall  V.  \\illiams,  i  Ohio  84  (1823). 

2.  If  a  father  puts  his  son  into  business  with  another,  as  a 
Clerk,  on  a  salary  graduated  by  the  profits,  for  three 
years,  and  at  the  expiration,  as  a  partner,  the  son  would 

36 


Pt.  I,  Ch.  2.  Antecedents.  §17, 

not  be  liable  for  debts  contra^led  during  the  three  )'ears, 
because  the  provisional  arrangement  lasted  until  the  end 
of  the  term. 

Ad  interim  clerk  not  a  partner  until  the  term  expires.  B,  a  manu- 
fadlurer,  advertised  for  a  partner,  aud  C's  father,  in  response,  arranged 
for  C  to  become  B's  partner.  The  arrangement  was  subsequently 
postponed  for  3  years,  and  it  was  agreed  that  in  the  interval  C  should 
have  a  salary,  ascertained  by  the  profits,  but  not  so  as  to  be  liable  as 
a  partner.  C  acfled  as  a  partner,  by  opening  letters  and  discharging 
clerks,  and  stated  that  he  was  B's  partner.  A,  who  was  in  the  habit 
of  suppl3'ing  B  with  goods,  sued  C  for  the  price  of  goods  sold  after  the 
arrangement.  A  did  not  know,  when  he  sold  the  goods,  of  C's  state- 
ment, that  he  was  a  partner,  though  B  then  told  him  that  C  was  his 
partner. — Not  liable,  as  B's  declaration  to  A  did  not  affedl  C,  and  his 
admission  was  not  known  to  A  when  he  gave  B  credit.  Arrangement 
made  C  a  clerk  for  3  years,  and  not  a  partner  until  the  term  expired. 
Edmansou  v.  Thompson,  8  Jurist  N.  S.  235  (1861). 

If  a  lender  took  interest  and  a  percentage  of  the  coal 
mined,  and,  as  security,  an  assignment  of  the  lease  and 
title  to  the  works,  and  stipulated  for  three-fourths  of  the 
profits  when  repaid  his  loan  and  expenses,  he  would  not 
be  a  partner,  because  the  partnership  would  not  begin 
until  the  loan  was  refunded. 

Equitable  mortgagee  0/ mines  and prospe^ive partner,  upon  repay- 
ment of  loan,  is  not  a  partner  until  repaid.  By  articles,  B  advanced  C 
;^2,ooo,  for  working  a  coal  mine,  and  assumed  liability  for  that 
amount.  B  stipulated  for  10  per  cent,  interest  and  for  a  commission 
of  3d.  a  ton  on  the  coal  mined.  He  took  assignment  of  lease  and  title 
to  works  until  he  should  be  reimbursed.  After  payment  of  advance, 
royalties  and  expenses,  he  was  to  have  3-4  the  net  profits,  and  C  1-4 
and  a  salary.  C  worked  mines,  and  became  insolvent.  B  died  before 
his  advance  was  repaid.  A  sued  B's  executors  for  debt  incurred  in 
working  mines. — A  lender,  and  not  a  partner  until  loan  repaid  and 
subsequent  arrangement  took  efife(5l.  Dean  v.  Harris ;  Harris  v.  But- 
terfield,  33  Iv.T.  659(1876). 

3.  Carrying  on  business  zvaives  condition  0/ partnership.  Not  zvar, 
but  interdiilion  of  commercial  intercourse,  dissolz'cs  partnership. 
Articles  of  N.  O.  firm,  in  which  B  was  a  general  partner,  declared 
that  they  should  be  void  unless  C  became  special  partner.  C  refused, 
but  firm  continued  business,  and  accepted  a  draft  in  A's  favor,  April 
23,  1861.  B  returned  to  his  home  in  N.  Y.,  April  27,  1861.  A  sued  B. 
Defence :  War,  which  began  April  13,  by  attack  on  Sumpter,  dissolved 
the  partnership. — Recovered.  Firm  waived  C's  membership  by  con- 
tinuing business.  Though  war  begun,  partnership  not  dissolved  until 
commercial  intercourse  interdidled  by  President's  Proclamation  in 
August,  1861.     McStea  v.  Mathews,  50  N.  Y.  166  (1872). 

Beginning  business  makes  partnership.  By  articles,  partnership 
between  A  &  B  was  to  begin  when  each  had  contributed  his  quota. 
B  paid  his  share  in  part;  A  paid  in  full.  They  hired  and  stocked  a 
store,  and  began  business.  B  never  paid  vip  his  contribution,  and  A, 
being  excluded  from  store,  sought  to  recover,  as  owner,  the  posses- 
sion of  stock  bought  with  his  money. — Beginning  business  consti- 
tuted a  partnership,  and  was  a  waiver  of  condition  as  a  preliminary 
Stock  belonged  to  firm.      B's  failure  to  contribute,  or  A's  exclusioi/ 

37 


§iS. 


Antecedents.  Pt.  i,  Ch.  2. 

was  a  vrround  ol"  dissclutiou,  and  A's  remedy  was  a  bill  for  an  account. 
\ie\  V   Ik-tz,  2  E.  D.  Smith  i88,  N.  Y.  (1853). 

•/<7  0/  partner  in  excess  of  authoritv  does  not  begin  the  business. 
'  B 'contributed  patented  articles,  and  sold  them.  The  proceeds  were 
c(iuallv  divided.  C  authorized  to  take  notes  in  payment,  and  endorse 
H  it  C's  name.  D  paid  a  pauper  $2,  who  made  a  note  to  B  &  C,  and  C 
endorsed  it  in  B  &  C's  name,  to  D.  He  endorsed  it  to  A,  a  bonajide 
purchaser.  A  sued  B  &  C.  B's  defence  :  No  partnership  and  note  a 
forL'erv.— Judgment  for  B.  C'^  first  acl,  being  in  excess  of  authority, 
was  a  Vorgerv,  and  15  not  estopped,  because  no  business  begun,  to  cre- 
ate reputation  of  partnership.  Hotchkissv.  English,  4  Hun  369,  N.  Y. 
(1875V 


§18. 


(il)c  postponement  of  a  partnersl)ip,  luljicl)  enables  an  option- 
l)olt)cr  to  eipeiinient  luitl]  tl)e  business,  iiocs  not  affect  tl)ii"b 
persons. 

The  right  to  make  the  partnership  hang  in  suspense 
until  the  issue  of  its  success  or  failure  is  determined, 
although  absolute  for  the  contra6ling  parties/  is  none 
the  less  subject  to  the  rights  of  third  persons.  The 
parties  cannot  make  the  commencement  conditional, 
for  the  purpose  of  concealing  a  partnership  which  does 
in  facT:  exist.'  If  they  were  permitted  to  speculate  at 
the  expense  of  creditors,  a  business  could  be  estab- 
lished and  controlled  by  a  principal,  who  might  shift 
its  liabilities  upon  a  man  of  straw,  and  monopolize  its 
profits  himself  The  disguise  is  all  the  more  trans- 
parent when  the  option  to  become  a  partner,  if  exerted, 
relates  back  to  the  beginning  of  the  business,  and 
entitles  the  holder  of  the  option  to  share  the  profits 
from  the  start.''  The  prima  fades  is  that  the  option 
does  not  relate  back,  but  that  the  membership  dates 
from  the  exertion  of  the  right,  and  that  proof  must  be 
snade  to  establish  a  relation  back  to  the  inception  of 

38 


Pt.  I,  Ch.  2.  Antecedents.  Si8. 

the  partnership/  During  the  interval,  the  characfter 
of  the  option-holder  is  determined  by  his  a6ls.  If  the 
business  was  in  reality  controlled  by  him,  and  the 
right  was  reserved  for  the  purpose  of  hiding  the  fa6l 
during  the  period  of  experiment,  until  he  could  pro- 
claim his  position  without  incurring  the  risks  of  the 
business,  the  form  will  not  affe6l  the  substance  of  the 
transaction. 

1.  Partnership  to  begin  with  the  tnaking  of  profits,  does  not  obtain 
imtil  profits  accrue.  A  rented  fa(5lory,  furnished  capital,  supplied 
machinery,  and  bought  materials  for  silk  lace  manufacfture.  B  was 
superintendent,  and  was  to  receive  £2  a  week  from  A  until  profits 
should  be  made,  and  then  1-2  profits.  A  sued  C,  the  sheriff,  for  seiz- 
ing and  selling  manufadtured  goods  at  instance  of  B's  separate  cred- 
itor.— Recovered,  as  B  could  not  be  a  partner  until  there  were  profits 
to  be  shared.  Burnell  v.  Hunt,  5  Jur.  650  (1841). 

2.  Option  to  take  profits  makes  a  partner.  Holding  out.  A  owned  a 
saw-mill,  and  B  managed  it,  under  the  name  of  B  &  Co.,  for  a  share 
in  the  profits  or  a  salary,  at  his  election.  In  the  spring,  A  contracted 
to  saw  D's  logs.  During  the  summer,  B  refused  to  saw  them,  and,  in 
the  fall,  elected  to  take  a  salary.  A,  who  subsequently  bought  out 
B,  sued  D.  He  set  up  the  damage  caused  by  B's  refusal.  Dedu(?tion 
allowed. — -Holding  B  out  as  partner  made  A  responsible  for  his  a(5ls. 
B  was  a  partner  until  he  exercised  his  option,  because  of  his  right  to 
the  profits.  Chamberlain  v.  Forbes,  3  S.  C.  277,  N.  Y.  (1874). 

3.  Option  to  become  a  partner  makes  no  partnership,  inter  se,  until 
exerted.  A  &  B  agreed  that  B  should  carry  on  business  as  B  &  Co., 
which  should,  from  the  outset,  be  for  the  benefit  of  himself  and  of  A's 
nominee,  if  A  should  nominate  a  partner  within  8  years.  A  under- 
took to  make  advances,  and  to  go  security  for  B,  who,  in  turn,  stipu- 
lated to  carry  on  the  business  with  A's  nominee  for  21  years,  and  to 
give  notes  for  amounts  advanced  by  B.  B  kept  A  advised  of  the  state 
of  the  business,  and  A  had  right  to  inspect  the  books.  Cash  and  bills 
receivable  were  deposited  with  the  cashier,  who  applied  them  in  pay- 
ment of  firm  liabilities.  During  the  first  8  years,  the  proceeds  should 
be  applied  to  pay  B,  board  for  himself  and  family,  and  ^100  a  year, 
and  A  his  advances,  with  interest,  and  then  B  should  take  1-3  and  A's 
nominee  2-3  of  the  profits  and  losses.  Before  8  years  expired,  B 
became  bankrupt,  and  A,  who  had  not  elecfted  to  nominate  himself 
as  a  partner,  proved  for  his  advances. — Entitled,  as  he  had  not  exer- 
cised his  option  to  become  a  partner,  and  as  there  were  no  firm  cred- 
itors with  whom  he  competed.  Ex  parte  Davis,  in  re  Harris,  4  DeG. 
J.  &  8.523(1863). 

4.  If  a  lender  took  no  interest,  but  stipulated  for  one- 
seventh  share  of  a  market  when  ere6led,  and  then  the 
loan  went  on  account  of  payment,  he  is  not  a  partner 
with  the  builder,  because  the  agreement  referred  to  com- 
pletion. 

39 


§19.  Antecedents.  Pt.  i,  Ch.  2. 

liurdcu  on  plaintiff  to  shoiu  thai  partnership  agreement  relates  back. 
H  iuivainc-tl  money,  with  interest,  to  C,  a  builder,  for  the  eredlion  of 
a  inarkit,  and,  on'  its  completion,  agreed  to  take  1-7  interest  in  it. 
His  advances  went  on  account  of  payment,  and  if  not  equal  to  valua- 
tion, he  agreed  to  pay  the  balance  ;  if  in  excess,  C  agreed  to  pay  in- 
terest on  surplus  as  "a  loan.  Profits  had  accrued  before  agreement 
was  made,  l)ut  no  account  had  been  taken.  A  sued  B  as  a  partner, 
for  services  and  materials  furnished  during  constru(5lion  of  building. 
Verdici  for  defendant. — Sustained.  As  a  conX.ra.&.  pri»ia  facie s^y^ak-S 
from  its  date,  and  as  B  had  taken  no  share  in  the  profits,  the  jury  was 
entitled  to  negative  a  partnership  from  the  beginning  of  the  opera- 
tion, although  B's  advances  made  without  interest,  resembled  a  con- 
tribution. Ilowell  V.  Brodie,  6  Bing.  N.  C.  44  (1839). 

Lender's  option  does  not  make  him  a  partner.  B,  on  i  September, 
1S67,  made  advances  to  C,  an  oil  refiner,  and  took  a  mortgage  on  his 
works  as  security.  C  agreed  to  repay  advances  before  I  January, 
1870;  until  then  to  pay  B  30  cents  a  barrel  for  oil  refined,  to  keep 
accounts,  and  let  B  inspe<5l  books,  and  to  keep  works  insured  and 
unincumbered.  If  B  elecfled,  before  i  January,  1879,  to  become  a 
partner,  the  advances  would  become  his  contribution,  and  he  would 
share  profits  from  commencement  of  business,  returning  the  30  cents 
a  barrel  received,  and  paying  C  an  annual  salary  of  |2,ooo.  B  did 
not  elecfl.  A  sued  B  &  C  as  partners.— Judgment  for  defendants. 
Irwin  V.  Bidwell,  22  Sm.  244,  Pa.  (1872). 

But  where  a  man's  contribution  is  already  in  the  busi- 
ness, the  option  to  become  a  partner  is  pradlically  the 
ri^ht  to  take  the  profits,  if  any  accrue,  and  this  is  a  part- 
nership. 


§19. 

^\]t  contribution  is  mak  bri  a  partner  to  X\)t  firm,  anb  w  \)\b 
separate  obliaatian. 

There  is  no  partnership  in  the  contributions.  Al- 
though the  partnership  may  begin  before  the  contri- 
butions are  made,  yet  the  firm  is  a  subsequent  associa- 
tion, and  the  contributions  are  individual  obligations 
antecedent  to  the  partnership.  Being  the  quotas 
which  the  partners  contribute,  they  charge  the  indi- 
viduals, but  not  the  firm.  If  a  partner  contributes 
his  quota  of  stock  to  the  firm,  and  it  becomes  firm 
property,  his  co-partners  do  not  become  liable  for  the 


Pt.  I,  Ch.  2.  Antecedents.  §19. 

price.  The  buyer  alone  is  liable,  and  he  is  the 
partner,'  If  the  purchasers  agree  to  pay  according 
to  their  quotas  for  a  common  stock,  they  will  not  be- 
come jointly  liable.^  The  firm  does  not  assume  the 
debt  of  the  individual  partner  for  his  contribution,^ 
and  his  attempt  to  impose  it  upon  his  co-partners  is  a 
fraud,  which  would  be  sufficient  to  set  aside  a  judg- 
ment for  collusion  against  the  creditor  who  knew  the 
purchase  was  made  for  a  contribution.'' 

The  co-partners  become  liable  when  the  sale  is  made 
dire(5lly  to  the  firm,^  or  to  a  partner,  if  he  buys  for  the 
firm,  although  on  his  separate  credit.  The  business 
cannot  be  severed  and  turned  into  single  ventures  in 
order  to  let  the  partner  treat  the  separate  purchases  as 
his  contribution.*'  Though  if  nothing  is  undertaken 
but  a  series  of  optional  ventures,  the  purchases  would 
stand  as  contributions.^ 

As  it  is  a  preliminary  condition,  the  partners  may 
enforce  the  contribution  by  an  adlion.  But  after  going 
on  with  the  business  without  the  contribution,  they 
could  not  exclude  the  partner  who  failed  to  pay  his 
contribution.  The  non-payment  would  entitle  them 
to  dissolve  the  firm,  but  not  to  take  the  law  into  their 
own  hands  and  exclude  him.^ 

1.  Merchandise  ordered  by  a  partner,  as  his  contribution,  a  separate 
debt.  B,  owner  of  ship,  and  others  agreed,  jointly,  to  fit  her  out  for  a 
voyage.  Each  furnished  his  portion  to  the  cargo,  and  shared  the 
profit  and  loss  of  the  adventure  in  proportion  to  his  contribution.  A 
proved  against  B,  who  became  bankrupt,  for  copper  bought  as  his 
contribution,  and  subsequently  brought  assumpsit  against  the  others, 
as  partners,  for  the  price.  The  defendants  had  accepted  drafts  for  the 
copper. — Though  liable  on  drafts,  not  in  assumpsit,  because  each  paid 
for  his  own  contribution,  which  did  not  become  joint  stock  until  the 
voyage  began.  Saville  v.  Robertson,  4  Term.  720  (1792). 

2.  A  purchase  in  common  not  partnership.  B,  a  merchant  at  Leeds, 
who  was  in  the  habit  of  dealing  with  A,  at  Hamburgh,  ordered  a 
cargo  of  wheat,  on  account  of  himself  and  C,  and  direcfled  bills  to  be 
drawn  upon  each  for  his  moiety.     The  correspondence  described  the 

41 


§19- 


Antecedents.  Pt.  i,  Ch.  2. 


ailvciiture  as  joiiil.  The  cargo  was  shipped,  and  each  took  his  half. 
H  paid  lor  his  share,  and  A  sued  him  for  balance  of  price  due  from  C, 
who  had  become  bankrupt.— Not  C"s  partner,  because  no  sharing  of 
profit  Olid  loss,  but  a  separate  purchase  by  each.  Gibson  v.  Lupton,  9 
BitiK.  297(1832). 

3.  f^rlnn-'s  deed  of  lai:d  held  for  firm  to  repay  his  contribution,  gives 
'  HO  title  against  firm  cr.-ditors  subsequently  obtaining  judgment.    B,  C 

&  I),  partners,  bought  laud,  though  they  took  as  tenants  in  common. 
I)  sold  out  to  B  &  C,  who  agreed  to  contribute  |5,ooo  each,  to  carry  on 
the  business.  B  conveyed  to  A,  who  endorsed  his  note  for  |5,ooo, 
and  who  knew  the  facts,  a  moiety  of  land  as  security,  B  &  C  failed. 
SulKsefjucnt  judgment-creditor  of  firm  obtained  decree  for  proceeds. 
A  ap]H.'aled.— Judgment  afiSrmed.  Firm  title  paramount  to  A's  deed, 
which  was,  iu  efiect,  a  mortgage  for  B's  contribution.  Bank  v.  Sawyer, 
38  O.  8.339(1882). 

4.  If  partner  gives  firm  note  and  judgment  to  lender,  for  money  to  buy 
his  contribution,  firm  creditors  may  attack  judgment  collaterally  for 
collusion  betiueen  partner  and  lender  to  defraud  them.  B  agreed  to 
furnish  capital  for  firm  of  B  &  C.  They  bought  out  D,  whom  B  paid 
jtjSfj,  but  raised  the  purchase-money  by  giving  a  firm  note  for  ^1200, 
which  A  discounted  for  B.  B  gave  a  judgment  note  of  the  firm  and 
of  himself  to  A,  who  entered  up  judgment  and  took  firm  property  in 
execution.  C  asked  to  open  judgment.  Refused.  He  then  confessed 
several  judgnients  to  D  et  al.,  firm  creditors,  one  of  whom  sold  the 
finn  property  on  execution,  for  ^916.  A  claimed  priority.  Auditor 
awarded  fund  to  D  et  al.,  and  excluded  A  as  B's  individual  creditor. 
— .\ffinned.  Judgment  collusive,  and  creditor  could  attack  it  before 
auditor.   McNaughton's  Appeal,  5    Out.  550,  Pa.  (1882). 

5.  I) i reel  purchase  for  the  concern,  and  not  for  a  contribution  to  it, 
charges  the  partners.  B  &  C  agreed  to  repay  D  his  advances  in  a 
previous  adventure  out  of  the  returns  from  a  new  venture,  and  to  go 
halves  witli  him  in  the  surplus  of  profit  or  loss.  The  goods  were  to 
be  bought  and  paid  for  by  B  &  C,  and  shipped  on  a  certain  vessel.  D 
also  consigned  goods  to  the  supercargo,  for  sale  on  joint  account  with 
H.  A  sued  D  for  the  price  of  goods  bought  by  B  &  C  for  the  ship- 
ment.— Liable  as  a  partner,  because  the  goods  immediately  upon  the 
purcha.se  became  stock  of  the  concern,  without  any  intermediate 
ownership  in  B  &  C.    Gouthwaite  v.  Duckworth,  12  East.  421  (1810). 

6.  Purchase  on  separate  credit  for  joitit  account  charges  firm.  B,  C  & 
I>  manufaAured  leather  in  partnership,  A  buving  as  an  individual,  on 
his  separate  credit,  one-half  the  hides,  B  and  C  the  other  half,  and 
dmding  the  nianufaclured  leather  for  sale  as  separate  individuals. 
A  sold  B  hides  and  .sued  the  firm.— Recovered.  The  purchases  and 
sales  were  made  for  the  firm.    Everitt  v.  Chapman,  6  Conn.  247  ( 1827). 

7.  Partner's  purcha.ses  contributions  for  optional  undertakings.  B,  C 
&  D  agreed  for  shipment  and  sale  of  cattle  on  joint  account.  Each 
might  buy  and  jiresent  cattle  for  shipment.  If  accepted  by  the 
others,  they  became  firm  stock.  A,  who  knew  nothing  of  joint 
arrangement  sold  B  cattle.  C  rejected,  but  D  accepted,  them,  and 
Uiey  were  so  d  for  joint  account  of  B  and  D.— A's  judgment  against 
hrm  reversed.  No  partnership  until  contribution  accepted.  Valen- 
tine V.  Hickle,  39  Ohio  vSt.  19  (1883). 

8.  Failure  by  partner  to  pay  cotitribution  in  full  don't  entitle  the  co- 
partner Uy  exclude  him  ivithonl  a  dissolution.  A.  B  &  C  formed 
partnership  to  ereA  buildings  and  carry  on  business.     Each  to  con- 

42 


Pt.  I,  Ch.  2.  Antecedents.  §20. 

tribute  |;io,ooo.  A  owned  land,  valued  at  >6,ooo,  which  he  put  in  as 
part  of  his  contribution.  After  business  had  begun,  B  &  C  excluded 
A,  because  he  had  not  paid  up  in  full.  A  brought  bill  for  dissolution 
and  account. — Decree.  B  &  C  might  have  brought  suit  for  balance, 
or  for  dissolution,  but  could  not  exclude  A  without  a  dissolution. 
Hartman  v.  Woehr,  3  C.  E.  Gr.  383  (1867). 


§20. 


If  takm  into  a  firm  alreabu  formed,  a  fiartwr  mnnot  bt  l)elb 
for  a  contribution,  unUss  \]t  a%vttii  to  makt  onc.^ 

A  partner  not  being  liable  for  the  contribution  of 
bis  co-partner,  is  not  cbarged  for  the  contribution 
made  before  he  became  a  member  of  the  firm.  He  is 
not  charged  as  a  partner  before  he  becomes  a  partner, 
nor  after  he  joins  the  firm  are  his  liabilities  carried 
back,  and  made  by  relation  to  precede  his  membership. 
If  admitted  to  share  in  a  shipment  after  the  merchan- 
dise was  bought,  he  does  not  become  liable  for  the 
price."  The  buyers  alone  are  liable,  because  the  mer- 
chandise alone  was  contributed  by  them.  In  the 
absence  of  a  stipulation  that  he  should  reimburse 
them  a  part  of  the  outlay,  in  proportion  to  his  share 
of  the  profits,  the  law  will  not  imply  such  an  obliga- 
tion. Unless  they  stipulate  for  a  contribution  by 
him,  the  capital  borrowed  by  the  firm  for  its  business 
cannot  be  charged  as  a  joint  expense,  and  a  portion 
corresponding  to  his  share  of  the  profits  be  dedu(51ed 
from  his  account.''  The  law  does  not  make  a  partner 
contribute.  The  contribution  is  the  result  of  his 
agreement.  An  existing  partnership  is  presumably 
equipped  with  its  capital  stock,  furnished  before  the 
firm  began  business. 


^j  Antecedents.  Pt.  i,  Ch.  2. 

I  Cow  aUribiiU-s  this  to  the  partnership  conlradl:  "A  subsequently 
'  "aciiuiml  joint  interest  has  not  the  effecfl  and  operation  of  altering 
"and  varyiiiK  Hi*-'  "iiture  of  the  original  contraa.  .  .  If  such  an  e.r 
"host  fdi'lo  operation  were  ascribable  to  an  after-acquired  right,  the 
"law  would  in  fad  create  a  supposed  contra(5l,  when  the  real  con- 
"tracl  was  consunnnated  before  the  joint  interest  and  consequent 
"joint  risk  was  in  existence.  No  subsequent  adl  or  acknowledge- 
"nicnt  therefore  will  create  in  a  party  the  charader  of,  or  render  him 
"  liable  as  a  jiartner  upon  a  cjntraA,  if  it  clearly  appears  that  a  part- 
"  nership  did  not  exist  at  the  time  the  coutracT;  was  made."  Gow  on 
Tartnership,  31.  London,  1823. 

2.  Adtnitliui^  party  after  purchase  of  goods  to  share  in  adventure  does 
not  com  in  it  him  for  price.  B  bought  goods  of  A  for  shipment  to  the 
Ilaltic,  anil  let  C  take  1-5  part  in  the  adventure  upon  delivery  of  the 
goods  on  l)oard.  A  sued  C  for  the  price. — Not  liable,  because  the 
goo<ls  remained  H's  property  until  contributed  to  the  joint  enterprise, 
by  giving  C  an  interestin  them.    Young  v.  Hunter,  4  Taunt.  582  (1812). 

3.  I 'n less  a  partner  is  lialilc  to  contribute  capital,  his  co-partners  can 
not  charge  him  interest  on  money  borrowed  as  working  capital  for  the 

firm.  B  &  C  owed  A  $1, 126.36  for  arrears  of  salary,  when  they  took 
him  into  tlie  firm,  and  gave  him  1-5  of  the  net  profits  for  5  years,  and 
1-4  for  2  years.  A,  in  account,  claimed  that  the  net  profits  were 
135,776.38,  but  B  &  C  estimated  them  at  ^^31, 121.69.  Tbe  difference 
was  the  interest  on  money  borrowed  by  B  &  C,  as  capital  for  the 
business. — Decree  for  A.  The  inference  to  be  drawn  from  the  articles 
and  conduct  of  the  partners  was  that  B  &  C  should  furnish  the  capital. 
If  they  borrow  it,  they  should  pay  interest  for  the  loan,  and  not  A, 
who  made  no  agreement  to  contribute  any  capital.  Topping  v.  Pad- 
dock, 92  111.  92  (1879). 


§21. 


<Jhc  (Tourt  iJctcrmincs  tl)e  legal  effect  of  tl)c  contract,  but  Us 

trnns,  if  oral,  arc  founi)  bij  a  jurn. 

Who  ascertains  whether  a  partnership  exists  or  not 
depends  upon  the  nature  of  the  contrad.  If  it  is  in 
writing,  the  court  interprets  the  meaning  of  the  parties 
and  determines  the  legal  effec^t  of  the  articles.  If  the 
contract  is  not  in  writing,  the  jury  finds  what  the  con- 
trad  was,'  and  the  court  decides  the  legal  effeA  of  it.^ 

I.  li'/ial  the  contraa  between  the  parties  is,  viust  be  found  bv  a  jurv. 
A,  a  retail  dealer,  had  an  arrangement  with  B,  the  brewers,  to  supplv 
nim  with  t,eer.  A's  version  was  that  B  should  have  1 7sh.  a  barrel  out 
ot  tbe  profits  in  consideration  of  his  paying  1-2  A's  rent,  and  A  should 

44 


Pt.  I,  Ch.  2.  Antecedents.  I2Z. 

have  the  rest  of  the  profits.  B's  version  was,  that  he  should  pay  1-2 
A's  rent,  and  repay  himself  by  adding  lysh.  a  barrel  to  market  price 
of  beer  which  he  supplied  to  A.  The  question,  upon  petition  of  A's 
assignees  in  bankruptcy,  was  whether  this  agreement  constituted  a 
partnership. — Which  version  was  true,  was  an  issue  of  fa6l  for  trial 
by  a  jury.  If  B  shared  the  profits,  he  was  a  partner  ;  if  he  charged 
his  half  of  the  rent  in  the  price  of  the  beer,  he  was  not.  Ex  parte 
Langdale,  18  Vesey,  Jr.,  300  (1811). 

2.  Upon  undisputed  /ac^s,  question  of  partnership  a  conclusion  0/  law. 
B  &  C  agreed  to  contribute  capital  to  buy  live-stock,  and  to  share  the 
profit  and  loss  of  their  dealings.  B,  who  did  not  complete  his  con- 
tribution, gave  a  bill  of  sale  for  stock  to  his  separate  creditor.  A,  who 
brought  trover.  B  &  C  insolvent.  C's  defence  :  Question,  whether  B 
partner  only  in  profits  or  also  in  stock,  for  jury. — ^Judgment  for 
defendant.  Court  decides  upon  undisputed  fadls.  Firm  title  not 
devested  by  B's  sale.  Kingsbury  v.  Tharp,  28  N.  W.  R.  74,  Mich.  (1886). 


§22. 

Unless  tf)e  terms  of  tl)c  contract  l)(n)e  been  trefiniteln  settled, 
tl)e  contract  is  not  ronclubeb. 

As  the  partnership  results  from  a  contradl,  the 
terms  must  be  finally  settled  by  the  parties,  or  there 
will  be  no  contrail  which  can  be  enforced.  The  busi- 
ness, if  undertaken,  would  not  operate  as  a  substitute 
for  the  contradl,  if  the  parties  meant  to  agree  upon  the 
terms  but  failed  to  complete  the  bargain.* 

I.  specific  performance  of  partnership  contract  not  eftforced  until  terms 
definitely  settled  and  plaintiff  able  to  fulfil  his  obligations.  A,  B  & 
C  were  engaged  in  organizing  a  sewage  company.  B  was  to  furnish 
capital  which  was  to  be  repaid  out  of  profits,  and  was  to  receive  a 
commission  on  the  transadlions.  C  divulged  his  process  for  making 
yeast,  and  they  agreed  to  be  partners  for  its  manufa6lure.  B  was  to 
supply  the  nione}-,  and  A  and  C  do  the  work.  They  started  three 
different  places  of  business  under  various  names,  though  B  took  leases 
and  kept  bank  account  of  each  in  his  own  name.  They  had  articles 
drawn  up,  but  did  not  sign  them,  and  then  quarrelled  and  put  A  out. 
He  brought  a  bill  to  enforce  the  contracft. — vSpecific  performance 
refused,  because  he  had  negledled  to  secure  execution  of  the  contracfl 
and  was  never  in  a  position  to  bear  the  losses  imposed  by  its  terms. 
Ellis  V.  Ward,  21  W.  R.  100  (1872). 

45 


§23- 


Antecedents.  Pt.  i,  Ch.  2. 

§23. 


^\]c  intention  to  be  ^jautncra  is  not  fquiBalcnt  to  a  contract  of 
partncrsl)ip. 

The  intention  may  be  reconsidered,  and  until  em- 
lx)died  in  a  contradl  it  does  not  charge  the  parties 
who  entertain  the  projeA  as  partners  by  anticijDation.' 

The  failure  of  a  proje6led  company  to  come  into 
existence  after  the  applicant  has  qualified  himself  as 
a  member,  would  save  him  from  liability  as  a  partner. 
He  would  have  made  an  offer  to  become  a  partner,  but 
there  would  be  no  company  in  existence  to  accept  it.^ 
A  would-be-member  is  not  liable  for  the  a6ls  of  the 
projectors,  except  so  far  as  they  were  his  agents.'^ 
On  the  other  hand,  if  an  applicant  takes  part  in 
organizing  a  company,  but  does  not  comply  with  the 
requisites  of  admission,  he  does  not  become  a  member 
in  due  legal  form.''  He  is  not  a  partner,  and  cannot 
be  charged  as  a  member  of  the  company.  He  may 
even  have  the  right  to  demand  the  privileges  of  mem- 
bership, and  3-et  not  be  a  partner;  he  may  hold  scrip 
which  entitles  him  to  demand  certificates  of  stock,  but 
he  is  not  a  partner  until  he  exerts  his  right  and  be- 
comes a  member  of  the  company,' 

1 .  Ititinlioii  not  equivalent  to  contraFt  of  partnership.  B,  and  4  others, 
rx)UKht  cotton,  with  intent,  but  without  contract,  to  sellon  joint 
account.  H  liehl  the  cotton.  He  consigned  it  to  A  for  an  advance, 
pretending  that  lie  had  authority.  A  lost  on  consignment,  and  sued 
Uie  others  for  the  loss.— Xo  partnership  until  intention  to  sell  passed 
into  a  contract.  Baldwin  v.  Burrows,  47  N.  Y.  199  (1872). 

2.  Takiuir  stock  in  projeHed  Co.  no  partnership  until  Co.  established. 
I  rosi)ectus  issued  for  ijrojec'led  Co.,  to  be  organized  by  a  deed,  and  all 
ulio  flid  not  execute  it  within  30  days  were  to  forfeit  their  interest. 
»  appiierllor  shares,  which  were  allotted  to  him,  and  he  paid  the  first 
^w,^'!^ A  , '^e°°^  "o  part  in  the  concern,  though  his  name  was 
inserted  by  Secretary,  in  the  list  of  subscribers  on  the  Co.'s  books. 
A  sucfi  ji,  as  a  partner,  for  services  and  materials  furnished  the  Co. 

46 


Pt.  I,  Ch.  2.  Antecedents.  §23^: <■ 

— Not  liable,  because  he  had  only  offered  to  become  a  partner  in  the 
Co.,  which  never  came  into  existence,  and  had  not  constituted  the 
projedlors  his  agents.   Fox  v.  Clifton,  6  Bing.  776  (1830). 

3.  Promoters  not  liable  beyond  subscriptions.  A,  B  et  al.,  subscribed 
and  paid  for  stock  of  projected  corporation  for  a  college.  A  advanced 
money  in  eredting  buildings,  and  sued  B  et  al.  for  contribution. — Not 
liable.  Subscription  limit  of  defendant's  undertaking.  Shibley  v. 
Angle,  37  N.  Y.  626  (1S68). 

Intermediate  partnership  until  incorpoimtion.  A  held  notes  of  B 
&  C,  partners,  in  Conne6licut,  24januar3',  1877,  "cv'hen  D,  of  Boston, 
and  E,  of  Providence,  advanced  jf2,ooo  for  a  quarter  interest  in  the 
business  and  a  quarter  of  the  capital  stock  of  a  corporation  to  be 
organized  to  carry  on  the  business.  A,  upon  hearing  of  agreement, 
did  not  press  for  payment,  but  took  renewal  notes  after  24  January, 
1877.  A  also  discounted  note,  22  June,  1877,  for  $300.  Neither  D 
nor  E  took  part  in  business,  or  knew  of  coutracft  being  divulged  to  A. 
— A  obtained  judgment  for  ^300.  D  and  E  partners  from  24  January-, 
1877.  Counedlicut  law  governs  question  of  partnership.  Citizen's 
Bank  v.  Hine,  49  Conn.  236  (1881). 

A  partner's  status  in  a  firm  may  be  assumed  ivitlwut  liability  as  a 
qualification  for  incorporation.  A,  B  &  C,  partners,  contemplating 
incorporation,  agreed  with  D  to  take  him  into  their  business  upon 
his  paying  |;5,ooo  in  cash  and  giving  his  note  for  |;5,ooo,  and  to  divide 
the  shares  in  the  proje(5led  corporation  in  proportion  to  the  contribu- 
tions in  the  business.  D  was  to  share  the  profits  from  the  date  of  his 
payment.  The  firm  was  insured,  and  a  clause  avoided  the  policy 
for  any  change  in  the  title  or  possession  of  the  property,  or  if  the 
interest  of  the  assured  was  anything  but  the  entire  unconditional  and 
sole  ownership  of  the  policy.  Defence  :  Change  by  D's  becoming  a 
partner. — D  not  a  partner.  Prospecflive  stockholder  and  intermediate 
lender.  London  Assurance  Co.  v.  Drennen,  113  U.  S.  51  (1885);  116 
U.  S.  461  (i886j. 

4.  Scripholder,  tliougJi  intending  to  become  a  partner,  is  not  sucJi  in 
fa^.     B  applied  for  30  shares  of  a  proje6led  Co.     10  were  allotted  to 

him.  He  paid,  on  account,  ^15  a  share,  signed  'some'  deed  at  Co. 's 
counting-house,  received  scrip,  and  attended  a  shareholders'  meeting. 
A  sued  him,  as  a  partner,  on  an  acceptance  of  the  Co. — Evidence 
insufficient  to  charge  B  as  a  partner  in  fa6l,  or  by  holding  out.  Dick- 
inson V.  Valpy,  10  B.  &  C.  128  (1829). 

Signing  prospertus,  and  aiding  organization  of  a  company,  is  not 
joining  it.  B  signed  prospectus,  which  announced  the  projedl  of  a 
company  and  the  terms  of  subscription.  He  attended  a  subscribers' 
meeting,  and  solicited  others  to  take  shares,  but  never  paid  his  sub- 
scription. A  supplied  goods  to  company,  and  sued  B  as  a  partner. — 
Not  liable,  because  a  declaration  of  intention  to  be  a  partner  is  not 
sufficient  to  make  out  an  adlual  partnership.  Bourne  v.  Freeth,  9  B. 
&  C.  632  (1829). 

5.  Holding  certificate  and  paying  deposit  do  not  make  a  stockholder. 
B  paid  denosit  on  a  share  in  Co.,  and  received  a  certificate,  which 
described  her  as  the  holder  of  share  No.  133  of  Co. 's  stock.  She  had 
never  signed  any  deed,  though  she  had  spoken  and  written  of  herself 
as  a  shareholder.  A,  who  knew  nothing  of  her  holding  herself  out 
when  he  made  the  sale,  sued  her  for  price  of  merchandise  sold  and 
delivered  to  Co. — Not  a  member,  although  she  thought  she  was,  as 
the  certificate  conveyed  no  interest  in  the  stock.  Vice  v.  Anson,  7  B. 
&  C.  409  (1827). 

47 


524-  Antecedents.  Pt.  i,  Ch.  2. 

§24. 

«lraLimg  in  corporate  form  u)itl)out  a  fran£l)ise,  is  a  partiursl]ip. 

Persons  acling  iu  corporate  form  without  a  franchise 
are  partners,  and  are  liable  for  the  adls  of  the  admin- 
istration which  they  have  organized  to  carry  on  the 
business.'  Even  in  the  case  of  a  valid  incorporation 
the  stockholders  theoretically  dire6l  and  control  the 
management  of  the  corporation,  and,  as  the  ultimate 
repositaries  of  the  corporate  power,  they  authorize  and 
sanclion  its  exercise.  This  theor}'  would  charge  all 
the  corporators  as  partners,  were  it  not  for  the  exemp- 
tion secured  by  the  franchise."  The  immunity  from 
liability  for  joint  transa(5lions  can  be  obtained  only  by 
a  grant  from  the  State.  It  is  the  charter  which  secures 
the  exemption.  Nevertheless,  trading  as  a  coporation 
has  been  held  not  to  charge  the  stockholders  as  part- 
ners where  they,  or  the  parties  who  dealt  with  them, 
transaclcd  business  in  the  belief  that  they  had  a  char- 
ter. The  corporate  existence  in  law  was  justified  by 
faith.  But  they  were  none  the  less  doing  a6ls  which 
constitute  partnership,  and  they  are  charged  as  part- 
ners by  law,  which  they  are  bound  to  know.  It  is  no 
answer  to  say  that  they  should  not  be  made  partners 
by  operation  of  law,  unless  the  law  renounces  its  pre- 
rogative, and  refuses  to  pronounce  the  legal  efifecT:  of 
the  transaction.  The  reason  for  the  decision  is  sim- 
ply the  hardship  of  the  common  law,  which  charges 
every  proprietor  of  the  stock  with  unlimited  liability 
as  a  partner,  although  he  took  no  part  in  the  manage- 
ment of  the  business  (§3).  Doing  business  in  corpo- 
rate form  without  a  charter  presents  an  extreme  appli- 
cation of  the  dogma.      Where   there   is   a   corporate 

48 


Pt.  I,  Ch.  2.  Antecedents.  §24. 

franchise,  the  stockholders  are  not,  practically,  prin- 
cipals in  the  business,  for  they  possess  but  a  shadow 
of  power  in  the  management  of  the  corporation.  This 
is  the  justification  for  the  exemption  which  the  sover- 
eign grants  by  the  charter.  The  member  of  an  unin- 
corporated association  is  as  remote  from  the  manage- 
ment and  control  of  the  organization  as  the  corporator 
in  a  chartered  company.  This  brings  out  the  hard- 
ship of  the  member's  position  in  being  charged  with 
unlimited  liability,  but  there  is  for  him  no  relief  con- 
sistent with  the  struifture  of  the  Common  law,  except 
a  grant  of  immunit}^  from  the  Sovereign  power. 

A  de  faclo  is  an  illegal  corporation,  because  the 
incorporation  was  not  efFe6led  according  to  law.  The 
color  of  authorit}^  for  the  existence  of  such  a  corpora- 
tion is  derived  from  tradition.  When  the  franchise 
was  a  dire(5l  grant  made  b}^  the  Executive  or  Legisla- 
tive department,  the  charter  was  deemed  the  a6l  of  a 
co-ordinate  branch  of  the  Government,  and,  in  defer- 
ence to  the  Political  Power,  was  treated  as  a  judgment 
which  could  not  be  impeached  collaterally.  The  pro- 
hibition by  Constitution  of  special  grants,  and  the 
statutory  regulation  of  incorporation  has  made  it  sub- 
je(5l  to  judicial  cognizance,  and  has  changed  the  char-, 
a6ler  of  incorporation  from  a  Public  to  a  private  trans- 
a6lion.  The  incorporation  has  become,  and  is  now, 
the  a(5l  of  the  incorporators  In  cases  of  incorporation 
under  general  statutes,  the  Executive  department  of 
the  Government  is  powerless  to  prevent  the  incorpora- 
tion.    Its  a6lion  is  purely  ministerial. 

Since  provision  has  been  made  for  incorporation  by 
general  statutes,  and  compliance  with  the  statutory 
requirements  is  the  only  condition  of  the  franchise,  a 

49 


?!24. 


Antecedents.  Pt.  i,  Ch.  2. 


corporation  has  the  status  of  a  special  partnership. 
The  corporator,  like  the  special  partner,  claims  exemp- 
tion from  the  full  measure  of  the  liability  which,  by 
the  Common  law,  attaches  to  his  a6ls.  The  special 
partner,  however,  furnishes  co-partners  who  are  liable 
to  the  full  extent  for  the  joint  a(?ts,  whereas  all  the 
corporators  claim  the  benefit  of  a  limited  liabilit}^ 
In  a  choice  between  a  corporation  and  a  special  part- 
nership, the  law,  which  exa6ls  the  security  of  indi- 
vidual responsibility,  must  prefer  the  special  partner- 
ship, which  involves  a  narrower  exemption.  But 
neither  is  privileged  in  the  first  instance.  In  each 
case  immunit}^  must  be  proved,  for  it  is  a  universal 
principle  that  he  who  claims  a  special  privilege  must 
make  out  the  exception  upon  which  he  relies.  The 
burden  of  proof  rests  upon  him,  and  is  the  condition 
of  his  right.  If  the  law  has  prescribed  the  requisites, 
nothing  short  of  compliance  with  the  requisitions  of 
the  law  will  be  sufficient  to  establish  the  exceptional 
privilege. 

The  question  arose  under  general  mining  laws,  and 
the  change  in  the  chara6ler  of  incorporation,  from  a 
Public  to  a  private  a6l,  was  recognized  by  the  Supreme 
Court  of  Pennsylvania.'  The  position  was  subse- 
•quently  reconsidered,  and  the  decision  declared  not  to 
be  law. ■'  The  change  of  the  process  was  admitted,  but 
the  effed  of  the  change  M'as  denied.  Upon  what  basis 
of  reasoning  does  the  denial  rest?  The  staple  of  the 
argument  is  the  miserable  plight  of  the  stockholders, 
who  are  cliarged  as  partners.  But  hardship  proves  too 
much.  If  unlimited  liability  for  joint  ads  is  unjust, 
the  Common  law  exadion  should  be  restrided,  and  a 
limit'-d  liability  allowed  where  the  corporator,  or  part- 

50 


Pt.  I,  Ch.  2.  Antecedents.  §24. 

ner,  takes  no  part  in  the  business.  So  long  as  the 
principle  stands  as  a  part  of  the  law,  and  is  admitted 
by  the  court,  the  hardship  does  not  furnish  a  legal 
reason  for  rejecfbing  the  law.  This  is  self-evident,  and 
the  hardship  of  the  case  must  not  be  permitted  to  mask 
the  real  position.  The  ratio  decidendi  was  that  self- 
incorporation  under  statutes  is,  by  tradition,  the  grant 
of  a  charter  by  the  State.  The  corporators  are  pro- 
tected by  the  reminiscence  of  the  deference  shown  to 
a6ls  of  Government  in  the  days  when  the  franchise 
was  received  by  dire6l  grant  from  Parliament  or  the 
Crown. 

A  point  is  made  by  Morawetz,  to  uphold  his  argu- 
ment, that  a  de  faBo  corporation  prote(51:s  its  members 
from  liability  as  partners.  It  is  this:  If  the  corpora- 
tors are  charged  as  partners  in  2Lde  faFlo  corporation, 
the  members  of  a  de  jure  corporation  must  also  be 
charged  upon  the  same  principle  for  its  ultra  vires 
adls.*"  The  answer  to  his  position  divides  itself  into 
two  parts.  First ^  As  to  ultra  vires  contrails.  There 
are  none.  A  contrail  made  by  the  agent  of  a  corpora- 
tion in  excess  of  its  authority  delegated  to  him  is  not 
the  contra(5l  of  the  corporation,  and  does  not  create  a 
corporate  obligation.^  In  order  to  charge  the  corpora- 
tors as  partners  upon  an  ultra  vires  contrail,  they 
must  all  unite,  and  authorize  it  to  be  made ;  otherwise 
only  the  persons  who  do  or  authorize  the  aA  are  lia- 
ble.^ Second^  As  to  torts.  Between  the  tort-feasor  and 
his  innocent  associates,  they  are  always  ulti'a  vires. 
The  partner,  or  corporator,  who  commits  a  tort  is  lia- 
ble individually,  like  any  other  tort-feasor,  for  his  a(5l, 
although  when  he  is  a6ling  in  the  course  of  the  joint 
business,  his  tort  charges  the  firm,  or  corporation.' 

51 


§24-  Antecedents.  Pt.  i,  Ch.  2. 

Nevertheless,  the  ultimate  liability  is  that  of  the 
wrong-doer,  who  must  reimburse  his  co-partners,  or 
the  corporation.  Of  course  it  was  never  intended  by 
the  charter  to  authorize  the  corporation  to  commit 
such  torts,  but  in  charcring  the  company  the  liability 
cannot  be  said  to  be  incurred  in  excess  of  the  franchise. 
In  facl,  the  endeavor  to  trace  the  liability  of  a  corpora- 
tion to  an  authority  from  the  State  to  perform  the  adls 
by  which  the  liability  is  entailed  is  misleading.  The 
real  purpose  of  a  charter  is  not  to  grant  powers,  but 
to  secure  exemption.  The  so-called  powers  in  the 
charter  are  nothing  but  a  description  of  the  scope  of 
the  business  for  which  the  members  have  obtained 
the  exemption.  They  are  liable  as  a  corporation  for 
every  acl  done  in  the  course  of  that  business,  not  be- 
cause they  are  authorized  by  the  State  to  do  the  adl, 
but  because  the  adl  is  an  incident  of  the  business 
which  they  themselves  undertake.  When  the  tort  is 
not  incident  to  the  business  defined  by  the  charter, 
it  stands  upon  the  same  footing  as  an  ultra  vires  con- 
trad.  No  one  is  liable  but  the  tort-feasor  and  his 
accomplices,  and  they  are  charged  to  the  full  extent 
of  their  individual  capacity.  No  foundation,  it  thus 
appears,  exists  in  law,  which  is  the  embodiment  of 
principle,  for  the  analogy  instituted  between  a  de  fadlo 
corporation,  which  charges  the  members,  because  they 
have  no  right  to  transaci;  business,  except  as  partners, 
and  a  de  jure  corporation,  which  has  the  right  to  trans- 
ad  business,  and  is  liable  for  the  tort  of  a  member, 
because  it  is  committed  in  the  course  of  the  corporate 
bu5;niess.  The  abuse  by  the  agent  of  his  authority 
charges  the  principal,  because  the  authority  exists. 


52 


Pt.  I,  Ch.  2.  Antecedents.  §24. 

The  act  of  a  person  who  has  no  anthority  charges 
him,  because  he  is  a  principal.^ 

The  effe6l  iijDon  a  charter  granted  by  the  State  of 
Pennsylvania  prior  to  the  present  Constitution,  of  an 
acceptance  by  the  corporation  of  subsequent  legisla- 
tion in  its  favor,  might  be  to  reduce  it  to  the  status 
of  corporations  formed  under  the  general  statutes, 
which  regulate  self-incorporation.  This  would  do 
away  with  the  Dartmouth  College  case  in  Pennsylva- 
nia, and  bring  corporations,  like  other  persons,  under 
the  sovereign  control  of  the  Commonwealth.^" 

1.  Lnincorporatcd  society  a  partnership.  Joint  stock  conipany  ap- 
pointed trustees,  who,  in  exercise  of  their  discretion,  purchased  a 
printing  press. — All  members  liable  for  price,  as  partners.  Wells  v. 
Gates,  18  Barb.,  N.  Y.,  554  {1854). 

Managers  of  unincorporated  society  appropriated  property  of  the 
body  to  their  own  use.  Some  members  sued  for  conversion.  De- 
fence :  Non-joinder  of  the  others. — Suit  maintainable  by  some  part- 
ners on  behalf  of  all,  under  Code.    Dennis  v.  Kennedy,  19  Barb.,  N. 

v.,  517(1854). 

Coiitrafl  for  salary  with  alleged  corporation  don'' t  bind  a  subsequent 
president  and  stockholder  as  partner.  A  was  employed,  as  super- 
intendent, by  B,  president  of  an  alleged  corporation.  Afterwards,  C 
subscribed  to  stock,  and  was  eleAed  president.  A  reported  to  him, 
and  drew  upon  him  for  salary  and  expenses  of  business.  Until  it 
failed,  C  supposed  the  conipany  had  a  charter.  A  sued  C  for  salary. 
— Judgment  for  C.  A's  contract  with  B.  C  not  bound  by  a  contradl 
made  before  he  became  a  partner.  Fuller  v.  Rowe,  57  N.  Y.  23  (1874). 

Contract  severable,  according  to  services  rendered  ? 

2.  If  partners  transact  business  in  corporation  form,  they  are  bound 
by  aft  of  directors  within  scope  of  business,  although  irregularly 
executed,  unless  objeRed  to  at  the  time.  A  stage  line  was  organized 
to  go  from  Cincinnati  to  Sandusky,  and  stock  issued  to  subscribers, 
who  held  part  until  it  could  be  placed.  They  elected  diredlors,  who 
bought  and  consolidated  with  a  line  from  Cincinnati  to  Columbus, 
abandoning  the  northern  half  of  the  roilte.  This  was  done  at  an 
irregular  meeting,  but  with  the  knowledge  of  the  stockholders,  and 
without  any  protest  by  them.  The  companv  Ijecame  embarrassed. 
Creditors'  bill  for  account  and  contribution. — Decree.  Stockholders 
partners,  and  liable  for  contribution.  Purchase  of  mail  route,  and. 
consolidation  with  it,  within  scope  of  business,  and  irregular  transfer 
waived  by  stockholders'  acquiesence.  Holder  of  stock  charged  as  if 
bona  fide  subscriber.   Rianhard  v.  Hovey,  13  Ohio  300  (1S44). 

3.  Continuing  to  act  as  a  corporation  after  the  charter  has  expired, 
does  not  charge  the  stockholders  as  partners.  Neither  B  and  C,  stock- 
holders, nor  any  one  connected  with  the  corporation,  knew  that  the 
charter  had  expired.  A  dividend  was  declared  subsequently,  and 
received  by  B  and  C.     D,  the  secretary,  gave  a  corporation  note,  after 

53 


|524. 


Antecedents.  Pt.  i,  Ch.  2. 

Ihf  fxi)iralioii,  to  A,  who  sued  B  and  C  as  partners.— Not  liable. 
Joint  owners  arc  not  ])artners.  B  and  C  not  even  joint  owners,  but 
ustiiv  que  trust,  entitled  only  to  share  in  surplus  after  corporation 
debts  are  paid.  Partnership  arises  from  intention,  or  holding  out, 
but  not  'by  operation  of  law.'  Dividend  was  not  received  as  the 
profits  of  a  ]>artnership,  but  of  a  corporation.  Central  City  Savings 
Hank  v.  Walker,  66  N.  Y.  425  (1S77), 

\lssumiui^  a  franchise  creates  a  de  faflo  corporation,  which  exists 
until  decree  of  ouster.  In  1874,  city,  B,  sold  lots  to  C,  taking  his 
mortgage  for  uui)aid  purchase-money.  C  conveyed  to  association  A, 
which,  acting  as  a  corporation,  though  illegally  organized  under 
General  Statutes,  divided  lot,  and  sold  parcels  to  co-defendants. _  B, 
in  1.S79,  recorded  mortgage.  In  1S80,  Attorney  General  obtained 
<lecrce  that  A  never  had  any  corporate  existence.  B  brought  suit  en 
his  mortgage  and  vendor's  lien,  and,  relying  on  quo  warranto, 
obtained  judgment,  A's  evidence  of  attempted  incorporation  being 
excluded.  A  appealed. — Judgment  reversed.  Title  and  conveyances 
oi  de  failo  corporation  valid  until  decree  of  ouster  made.  Not  a 
question  of  estoppel,  but  of  public  policv.  Society  Perun  v.  Cleveland, 
43O.  St.  4S1  (1885). 

4.  Self-incorporation  tinder  general  statutes  valid  only  if  statutory 
requisitions  are fulf  lied.  B  et  al.,  partners,  who  had  erected  mills 
and  carried  on  manufacturing  business,  organized  under  the  general 
mining  law,  and  five  of  them  certified  that  they  had  each  subscribed 
20<xj  shares  of  I50  each,  for  the  capital  of  1500,000,  and  that  1351,525 
had  been  acluallv  paid  in.  In  fact,  the  only  capital  was  the  firm 
stock,  and  the  actual  pa3nient  was  the  money  previously  expended 
during  the  partnership.  Shares  of  stock  were  issued  to  the  partners 
in  the  original  firm,  who  then  transadled  business  as  a  corporation. 
495  shares  of  the  f  500, 000  were  never  issued  or  paid  for.  A  sold  B  et 
al.  cotton,  and  sued  them  as  partners. — Recovered.  Incorporation  un- 
lawfully efFedted,  no  prote(ftion  against  creditors.  Paterson  v.  Arnold, 
9  Wright  410,  Pa.  (1863). 

5.  Cochran  v.  Arnold,  8  Smith  399,  Pa.  (1868). 

6.  Private  Corporations,  by  Victor  Morawetz,  2ded.,  18S6,  s.  74S, 
ad  Jinem. 

7.  lltra  vires  contraB  not  binding.  Railroad  A,  without  authority  by 
its  charter,  leased  railroad  B  for  99  years,  and  operated  the  road.  A 
et  al.,  who  guaranteed  performance  of  the  terms,  brought  bill  to  en- 
force contract.— Dismissed.  Ultra  vires.  Pa.  R.  R.'v.  St.  Louis, 
Alton  &  Terre-IIaute  R.  R.,  118  U.  S.  290  (18S6). 

Torts  ofviunicipal  officers  charge  city  which  they  represent.  Muni- 
cipal cori>oration  A  sued  to  recover  ^12,000  exa(5led  by  B,  internal 
revenue  collector,  as  special  taxes  on  spirits  distilled  by  A,  but  not 
de])osited  in  U.  vS.  bonded  warehouse,  as  required  by  law,  and  paid 
under  protest.  A  demurred  to  plaint,  because  the  distilling  was  done 
by  officers  who  exceeded  their  authority.— Judgment  for  B.  Corpo- 
ration liable  for  torts  of  officers  competent  to  exert  its  powers.  Salt 
Lake  City  v.  Hollister,  118  U.  S.  256  (1886). 

8.  Ratification  by  a  part?ier  of  aEls  beyotid  the  scope  of  the  partnership 
not  binding,  unless  all  the  partners  ratify  them.  B  and  22  others 
organized  company  C,  which  was  not  incorporated,  to  construct,  equip 
and  operate  a  railway  in  connection  with  through  line,  D.  The 
trustees  of  C  bought  of  A  all  the  stock  of  a  line  running  parallel  with 
1)  lor  a  short  distance,  making  D  the  principal  debtor,  and  the  mem- 

54 


Pt.  I,  Ch.  2.  Antecedents.  §25. 

bers  of  C  sureties  for  the  price.  B,  in  his  letter  of  approval,  stated 
that  "the  purchase  was  to  be  paid  for  by  the  duly 'authorized  notes 
of  C."  Thirteen  out  of  23  members  of  C  ratified  the  purchase.  A 
claimed  payment  out  of  B's  estate. — Disallowed.  The  purchase  was 
ultra  vires,  and  did  not  bind  the  members  of  C,  unless  they  adopted 
it.  B's  approval  was  qualified,  and  not  binding  without  a  ratification 
of  all  the  members.   Roberts'  Appeal,  il  Norris  407,  Pa.  (1880). 

9.  MORAWETZ,  ^748  and  I699,  who  has  collecfled  a  mass  of  cases,  dis- 
cusses the  contrariety  of  opinion  which  prevails  upon  the  subjecfl,  in 
consequence  of  the  uegledl  to  revert  for  the  solution  of  the  problem 
to  the  first  principles  of  the  Common  law. 

TO.  A  corporation's  acceptance  of  legislation  maybe  made  a  condition 
for  its  renunciation  of  chartered  privileges.  A,  under  K&.  16  May, 
1857,  extended  its  track,  and  thereby  subje6led  itself  to  A61  3  May, 
1855.  A  also  accepted  A61  15  April,  1868,  andsubje(5teditself  to  Con- 
stitutional Amendment  of  1857,  Art.  I,  s.  26,  P.  L-  811.  These  pro- 
visions made  the  renunciation  by  a  corporation  of  its  exemption  from 
State  control  the  condition  of  its  acceptance  of  subsequent  legislation 
in  its  favor.  B,  imder  Art.  XVI,  s.  8,  in  Constitution  of  1874,  recov- 
ered damages  for  property  not  taken  by  A,  but  injured  by  the  con- 
strucftion  of  its  elevated  track.  A  appealed. — ^Judgment  affirmed.  A 
surrendered  its  corporate  exemption,  and  legislature  resumed  its  dis- 
cretion to  impose  additional  liability.  Pa,  R.  R.  v.  Duncan,  i  Am. 
352,  Pa.  (1S86). 


§25. 


21  contriLnttion  gircs  tl]£  propertn  to  tl)e  business  for  tl]f 
tiuratiou  of  tl)c  |3artn£isl)ip,  in  otl)er  tuoriis,  girts  tl)e  use  of 
propertn ;  but  trabe,  luljiii)  is  bulling  ttn^  selling,  Iteds  uiitl)  tl)e 
oumersl)ip,  anilt,  necessarih),  rests  tl)e  title  in  tl)e  firm. 

What  is  meant  by  the  contribution  of  a  partner  to 
the  stock  of  a  firm  ?  Does  the  partner  contribute  the 
use  and  enjoyment  of  a  fund,  or  of  merchandise,  for 
the  duration  of  the  partnership,  and  retain  the  owner- 
ship of  the  stock  contributed  by  him,  or  does  he  con- 
vey to  the  firm  the  ownership  of  the  property? 

The  title  would,  unless  some  reason  existed  for 
shifting  it,  remain  vested  in  the  partner,  and  nothing 
but  the  use  of  the  property  would  be  contributed  to 

55 


^'25.  Antecedents.  Pt.  i,  Ch.  2. 

the  finiL  The  use  is  sufficient  to  answer  the  purposes 
Iff  the  business.  This  is  apparent  in  real  estate,  which 
is  not  an  article  of  trade.  If  a  partner  owns  the  build- 
ing occupied  l)v  a  firm,  and  used  as  the  stand  for 
transa(5ling  its  business,  he  would  contribute  the  use 
and  occupation  to  the  joint  stock,  but  he  would  retain 
tlie  title  as  his  separate  estate.  The  firm  could  neither 
sell  nor  encumber  the  premises.  The  title  could  be 
aliened  or  charged  only  by  the  contributing  partner, 
as  he  remains  the  owner.*  But  merchandise  is  the 
staple  of  trade,  and  is  governed  by  its  laws.  Third 
persons  mav  obje6l  to  a  partner's  retaining  the  title 
to  property  contributed  by  him.  The  firm  must  a(?t 
as  owner,  and  will  be  held  as  owner  during  the  part- 
nership. 

The  answer  to  the  question,  it  thus  appears,  depends 
upon  the  nature  and  effe6l  of  trade.  If  it  did  not  a£fe6l 
the  chara6ler  of  property,  did  not  make  it  fungible  or 
consume  it  in  the  use,  there  would  be  no  necessity  for 
the  partner's  transfer  of  his  title  to  the  firm.  If  the  real 
estate  is  a  mere  incident,  not  the  substance  of  its  trans- 
actions, the  use  is  sufficient  to  enable  the  firm  to  trans- 
act its  business,  and  persons  dealing  with  the  firm 
could  not  be  misled  by  the  ads  of  the  firm,  which  does 
not  assume  to  own  thepropert}^,  but  merely  to  possess 
it.  But  partnership  is  for  trade,  and  the  stock  is  bought 
and  sold  by  the  firm.  The  joinder  in  trade  is  to  buy 
and  sell.  The  business  requires  that  the  firm  should 
have  the  ownership  of  its  stock.  The  use  and  enjoy- 
ment would  be  of  no  service,  because  the  property  is 
not  for  use,  but  for  sale.  The  title,  therefore,  must 
be  vested  in  the  firm,  in  order  to  enable  it  to  transact 
its  business.'     Each  partner  may  exzrt  the  powers  of 

56 


Pt.  I,  Ch.  2.  Antecedents.  ^25. 

the  firm,  aud  he  has  the  right  to  sell,  not  only  his  own 
contribution,  but  also  the  contribution  of  his  co-part- 
ner. This  is  a  right  inherent  in  a  partner,  and  if  it 
is  taken  away  from  him  he  is  reduced  from  the  rank 
of  a  co-principal  in  the  business  to  the  position  of  an 
agent. 

It  was  held  at  one  period  in  Penns3dvania  that  the 
capital  stock  might  remain  the  property  of  the  contri- 
buting partner,  and  that  a  levy  upon  it  by  his  separate 
creditor  would  take  precedence  of  an  execution  issued 
by  a  firm  creditor.  But  the  decision  was  made  upon 
the  theory  of  working  out  a  firm  creditor's  right 
through  the  equity  of  the  partner,  and  not  upon  a 
consideration  of  the  necessity  which  exists  that  a 
commercial  firm  must  have  the  title  to  its  stock. ^  The 
facets  of  the  case  did  not  call  for  a  decision  in  this 
aspedl,  and  the  precedent  may  be  explained  by  re- 
ferring it  to  the  class  of  non-commercial  partnerships. 
The  business  undertaken  was  a  livery-stable.  The 
lease  and  fixtures,  as  well  as  the  equipment  of  horses 
and  vehicles,  might  be  owned  by  the  partner  who 
contributed  the  means  to  procure  them.  The  co- 
partner would  have  no  joint  ownership  of  the  property, 
because  there  was  no  necessity  in  the  business  for  him 
to  deal  with  the  title.  He  could  fulfil  the  purposes  of 
the  partnership  by  managing  the  business,  which  did 
not  involve  a  sale  of  the  property,  but  merely  its  use. 
The  case,  under  any  circumstances,  could  not  stand 
as  a  precedent  for  commercial  partnerships.  The 
contribution  of  a  partner  remains  his  separate  property 
at  the  farthest  only  until  it  is  converted  by  a  sale. 
The  sale  is  a  joint  a6l,  and  the  proceeds  belong  to 
the  firm.     The  purchase  of  goods  to  replace  the  mer- 

57 


§25.  Antecedents.  Pt.  i,  Ch.  2. 

chandisc  sold  is  made  uiDoii  the  joint  credit  of  the 
partners,  and  the  title  vests  in  them.  The  vendor  of 
the  original  stock,  bought  by  a  partner  for  his  contri- 
bution, has  no  lien  upon  it  in  the  hands  of  the  firm.'' 
He  cannot  claim  the  proceeds  of  a  sale  or  follow  the 
stock  into  a  different  corpus.  The  partner  who  con- 
tributes property,  for  which  he  has  not  yet  paid,  to  the 
stock  of  a  firm,  does  not  commit  a  breach  of  trust,  but 
perforiTTS  a  legitimate  operation  of  business.  The 
vendor  has  no  standing  as  a  cestiiy  que  trusty  to  treat 
him  as  a  delinquent  trustee.  On  the  contrary,  thej^ 
stand  as  buyer  and  seller  at  arms  length.  The  sale 
and  re-purchase  of  stock  are  the  very  elements  of  trade, 
and  must  be  assumed  as  a  fa6l  in  the  business,  if  not 
proved.  The  stock,  therefore,  will,  in  the  absence  of 
evidence  to  the  contrary,  be  presumed  to  belong  to  the 
firm.''  As  a  conversion  of  the  stock  is  the  purpose  of 
a  commercial  partnership,  the  law,  when  it  requires  a 
contribution,  vests  the  title  in  the  firm,  and  excludes 
a  separate  execution. 

If  the  title  is  in  dispute  only  between  the  partners, 
and  the  controversy  does  not  affe6l  strangers,  the  arti- 
cles may  make  the  contribution  separate  property.  A 
partner  may  stipulate  to  retain  title.  He  does  not 
then  contribute  the  property  to  the  firm,  but  keeps 
both  the  title  and  possession  himself." 

I .  Partner's  contribution  oflndlding,  a  usufrncl  dm-ing  t/ie partnership. 
15  &  C,  partners  in  publishing  establishment.  B  owned  the  building, 
and  finii  used  it,  without  lease,  for  its  business.  A  issued  execution 
against  finu.  Pending  final  process,  B  sold  his  interest  to  D,  who 
joined  C  in  a  new  firm,  which  assumed  the  debts  of  old  firm,  but 
before  shenfT's  sale  C  &  D  assigned  all  firm  assets  to  A,  who  brought 
bill  against  B  for  use  of  building.— Dismissed.  UsufruA  of  building 
contributed  only  for  duration  of  partnership,  and  ceased  upon  its 
termination  by  B's  retirement.  Rapier  v.  Gulf  City  Paper  Co.,  64 
Ala.  330(1877).  ^  .>        I'  .     ^ 


Pt.  I,  Ch.  2.  Antecedents.  §25. 

2.  Title  to  contribution  passes  to  Jinti.  A  insured  his  stock  in  compauy 
B.  Policy  avoided  if  A's  interest  in  the  property  was  any  other  than 
the  entire  unconditional  and  sole  ownershii^,  or  if  any  transfer  or 
change  was  made  of  his  title  or  possession.  Atook  C,  his  clerk,  into 
partnership,  giving  him  a  share  of  the  profits,  and  against  his  capital 
stock  of  |i57,ooo  stipulated  that  C  should  contribute  |io,ooo  the  first 
year,  and  let  1-3  of  his  salary  remain  until  |,io, 000  more  accumulated. 
C  prohibited  from  using  commercial  paper,  or  drawing  checks,  and 
funds  deposited  in  A's  name.  The  stock  was  destroyed  by  fire  before 
C  had  contributed  anjlhing.  A  sued  B  for  insurance.  The  nature 
of  the  contribution,  as  a  temporary  disposition  over  the  fund  diiring 
the  limited  period  of  a  partnership,  was  relied  on  to  disprove  a  trans- 
fer of  property  by  the  owner  to  the  firm,  which  he  formed  with  his 
clerk. — Judgment  for  B.  In  form,  and  in  external  fa(5t,  the  title  did 
pass,  said  the  Court,  even  if  only  for  the  occasion,  and  subje<5l  to  re- 
verMng  upon  a  dissolution :  In  substance  between  the  parties,  said 
the  dissenting  Judge,  without  reference  to  outsiders,  the  title  did  not 
pass.    Mallery  v.  Atlantic  &  Marine  Ins.  Co.,  51  Conn.  222  (1883). 

3.  Title  to  firm  stock  retained  by  contributing  partner.  B  &  C,  part- 
ners in  keeping  a  livery  stable.  B  furnished  capital,  and  retained 
exclusive  title  to  the  stock  until  C  should  pay  a  contribution,  which 
he  never  paid.  A  issued  separate  execiition  against  B,  and,  subse- 
quently, D  a  joint  execution  against  both. — A  entitled  to  proceeds 

■  of  sale.  York  Co.  Bank's  Appeal,  8  Casey  446,  Pa.  (1859). 

4.  Partners  make  contribution  cf  one,  firm  stock  by  contraBs  of  sale 
and  re-purchase.  Seizure  on  separate  execution  enures  to  firm  execu- 
tions. B  bought  goods  of  A  on  credit,  and  contributed  them  to  firm. 
C  contributed  labor;  profit  and  loss  were  equally  divided.  In  course 
of  business,  the  stock  was  sold  out  and  replaced.  A  sued  B  for  price, 
and  levied  on  the  stock.  Firm  creditors  issued  executions,  but  sheriff 
made  no  second  levy.  He  sold  the  goods,  and  paid  proceeds  to  firm 
creditors.  A  sued  sheriff  and  firm  creditors  for  proceeds. — A  had  no 
vendor's  lien.  B  &  C  could  not  deny  firm  title,  because  they  made 
the  contracts  of  sale  and  re-purchase.  Sheriff's  seizing  stock  on 
separate  execution  enured  to  firm  executions.  Ryder  v.  Gilbert,  16 
Hun    163,  N.  Y.  (1S78). 

5.  Stock,  though  contributed  'Wholly  by  a  partner,  through  the  co-paH- 
ner's  default  in  paying  his  quota  of  the  price,  if  replaced  by  joint  pur- 
chases, becomes  firm  property,  and  a  joint  execution  takes  it  aivay 

from  a  prior  separate  execution.  B  &  C,  holding  theniselves  out  as 
partners,  bought  and  sold  stock  on  firm  account.  C  failed  to  contri- 
bute any  capital,  and  received,  as  his  interest,  a  commission  on  sales. 
A  issued  execution  against  B,  and  firm  creditors  followed  with  joint 
executions. — In  default  of  evidence  that  any  of  the  original  stock 
remained,  which  was  B's  property,  as  C  failed  to  pay  his  half,  the 
current  stock  v.as  presumed  to  belong  to  the  firm,  and  to  have  been 
bought  on  the  credit  of  B  &  C.  A's  separate  execution  was  accord- 
ingly postponed  to  the  joint  executions,  which  took  the  proceeds. 
Walter's  Appeal,  i  Chester  Co.  Reps.  278,  Pa.  (iSSi). 

6.  Partnership  inter  se  cuithout  joint  stock.  Advance,  with  guaranty 
of  profits,  not  a  loan,  but  a  partnership.  By  agreement,  A  'advanced 
money  to  B,'  for  purchase  of  cattle,  which  A  was  to  ozun  till  sale. 
B  did  tlie  work.  Profits  divided  equally,  and  B  guaranteed  A  profits 
equal  to  20  per  cent,  on  his  advance.  B  attempted  to  hold  the  cat- 
tle, claiming  that  the  transa6lion  was  a  cover  for  a  usurious  loan.  A 
brought  account,   averring  a  partnership,   and    claiming   the  whole 

59 


§26.  Antecedents.  Pt.  i,  Ch.  2. 

property  —Partnership  without  any  joint  stock.     A  entitled  to  1-2 
profits  on  sales,  and  to  all  the  property  on  hand.    Robins  v.  Laswell, 

,-  Til     -.Ac  CtSfi-?! 


111.   36s  (1862). 


^26. 


Special  partn£rg|)ip  ia  not  an  a-ccption,  but  is  t\)t  normal  tppc 
of  tl]c  relation. 

The  type  of  partnership  at  the  Civil  law  made  the 
co-operation  of  a  proprietor  in  the  management  of  the 
business  the  test  of  his  unlimited  liability  as  a  part- 
ner. •  The  special  partnership  embodied  this  principle. 
The  introduction  of  this  kind  of  partnership  into  the 
Common  law  ran  counter  to  the  instincts  of  the  Com- 
mon lawyers,  who  made  the  property  element,  or  the 
interest  of  a  proprietor,  the  sole  test  of  partnership, 
A  dormant  partner,  the  commercial  type  of  the  undis- 
closed principal,  represented  the  Common  law  partner, 
pure  and  simple.  Special  partnership  impeached  the 
general  principle  of  the  Common  law,  and  released  the 
special  partner  from  the  unlimited  liability  wliicli 
the  Common  law  imposes  upon  every  proprietor. 
The  docl;rine  of  the  undisclosed  principle  was  felt  to 
be  the  obstacle  in  the  way  of  any  limitation  of  lia- 
bility at  the  Common  law,  and  the  attack  was  directed 
against  that  principle. ^  But  the  dodrine  was  found 
to  be  too  firmly  imbedded  in  the  law  to  be  uprooted. 
Upon  the  failure  of  the  assault,  limited  liability  was 
introduced  by  legislation."  The  alteration  introduced 
by  statute  was  not  revolutionary,  but  left  the  princi- 
ple of  unlimited  liability  in  force,  except  wljere  a  full 
disclosure  of  the  limitation  of  liability  was  announced 
by  the  record,  and  brought  home  to  the  customers.^ 

60 


Pt.  I,  Ch.  2.  Antecedents.  §26. 

The  expediency  of  giving  a  trader  the  faculty  to  limit 
his  liability  under  the'  precaution  of  notice  brought 
home  to  his  customers,  was  obvious.  The  limitation 
of  liability  was  proclaimed  as  the  new  gospel  of  trade.* 
The  persecution  of  the  special  partner  by  the  courts, 
in  spite  of  this  prevailing  tendency  to  introduce  a 
limitation  of  liability,  can  only  be  ex,plained  by  the 
professional  belief  that  the  recognition  of  a  special 
partner  would  abrogate  the  Common  law  principle  of 
unlimited  liability.  The  statute,  however,  did  estab- 
lish a  special  partnership,  and  that  was  the  end  of  it.' 
The  refusal  to  recognize  this  variety  of  partnership, 
except  under  res  trillions,  which  render  its  existence 
almost  impossible,  has  led  to  the  wholesale  abrogation 
of  the  Common  law  principle  of  unlimited  liability. 
As  usual,  the  last  state  is  worse  than  the  first. 

1.  Undisclosed  principal  liable  on  agenVs  contrail.  B  did  business  as 
C's  agent,  but  in  his  own  name.  B  accepted  bill  in  A's  favor,  con- 
trary to  C's  commands.  A  sued  C.  Defence :  C  unknown  to  A  at 
time  of  acceptance. — ^Judgment  for  A.  Bill  given  in  course  of  busi- 
ness bound  C  as  undisclosed  principal.  Edmunds  v.  Bushell,  L.  R. 
iQ.  B.  96(1865). 

2.  Adl  March  21,  1836,  P.  L.  243,  Pa.,  and  Supplements. 

3.  An  anonymous  writer  in  the  American  Law  Review,  takes  the 
ground  that  notice  to  creditors  relieved  a  participant  in  the  profits, 
who  had  stipulated  against  liability,  and  that  this  principle  would 
relieve  a  known  special  partner  who  had  not  complied  with  the  statu- 
tory requirements.  Article  on  Liability  as  a  Partner,  2  Am.  L.  Rev. 
7,  8  and  202  :   1877. 

4.  Lord  Bramwei.1,  has  recently  recounted  the  history,  but  his  address 
is  reported  only  in  the  daily  press. 

5.  The  language  of  Smith,  J.,  Eastman  v.  Clark,  infra  i<  44,  n.  i, 
gives  the  true  rationale  of  special  partnerships: 

"  If  it  be  argued  that  it  is  against  the  polic}'  of  the  law  to  allow  a 
"  man  a  chance  to  share  in  the  receipts  of  a  business  without  also 
"sharing  all  its  liabilities,  the  answer  is  that  the  law  permits  such 
"  agreements  as  the  present  to  have  full  force  and  effect,  when  the 
"stipulations  are  known  to  those  dealing  with  the  parties.    *    *    *   * 

"  The  intrinsic  justice  of  this  legal  principle  seems  to  be  recognized 
"by  the  legislative  enadlments  relating  to  limited  partnerships 
"  'which  provide  for  the  public  record  of  the  partnership  limitations 
"as  a  method  of  making  them  known  to  third  persons.'  " 

61 


§2;.  Antecedents.  Pt.  i,  Ch.  2. 

§27. 

:\  partncriil)ip  in  tl)c  firotits  uiitl)out  a  fii-opi-ictovsl)ip  of  tl)c 
stock  15  a  miiMioincr  in  a  tomincrcial  partncrsljifi. 

The  sale  by  agents,  or  brokers,  who  receive  a  share 
of  the  profits,  would  not  deserve  mention  were  they 
not  said  to  be  partners  m  the  profits,  but  not  in  the 
stock  of  a  firm.  They  are,  in  fad,  nothing  but  agents, 
and  the  designation  of  partners  is  stripped  of  all  mean- 
ing by  limiting  the  partnership  to  the  profits,  which 
are  only  the  result  of  a  business.  It  is  the  sharing 
made  by  proprietors  which  indicates  that  they  are 
the  principals,  or  partners,  in  the  business.^  For  this 
reason  a  partner  in  the  profits  for  soliciting  orders 
could  not  bind  the  partners  who  owned  the  stock  by 
the  release  of  a  firm  debtor,  who  paid  him.^  As  he 
was  but  an  agent,  selling  was  the  limit  of  his  power, 
and  receiving  payment  exceeded  his  capacity.  Nor 
could  a  partner  in  the  profits,  who  bought  for  the 
partners,  draw  upon  their  bank  deposit.^  He  was 
only  a  broker,  who  had  no  title  to  the  goods  bought, 
nor  to  the  proceeds,  but  merely  to  the  profits.  A 
partner  in  the  profits  abroad  disposed  of  a  cargo  which 
had  been  pledged,  but  replaced  it  by  merchandise 
which  he  bought,  and  remitted  the  bill  of  lading, 
which  the  partner,  in  England,  handed  over  for  the 
substituted  cargo  to  the  creditor.  But  the  debtor  who 
failed  between  the  sale  and  re-purchase,  could  not  pass 
the  title,  as  it  went,  upon  his  bankruptcy,  to  the  as- 
signee for  creditors.'  Had  the  foreign  agent  been  a 
partner,  his  bona  fide  disposition  would  have  been  a 
valid  transfer  of  the  title.' 


62 


I 


r 


Pt.  j.  Ch.  2.  Antecedents.  §?7. 

1.  Individuals  said  to  be  partners  in  the  profits,  though  not  in  the  stock. 
A  pastured  bullocks  on  C's  land,  and  agreed  to  share  the  price  which 
they  brought,  above  ^20.  with  C,  for  fattening  them.  A  sued  B  for 
price,  and  he  pleaded  non-joiuder  of  C. — Overruled.  C  not  a  partner 
in  the  Ijullocks,  though  he  was  in  the  profits.  Wish  v.  Small,  i  Camp. 
329  (180S). 

'Partner  in  the  profits^  not  a  partner,  because  tiot  a  co-owner  of  the 
stock.  A,  by  agreement  in  1873,  contributed  the  capital  aud  owned 
all  the  stock,  aud  B  his  labor  and  experience,  to  carry  on  the  business 
as  A  &  Co.  B  did  not  bear  any  loss,  and  his  working  interest  was  1-3 
the  net  profits,  increased  in  1877  to  1-2.  C  recovered  judgment  against 
A,  and  put  execution  in  hands  of  sheriff,  D,  who  levied  on  part  of  firm 
stock,  which  A  replevied. — ^Judgment  for  D.  Property  retained  by  A, 
as  B  was  not  a  partner.  Query :  Would  B's  liability  as  a  partner 
justify  holding  assets  for  firm  creditors?  Stuniph  v.  Bauer,  76  Ind. 
157  (1881). 

2.  Sharing  profits  of  sale  gives  no  title,  or  poiver  over  stock.  A  &  B, 
clothiers,  and  also  jobbers,  employed  C,  as  traveling  salesman,  to 
solicit,  by  sample,  orders  for  piece  goods.  He  received  a  compensa- 
tion equal  to  1-2  profits.  A  &  B  sued  D  for  price  of  goods.  Defence : 
Release  by  C— Recovery.  C  a  clerk.  No  inference  admitted  from 
extent  of  his  agency  of  power  to  release.  Though  a  partner  in  the 
profits,  not  a  co-owner  of  stock  with  A  &  B,  who  alone  were  liable 
for  its  price.  Smith  v.  Percy,  5  Dutch.  74,  N.J.  (i860). 

3.  Share  in  profits  gives  sharer  no  title  to  proceeds  of  goods.  By  prior 
agreements,  B,  a  broker,  who  bought  for  A,  took  1-4  profits  and  1-8 
losses  of  adventures,  in  lieu  of  his  commission.  A  continued  to  em- 
ploy B  as  agent,  but,  by  a  new  agreement,  gave  him  1-3  profits  and 
made  no  provision  for  losses.  B  drew,  as  a  partner,  upon  the  proceeds 
deposited  by  A  with  C,  his  bankers.  A  became  bankrupt,  and  his 
assignees  sued  C  for  amount  of  A's  deposit. — Recovered,  as  B  had  no 
title  to  the  goods,  or  to  the  proceeds  which  represented  them,  but 
was  merely  entitled  to  a  share  of  the  profits.  Smith  v.  Watson,  2  B. 
&  C.  401  (1824). 

Note. — C  would  be  a  third  person,  and  entitled  to  deal  with  B  as 
a  partner.  This  would  be  a  defence,  if  B  had  not  indemnified  C, 
and  made  the  controversy  inter  sc. 

4.  A  share  in  pi'ofits  and  losses  of  adventure  gives  share-taker  no  title 
to  stock.  A  pledged  bills  of  lading  to  B  for  a  cargo  bought  for  him 
by  C,  his  foreign  agent,  who  shared  1-2  the  profits  and  losses  of  the 
adventure.  C  sold  part  of  the  cargo  abroad,  without  A  or  B's  knowl- 
edge. A  became  bankrupt.  Then  C  replaced  the'  goods  sold  by 
others,  and  sent  a  bill  of  lading  to  A,  which  he  gave  to  B.  A's 
assignees  in  bankruptcy  brought  trover  for  the  substituted  goods. — 
Recovered,  because  B  could  get  no  title  to  the  goods  from  C.  He 
was  nut  a  partner  as  to  the  stock,  which  belonged  to  A,  but  only  in 
the  adventure.  Meyer  v.  Sharpe,  5  Taunt.  74  (1S13). 

5.  Partner  can  pledge  firm  stock  after  co-partner' s  bankruptcy,  if  igno- 
rant of  the  act.  B,  in  England,  and  C,  in  Maryland,  partners.  D  had 
advanced  money  on  acceptances  of  B,  who  secretly  left  England  and 
exchanged  residences  with  C.  B  secured  D  by  consignments  of 
tobacco.  Subsequently  C  committed  an  a6l  of  bankruptcy  in  England, 
and  failed.  A  joint  commission  issued  against  both,  on  account  of 
B's  leaving  England.  Assignee  brought  trover  against  D. — Judgment 
for  D,  because  a  bona  fide  purchaser  from  B.  Creditors  had  waived  B's 
absconding  as  a(5l  of  bankruptcv.    Fo.x  v.  Hauburv,  Cowp.  445  (1776). 

63 


§28.  Antecedents.  Pt.  i,  Lh.  2. 

§28. 

ii:i)c  cjiliaiucmcnt  in  luiliie  of  a  routributiou  buring  i\)t  part- 
ncrsliip  cmiics  to  tl)c  fuin,  uil)icl)  is  also  cliargmbU  u)itl)  amj 
bcpicciation. 

'riic  accessory  follows  the  principal.  The  contrib- 
uting partner  who  desires  to  withdraw  the  property 
contributed  by  him  is  entitled  to  what  he  put  into  the 
firm,  but  not  to  any  increment  added  to  the  contribu- 
tion during  the  partnership.'  The  accretions  are 
attributed  to  the  firm,  as  owners." 

Where  the  partner  retains  title  and  contributes  only 
the  use  of  his  property,  the  value  of  the  increase  wall 
be  estimated  and  credited  to  the  firm  if  the  property 
cann(jt  be  severed  from  the  original  contribution.^  The 
arrangement  of  the  partners  for  a  withdrawal  of  the 
contributed  stock  at  its  original  valuation,  is  equiva- 
lent to  a  retention  of  title  by  the  contributing  partner, 
and  if  it  afterwards  becomes  inequitable,  the  courts 
will  not  give  it  effedl,  but  will  revert  to  the  normal 
method  of  adjustment.^ 

1.  The  language  of  the  German  and  of  the  Austrian  Code  is  identical: 
,,e.  143.  2Scnn  cin  ©ci'dlfdrnftcr  Sadicn  in  bie  ©efellfdjaft  eingebracl)t 

,,  bat,  Juctdic  Gigcntbum  bcrfclbcn  gctporbcn  finb,  fo  fallen  bicfelbcn  bit  bcr 
,,  Jluecinanbcrfctunu]  nidU  an  xbn  juriid,  fonbcrn  er  erbdit  ben  Serif;  aus 
„  bent  CJcjeUKbatfeuermbgen  critattet,  fi'ir  iweldjen  jic  gemdi§  Ueberetnfunft 
„  ubcrncmmen  Unirben.  '^tblt  es  an  biejer  2Bert^beftimmung,  fo  gejd^iet 
,,  bic  Critattung  nad>  beni  3i>ertl)e,  treld^cn  bie  Sadicn  jur  ^dt  ber  Ginbring 
„ung batten."  XieGeltcnben.'oanbcI^gefe^ebeS  Grbballs,  t»on^r  .  0§car 
2}  0  r  (^  a  r  b  t ,  JM*  vocibus,  Serlin,  1886. 

2.  7'hc  increase  in  value  of  contribution  belongs  to  firm.  A  contributed, 
in  1.S61,  mill  and  machinery,  at  ^'24,000;  B,  ^2,500 cash;  C  nothing. 
.At  first.  .\  took  1-2  and  B  and  C  each  1-4,  but  afterwards  each  took 
1-3  until  C's  death,  when  A  succeeded  to  his  share.  At  the  end  of 
that  year  .\  and  B  each  took  1-2.  Capital  and  accumulated  profits 
carried  interest.  The  mill  was  enlarged,  lands  bought,  and  other 
buildings  erecfted  during  partnership,  with  firm  funds.  The  entries 
put  mill  and  plant  at  original  price,  showing  increase  bv  improve- 

64 


Pt.  I,  Ch.  2.  Antecedents.  §29. 

nieiits  and  repairs,  and  decrease  by  annual  depreciation.  No  re- 
valuation during  partnership.  A  &  B  sold  out,  in  1S72,  receiving 
^57,052  for  mill  and  fixed  plant,  and  ^48,744  12s  for  movable  plant 
and  good  will.  A  claimed  ^57,052  as  his  capital. — Allowed  only  his 
original  .price.  Like  the  contribution,  its  enhancement  in  value 
belonged  to  the  firm,  which  r:either  rented  the  mill  and  plant  from 
A,  nor  repaired  them  for  him.  Robinson  v.  Ashton,  20  Eq.  25  (1873). 

3.  Improveinents  on  partner'' s  land,  made  zvith  firm  funds,  belong  to 
firm.     A  &  Co.  built  part  of  its  brewery  establishment  upon  A's  land. 

A's  executors  brought  bill  against  surviving  partners. — Firm  charged 
with  original  value  of  land  appropriated,  but  credited  with  enhanced 
value,  which  is  divisible  as  profits.  FrelinghuNseu  v.  Ballantine,  38 
N.J.  Eq.  266(1864). 

A  &  B  were  carpenters  in  partnership.  B  built  a  house,  with  firm 
assets,  on  his  own  lot.  Firm  dissolved.  B  sold  the  house  and  lot  to 
C,  and  left  the  jurisdicftion.  A  paid  firm  debts  beyond  bis  quota,  and 
claimed  title  to  lot  against  C,  who  still  owed  |;iooo  on  account  of  the 
purchase-money.  C  is  a  bona  fide  plirchaser  for  value,  without  notice 
of  the  firm's  claim  to  improvements  upon  it,  except  to  the  |iooo  pur- 
chase-money still  due.  Devoney  v.  Mahoney,  8  C.  E.  Gr.  247,  N.  J. 
(1872). 

4.  Option  to  ivithdrazv  foiDidry  superceded  by  rebuilding  ivith  con- 
tribiiting partner' s  co-operation.  By  articles,  A  contributed  a  foundry 
at  appraisement,  reserving  option  to  M'ithdraw  it  on  dissolution  at 
appraised  value.  The  foundry  was  burnt  down  during  the  partner- 
ship, and  was  rebuilt  with  firm  funds,  A  co-operating.  In  the  settle- 
ment, he  insisted  upon  a  return  of  the  land,  and  at  its  original  valua- 
tion ;  in  order  to  gain  the  rise  in  value. — Court  refused  him  the  land, 
and  gave  it  to  the  firm  at  the  original  valuation.  Clark's  Appeal,  22 
Sm.  142,  Pa.  (1872). 


§29. 


If  tl)c  qttestion  of  title  to  tlje  contribution  arises  bettiicm  tl)c 
partners,  a\\ii  nntl)out  refcrenfe  to  tljirti  fiersons,  tl)e  Itistinrtion 
between  a  eonnncreial  business  anb  utl)er  kinlis  of  business,  is 
simpln  a  matter  of  form. 

Fungible  goods  become  the  property  of  a  firm,  in 
spite  of  the  partners'  intention,  on  account  of  the 
nature  and  effe6f  of  trade.  The  use  which  is  made 
of  the  thing  carries  with  it  the  ownership.'  The  iden- 
tical thing  cannot  be  restored,  because  it  is  lost  by 
transacting  the  business.     A  different  thing,  although 

65 


§30.  Antecedents.  Pt.  i,  Ch.  2. 

the  same  in  kind,  must  be  returned  in  its  place.  But 
apart  from  the  holding  out  involved  in  the  firm's  deal- 
ing with  the  title  as  its  own,  the  distinction  between 
fungible  and  non-fungible  property  does  not  affeA  the 
partners.  If  they  intend  to  contribute  nothing  but 
the  use  to  the  firm,  that  is  all  the  firm  w^U  get.  The 
transfer  of  title  w^ill  be  merely  an  incident  of  the 
business;  it  will  not  control  the  partners  in  dealing 
with  each  other,  or  override  their  intention.  The 
partners  may  shuffle  the  title  as  they  please. 

1.     The  German  and  Austrian  Codes  agree  in  making   contributions 
firm  property : 

,,2.91.  SL'cnn  r^ctb  obcr  anbere  bcrbraucfibare  ober  bertretbare  Sadden, 
„  obcr  lucim  nnncrbrauAbarc  ober  unocrtretbare  ©ad^en  nad)  eincr  ©c^at= 
„5uni3,  bie  nidit  blc§  jum  ^\v(d  ber  (5eit)innt)ertbeitimg  gcjd^tet,  in  bic 
„  fMcfcUfduift  cingebradit  irerben,  fo  itterben  btefe  6egenftanbe  ©igent^um 
„bcr  &c\M']tl)ait."  And  the  Austrian  Code  adds  :  „  ^i"  3l»etfet  Jctrb 
„  angcnommcn,  bafg  bic  in  ba§  ^nocntar  bcr  OJeicUid^aft  ntit  bcr  Untcr= 
„  ic^rift  fammtlidier  Wefcirfdiafter  eingctragencn  bi§  baljin  ctncm  0efcU= 
,,  frfiaftcr  gchbrigen,  bet»eg[id}en  orber  unbmegtidien  ©ad)en  ©igent^um  bee 
^OJcicUeiaft  getDorbcn  finb."   Sorcbarbt,  sub  vocibus. 


^30, 


fllcrcliaiibisc  bcinci  tl)c  subiect-matta-  of  trabe,  partnersliip, 
as  ttu  organ  of  trak,  fonrcits  cncnjtijing  in  ml]icl)  tl)£  firm  bmls 
into  incrcl)antiisc. 

When  the  title  to  property  contributed  by  a  partner 
is  not  required  by  the  firm  for  the  transadion  of  its 
business,  the  use  of  the  property  constitutes  the  con- 
tribution, and  the  title  remains  in  the  contributing 
partner  (§25). 

But  the  fa(5l  that  the  firm  has  the  use,  indicates  that 
the  property  is  conneded  with  the  business,  and  a 

66 


E 


Pt.  I,  Ch.  2.  Antecedents.  .  §31.' 

slight  indication  of  intention  is  sufficient  to  transfer 
the  property  to  the  firm.  Thus  an  agent  was  sent  to 
Cuba  to  work  mines,  and  if  he  effe6led  a  sale  he  was 
given  half  the  price.  He  undertook  to  work  the 
mines  and  share  the  profits  with  the  principal  accord- 
ing to  their  contributions.  He  made  no  property  con- 
tribution, unless  the  agreement  for  a  sale  was  looked 
upon  as  vesting  title  to  the  mines  in  the  firm.  He 
would,  in  this  aspedl,  contribute  one-half  the  capital 
stock,  as  he  would  get  half  the  price  of  the  mines  if 
they  were  sold.  This  was  the  interpretation  put  upon 
the  contra6l.^ 

I.  Contrail  for  1-2  the  price  of  mines  not  enforced  if  parties  subse- 
quently became  partners  in  zi'orking  them,  a)id  shared  profits  accord- 
ing to  contributions,  the  right  to  1-2  the  price  being  the  plaintiff's 
only  contribution  ;  but  rcuicdy,  account.  A  was  employed  by  B  to  go 
to  Cuba,  look  after  B's  mines,  and  ship  the  asphaltum.  B  furnished 
the  money,  and  agreed  to  give  A  1-2  the  profits  on  a  sale  of  the  mines, 
products  and  patents.  They  shared  the  profits  of  working  the  mines, 
as  partners,  in  proportion  to  their  contributions.  The  business  did 
not  succeed,  and  B  sold  the  mines.  A  sued  him  for  half  the  price. 
Defence  :  A's  remedy,  account. — ^Judgment  for  B.  By  making  his 
share  in  the  partnership  depend  upon  his  contribution,  A  must  have 
put  into  the  firm  the  moiety  which  he  owned  in  the  mines  by  virtue 
of  his  right  to  half  the  price  of  them  on  a  sale,  and  could  not  after- 
wards sue  B  on  the  contract,  Seelye  v,  Taylor,  32  La.  An.  1115  (1880). 


§31. 

Olontlictinc;  tljearics  prenail  of  tl)e  fontributton,  an^  unsettle 
tl)e  propertij  riciljta  of  tl)e  partners  iiil)cre  tl)eu  Ijane  not  tuei)  its 
djaracter  bii  an  express  provision. 

In  the  first  place,  the  contribution  may  become  the 
property  of  the  firm  out  and  out,  so  that  upon  a  dis- 
solution the  contribution  will  be  divided,  like  other 
assets,  in  proportion  to  the  shares  of  the  respedlive 

67 


§3 1.  Antecedents.  Pt.  i,  Ch.  2. 

partners.  This  is  the  English  theory,  but  the  courts 
have  discovered  no  mode  of  working  it  out  to  a  logical 
conclusion. 

In  a  partnership  at  will,  if  one  partner  contributes 
$10,000,  and  the  other  his  services,  and  they  share 
the  profits  and  losses  equall}^,  the  partner  who  made 
the  contribution  might  die  the  next  day,  and  the  sur- 
vivor might  legall}^  appropriate  $5,000  of  the  capital 
stock,  although  the  whole  amount,  $10,000,  was  con- 
tributed by  the  deceased  partner.  Thus,  one  partner 
contributed  a  music-hall  and  tavern,  the  other  contri- 
buted no  propert}',  but  he  was  entitled  to  1-8  of  the 
profits.  Upon  a  dissolution  1-8  of  the  music-hall  and 
tavern  belonged  to  him.' 

If  this  theory  be  true,  and  the  $10,000  in  the  case 
put  were  lost  in  the  business,  the  non-contributing 
partner,  who  has  lost  nothing  but  the  expectation  of 
profit,  could  not  be  held  to  make  up  the  loss  to  the 
partner  contributing  the  capital.     Res  peril  domino. 

But  the  law  of  England,  on  the  contrary,  makes 
the  non-contributing  partner  share  the  loss  of  his  co- 
partner, a  result  consistent  only  wath  the  theor}-  which 
makes  a  partner  creditor  of  the  firm  for  his  contribu- 
tion. 

The  recent  English  decisions  indicate  a  disposition 
to  abandon  the  view  that  the  title  to  the  contribution 
is  vested  in  the  firm,  and  to  take  up  with  the  theory 
that  a  contribution  is  an  advance." 

I.  2^  and  2g  I'ifl.  r.  86  docs  not  create  a  limited  partnership.  B,  for 
/250  paid  him  by  A,  undertook  to  convey  him  in  partnership  1-8 
profits  of  a  music  hall  and  tavern,  under  28  and  29  Vict.  c.  86,  which 
B  called  the  Limited  Partnership  A(5l.  No  duration  fixed  for  loan  or 
partnership.— Partnership  at  will,  and  defendant's  denial  in  his  an- 
swer termmated  relation.— A  entitled  to  1-8  profits  during  continu- 
ance, and  to  1-8  of  hall  and  tavern  on  sale.     He  intended  to  be  a 


68 


) 


/ 


Pt.  I,  Ch.  2.  Antecedents.  §31, 

partner,  with  liability  limited  to  his  loan.  Syers  v.  Syers,  i  App.  Cas. 

174  (1876). 

2.  After  coiitributioiis  rc-iinbnrscd,  assets  shared  as  profits.  A  &  B, 
who  had  been  partners,  with  shares  in  proportion  of  3-1,  took  in  C, 
and  re-adjusted  the  interests  thus:  A  40  percent.,  B  35,  and  C  25. 
B  contributed  most  of  the  capital,  C  a  little,  and  B  less.  The  credit 
balances  at  expiration  of  partnership  were:  A  1214,815,  15^58,422,  and 
C  1160,762,  which  were  made  up  by  crediting  the  estimated  profits  each 
year  and  adding  interest,  with  an  allowance  to  A  of  |;2,5oo  a  year  for 
rent.  A  asked  for  a  division  of  assets  according  to  the  contributions. 
B  and  C  according  to  capitals  of  partners  at  dissolution. — Contribu- 
tions reimbursed  with  interest,  and  surplus  divided  according  to 
shares  of  the  profits.    Binney  v.  Mutrie,  12  App.  Cas.  1S6  (1S86). 

The  second  theory  which  has  obtained  currency  is 
that  the  contribution  is  a  loan  b}^  the  partner  to  his 
firm,  in  other  words,  to  himself  and  co-partners,  and 
is  charged  as  a  debt,  to  be  repaid  before  any  division 
of  firm  assets  can  be  made.  This  theory  obtains  in 
Massachusetts. 

It  is  the  Civil  law  Titutuuni  revived.  The  contri- 
bution is  merchandise,  which  is  fungible,  and  can 
not  be  returned  in  specie.  This  is  the  distindlive 
characteristic  of  the  viiituum.  The  partner's  loss  of 
title  to  his  contribution,  which  is  merged  in  the  firm 
stock,  although  for  temporary  purposes,  and  his  ina- 
bility to  recover  it  in  specie,  led  to  confounding  his 
position  with  that  of  a  lender.  The  idea  of  a  contri- 
bution is  lost  in  that  of  an  advance.' 

Two  partners  contributed  the  capital,  and  two  their 
services,  each  receiving  1-4  the  profits.  Upon  a  dis- 
solution the  firm  owed  to  each  contributing  partner 
the  amount  he  had  contributed.*  The  firm  debt  was, 
say  $100,000.  Each  partner  was  liable  for  one-fourth, 
or  $25,000.  Bach  contributing  partner,  after  dedu(5l- 
ing  $25,000  to  pay  his  quota  of  the  loss,  is  still  enti- 
tled to  recover  $25,000,  and  each  non-contributing 
partner  must  pay  that  sum  to  equalize  the  loss.     If  a 

partner  is  insolvent,  the  loss  is  distributed,  as  a  debt, 

69 


§,i  Antecedents,  Pt.  i,Ch.  2. 

among  the  solvent  partners.  The  quota  of  each  part- 
ner would  be  $33,  333-33>^',  and  the  non-contributing 
partner  would  be  liable  to  pay  that  amount  for  the  in- 
demnity of  his  co-partners.  A  partner  who  is  out  of 
the  jurisdi6lion  is  treated  as  if  insolvent,  because  the 
process  of  the  courts  cannot  reach  him,  and  his  quota 
of  the  loss  must  be  divided  among  the  partners  amena- 
ble to  j  udicial  process.^  The  theory  of  debt  would  make 
the  contribution  carry  interest,  but  the  Massachusetts 
courts  do  not  allow  interest  upon  the  contribution  with- 
out a  stipulation  to  that  effe6l.''  The  theory  of  debt 
halts  again  where  they  decide  that  upon  dissolution  a 
partner's  title  to  his  contribution  revests  in  him.'  He 
has  the  right  to  seize  the  assets  which  remain  in  the 
firm,  for  his  contribution,  without  first  devesting  the 
joint  title  by  judicial  proceedings.  This  is  the  pre- 
rogative of  an  owner,  for  no  lender  can  touch  the  prop- 
erty of  his  debtor  without  judgment  and  execution. 

3-  This  is  the  French  law: 

"Si  les  choses  dont  la  jouissance  seulement  a  6t6  mise  dans  la 
"  society  soiit  des  corps  certains  et  determines,  quinese  consomment 
•'pas  par  I'usage,  elles  sont  aux  risques  de  I'associe  proprietaire.  Si 
^'|les  choses  se  consomment,  si  elles  se  deteriorent  en  les  gardent, 
''si  elles  sont  destinies  a  etre  vendues,  ou  si  elles  ont  ete  niises  dans 
"  la  soci^te  sur  une  estimation  portee  par  un  inventaire,  elles  sont 
"aux  risques  de  la  societe.  Si  la  chose  a  ete  estimee,  I'associe  ne 
" peut  repeter  que  le  mantant  de  leur  estimation."  C.  C,  1851. 
^^  *:  Si  ce  sont  des  choses  qui  se  consomment  par  I'usage  meme  qui  en 
II  est  fait,  comme  le  vin,  I'huile,  I'argent  monnave  etc;  car  il  est  de 
'  regie  que  la^  simple  tradition  des  choses  fongibles  en  transmet  la 
^1  propriete  meme  ;  en  pareil  cas  la  societe  en  devient  proprietaire  et 
^  par  suite  elle  est  debitrice  envers  I'associe  qui  a  fait  I'apport  de 
choses  de  meme  nature  et  qualite,  ou  de  leur  valeur."  Vav.  s.  92. 

4-  Contrihutw7i  a  firm  debt,  and  each  partner  liable  for  Us  repayment. 
A  ami  B  contributed  the  capital,  C  and  D  their  services,  to  the  firm. 
nacn  partner  to  receive  1-4  the  net  profits,  after  deduc5ling  interest  on 
the  contributions.  The  firm  dissolved,  and  A  wound  up  the  business, 
winch  resulted  in  a  loss.  D  was  insolvent.  A  demanded  repavment 
01  nis  capital,  as  a  partnership  debt.  D's  defence :  His  labor  became 
capital ;  but  no  intention  to  insure  either  contribution.— Recovered, 
nac  1  solvent  partner  must  contribute  equally  to  repay  the  capital. 
Whitcomb  V.  Converse,  119  Mass.  38  (1875). 

70 


Pt.  I,  Ch.  2.  Antecedents.  §32. 

5.  Loss  apportioned  according  to  interests  of  partners  within  jurisdic- 
tion.  A,  and  others,  some  in  Massachusetts,  and  some  who  afterwards 
removed  from  the  State,  formed  a  ferry  company,  as  a  partnership. 
The  proceeds,  less  expenses,  went  to  the  subscribers  pro  rata.  A 
paid  money  for  the  firm,  and  sued  the  members  in  Massachusetts  for 
contribution. — Recovered.  Loss  apportioned  in  proportion  to  inter- 
ests, and  members  out  of  jurisdicftion  disregarded,  like  insolvents. 
Whitman  v.  Porter,  107  Mass.  522  (1871). 

6.  Assets  go  on  accou7it  of,  and  in  proportion  to,  the  contributions,  and 
each  partner  must  make  up  the  deficit  in  proportion  to  his  share  of  the 
profits.  A,  B  &  C,  an  infant,  who  agreed  to  share  profits  equally, 
dissolved,  and  made  B  liquidating  partner.  He  might  retain,  out  of 
the  assets,  his  contribution,  14,874,  without  interest,  and  after  paying 
the  debts,  repay  A's  contribution,  |i,8oo,  without  interest,  and  apply 
the  balance  to  C's  contribution,  1882.  The  assets  were  not  sufiicient 
to  repay  the  contributions.  A  and  B  claimed  that  the  contributions 
should  be  repaid  with  interest,  that  the  assets  should  be  shared  in 
proportion  to  the  contributions,  and  that  each  partner  should  make 
up  one-third  of  the  deficiency.  C's  defence:  Infancy.  That  each 
partner  should  have  1-3  of  the  assets,  and  make  up  the  deficit  in  pro- 
portion to  his  contribution. — Assets  divided  in  proportion  to  contri- 
butions, but  no  interest  allowed  on  them.  Each  partner  liable  foi 
1-3  of  deficiency.  Moley  v.  Brine,  120  Mass.  324  (1876). 

7-  Partner  entitled  to  repayment  for  his  contribution  before  profits  are 
computed.  A  agreed  to  furnish  all  the  capital,  and  B  his  services,  in 
carrying  on  a  drug  store,  and  divdde  the  profits  equally  after  deduct- 
ing interest  and  expenses,  including  a  salary  to  B.  A  contributed 
13,300.  The  firm  dissolved,  and  A's  executrix  claimed  to  deduA 
13,300  capital,  and  then  take  half  the  residue  as  profits. — Recovered, 
less  1-2  the  loss,  i.  e.,  depreciation  in  value  of  the  fixtures.  The 
contribution  becomes  firm  property,  but  reverts  to  the  contributing 
partner  upon  dissolution.  Livingston  v.  Blanchard,  130  Mass.  341 
(1881). 


§32. 

<l^t  tl]cors  tl)at  tl)e  rontributiou  is  a  bebt  \\<x%  bem  abopkb  in 
seocral  States,  btsiks  ilTassadjusctts. 

It  is  recognized  in  Georgia.  The  contributing  part- 
ner, upon  a  dissolution,  agreed  to  pay  all  the  debts  of 
the  firm.  His  contribution  was  construed  to  be  a  debt, 
and,  as  such,  was  embraced  in  his  agreement.^ 

In  Indiana.  A  partner,  who  furnished  the  capital 
to  eredl  buildings  and  provide  the  machinery  for  manu- 


^32.  Antecedents.  Pt.  i,  Ch.  2. 

faclurinj;  in  partnership,  was  entitled  to  colled  from 
his  co-partner  a  portion  of  the  loss  caused  by  fire,  cor- 
responding to  his  share  of  the  profits." 

In  Illinois.  The  destru(?tion  of  buildings  and  ma- 
chinery was  a  loss  apportioned  equally  among  the 
partners,  because  they  shared  the  profits  on  an  equal 
footing.^ 

1.  Partner's  agreement,  upon  dissolution^  to  pay  firin  debts  includes 
■u'hat  the  firm  owes  him  for  his  contribution.  A  contributed  skill  and 
lal)or.  and  B  contributed  property,  which  would  belong  to  the  firm 
when  paid  for  out  of  the  net  proceeds  of  the  business.  Upon  dissolu- 
tion, H  a.yreed  to  pay  the  firm  debts,  and  A  made  over  his  interest  in 
certain  assets,  including  B's  contribution.  Some  proceeds  were  left 
undivided,  and  1?  held  them  as  his  own.  A  brought  bill  for  his  share 
of  them.  Rill  dismissed  at  the  hearing,  because  it  contained  no  aver- 
ment that  the  proceeds  in  question  exceeded  the  net  proceeds  which 
were  to  be  applied  in  payment  for  B's  contribution. — Reversed.  Dis- 
missal admits  facts  set  forth  in  the  bill :  That  the  individual  assets 
belonged  to  the  partners  in  equal  proportions :  That  B  agreed  to  paj' 
all  debts.  This  included  the  firm  debt  to  B  for  his  c<mtribution. 
Tcllyett  v.  Markham,  57  Geo.  11  (1876). 

2.  Share  in  profit  arid  loss  measures  the  distribution  of  the  loss  of  capi- 
tal. A  and  B  furnished  the  capital  and  C  did  the  work.  A  received 
10  per  cent,  on  his  capital,  and  B  and  C  salaries.  Then  profit  and 
loss  divided  equally.  A  partial  loss  of  capital. — In  account,  C  must 
bear  1-3  of  the  loss.    Carlisle  v.  Fenbrook,  57  Ind.  529  (1S77). 

3.  Agreement  to  divide  losses  includes  partial  loss  of  capital.  A  con- 
tributed building  and  machinery,  at  19,600,  and  B  and  C,  together, 
$2,500.  Profit  and  loss  divided  equally  during  partnership.  Build- 
ings destroyed  bj-  fire.  A  charged  B  and  C,  each,  with  a  third  of  the 
loss  of  capital.  Defence  :  Only  a  loss  in  excess  of  capital  to  be  equally 
divided. — Loss  of  capital  divided  equally.  Taft  v.  Schwamb,  80  111. 
289(1875). 

In  New  York  the  theory  has  been  fully  discussed, 
and  perhaps  settled.  A  partner  contributed  $2,000 
for  3-4  of  the  profits.  The  co-partner  contributed 
$2,000  for  1-4  of  the  profits.  The  court  accounted  for 
the  excess  of  profits  as  a  compensation  to  the  partner 
for  his  services.  The  conjedure  was  but  a  shrewd 
guess,  while  sharing  the  losses  in  proportion  to  the 
contributions  would  efifedl  the  same  result  upon  prin- 
ciple.' In  another  case,  also  decided  by  a  lower  court, 
the  losses  were  distributed,  in  spite  of  Judge  HoFF- 


Pt.  I,  Ch.  2.  Antecedents.  §32. 

:\rAN's  reasoning  in  his  dissent  from  the  decision  in 
Hasbrouck  v.  Childs,  not  in  proportion  to  the  contri- 
butions, but  in  proportion  to  the  profits."  The  Court 
of  Appeals  has  recognized  the  debt  theory  without 
discussion.'^ 

1.  Majority  :  Profits  xvil I  be  apportioned  as  a  return  upon  contribution, 
and  as  a  compensation  for  services.  Minority.-  Losses  of  capita  t  are 
borne  in  proportion  to  contributions  'ci'ithout  reference  to  s/mres  in  the 
profits.  A  contributed  |;2,ooo,  and  did  all  the  work ;  B  contributed 
f  2,000,  and  did  no  work.  A  took  3-4  and  B  1-4  the  profits.  No  men- 
tion of  loss.  Partial  loss  of  capital.  A  claimed  half  the  residue.  B's 
defence:  A  should  bear  3-4  the  loss. — Recovered.  IMajority:  1-2 
profits  went  to  A,  as  compensation  for  services,  the  other  1-2  was 
divided  between  them  as  partners.  IMinority :  A  not  a  clerk;  he 
received  extra  profits  as  a  partner.  Equality  a  presumption  of  facft. 
In  the  absence  of  agreement,  profit  and  loss  divided  according  to 
contribution.  In  such  case,  if  one  contributes  labor  and  the  other 
capital,  the  jury  alone  can  decide  the  value  of  the  labor  contribution. 
If  money  is  contributed  against  labor,  the  two  form  a  joint  fund,  and 
the  loss  of  capital  is  counterbalanced  by  a  proportionate  loss  of  labor ; 
if  onlv  the  use  of  money  is  contributed,  res  perit  domino.  The  con- 
tributions and  the  shares  of  profit  and  loss  may  be  in  different  pro- 
portions. Then,  as  profits  are  not  divided  until  capital  is  deduAed, 
so  losses  are  not  apportioned  in  the  ratio  of  profits,  except  for  a  defi- 
ciency beyond  capital ;  otherwise  the  partner  having  the  larger  share 
of  profits  would  guarantee  his  co-partner's  capital  pro  taiito.  Has- 
brouck V.  Childs,  3  Bosw.  105,  N.  Y.  (1858). 

2.  Losses  shared  like  profits  in  absence  of  agreement.  A,  B  &  C  manu- 
factured tubs.  A  and  B  furnished  fa6lory,  stock  and  funds,  and  C 
carried  on  the  business.  Card  contained  the  names  of  all  three.  The 
profits  were  shared  equally.  Loss  of  nearly  all  the  stock.  A  and  B 
brought  account  against  C. — Decree.  Presumption  that  losses  shared 
like  profits,  unless  rebutted.  Munro  v.  Whitman,  8  Hun  553,  N.  Y. 
(1876). 

3.  Agreement  must  be  clear  to  rebut  the  inference  of  debt.  A  con- 
tributed merchandise,  estimated  at  |;i5,ooo;  B  merchandise  at  13,000. 
Profits  and  losses,  including  depreciation  of  stock  and  expenses,  were 
shared  equally.  A  charged  B  one-half  of  his  capital  lost  in  excess  of 
B's  capital. — Recovered.  The  clause  did  not  distinctly  provide  for  a 
division  of  the  assets  in  proportion  to  the  contributions  and  relegate 
the  division  of  loss  to  the  excess  after  the  contributions  were  restored, 
Jones  V.  Butler,  87  N.  Y.  613  (1882). 

The  German  law  pushes  the  debt  theory  to  its  log- 
ical conclusion,  and  makes  the  contributions  carry 
interest.  The  increment  goes  to  swell  the  profits  of 
the  contributing,  and  the  losses  of  the  non-contribut- 
ing, partner. 

73 


§33-  Antecedents,  Pt.  i,  Ch.  2. 

Rknaud  ^ves  the  following  illustratious  :  First,  of  profits,  when 
hoth  i)artners  contribute.  A  contributes  $i,ooo,  B  1:9,000.  At  end  of 
the  year  there  is  a  profit  of  |2,ooo.  A  takas  l^o  interest  on  his  con- 
Iribiilion,  at  4  per  cent,  B  I360  on  his;  in  all,  I400  dedudled  before 
the  net  profits  of  |;i,6oj  is  divided  between  them,  giving  A  f  1,840,  and 
B  ^fio,  i6o.  Second,  of  losses.  The  end  of  the  year  shows  a  loss  of 
|2,ooo.  .'X.s  540  is  due  A,  and  I360  B,  for  interest,  the  aggregate,  I400, 
is  added  to  |2,ooo,  and  A  stands  half  the  loss,  or  |i,2oo,  which  takes 
all  his  capital,  and  after  deducting  his  interest,  I40,  pays  half  B's 
interest,  or  $S6o,  to  him.  Third,  of  profits,  when  one  partner  con- 
tril)utes  property  and  the  other  does  not.  A  contributes  no  property, 
B  i^io.ooo.  At  the  end  of  the  year  there  is  a  profit  of  f  2,000.  B  takes 
moo  interest  and  half  the  balance  of  |ii,6oo.  He  receives  his  capital, 
|io,ooo,  interest,  $400,  and  profits,  |8oo,  in  all,  |i  1,200.  A  receives 
ISoo.  Fourth.  A  lo.ss  of  f  2, 000  at  the  end  of  the  year.  Each  makes 
up  half  the  loss  of  principal  and  interest.  A  pays  |2oo  on  interest,  and 
|i,oooon  principal,  account  to  B,  who  also  loses  |i,20o.  Gominanbit= 
flcfeUfc^often,  g33,  pp.  ii3;i-4. 


§33. 


The  only  theory  consistent  with  partnership  is  that 
the  firm  acquires  the  title  to  the  partners'  contribu- 
tions by  reason  of  the  business  in  which  the  firm  is 
engaged,  and  fiDr  its  purposes  alone.     Trade  involves     j 
the  title  as  an  incident  of  its  fun6lion.     The  owners     ' 
are  not  presumed  to  part  with  the  title,  except  for 
the  purpose  of  the  joint  business.     The  moment  the 
objedl  of  the  joinder  is  accomplished,  the  title  reverts    A 
to  the  original  proprietor.     The  use  carries  the  title    I 
by  trade  necessity,  but  the  co-partner  can  not  retain     I 
it  after  the   trade   purpose   is  satisfied.       Upon   this 
theory  the  partners  share  the  capital  stock  according 
to  their  contributions,  and  share  the  deficit  beyond  the 
contributions  as  they  share  the  profits. 

^\)t  title  to  tlie  contribution,  tl)ougl)  inDobet)  in  its  use  bn  tl)c 
firm,  is  bctuieen  tl)e  partners  separate  estate. 

Who  has  the  title  to  a  partner's  contribution  ?  pro- 
voked a  controversy;  which  began  in  the  middle  ages, 


74 


Pt:  I,  Ch.  2.  Antecedents.  §33. 

and  still  continues  at  the  present  day.  The  argu- 
ments urged  by  the  disputants  made  the  answer  turn 
upon  the  point  whether  the  partner  contributed  the 
property  itself,  that  is,  the  full  ownership  of  it,  to  the 
firm,  or  only  the  use  and  enjoyment  of  the  property, 
while  he  retained  the  title  in  himself.  The  result  of 
the  discussion  was  a  general  consensus  of  authors. 
They  united  in  thinking  that  the  partner  contributed 
only  the  use.  He  retained  the  title  himself*  The 
position  established  by  medieval  authority  is  no  less 
sound  to-day  than  it  was  when  first  taken.  The 
ancient  authority  has,  in  recent  times,  been  called  in 
question,  but  the  reason  for  doubting  the  soundness 
of  judgment  displayed  by  the  sages  of  law  in  settling 
the  controversy  are  not  tenable.  The  modern  obscu- 
rity arises  from  confounding  the  substance  of  the 
transaction  with  its  form.  The  title,  when  required 
by  the  business,  must  be  vested  in  the  firm,  in  order 
to  enable  it  to  deal  with  or  dispose  of  the  property  for 
the  purposes  of  the  business.  For  this  reason  the 
partner  makes  a  transfer  of  his  title  to  the  firm.  The 
effe(5l  of  changing  the  title,  upon  creditors  who  deal 
with  the  firm,  has  been  stated  (§25).  They  acquire 
rights  by  reason  of  the  firm's  dealing  with  the  title. 
They  rely  upon  the  title  which  the  firm  holds  out  to 
them  as  its  own.  This  is  an  incident  of  commercial 
business,  which  involves  buying  and  selling  property, 
or  exerting  the  powers  of  proprietorship.  But  the 
partners  do  not  possess  the  stranger's  right  to  insist 
that  the  title  shall  belong  to  the  firm.  They  know 
the  actual  title,  and  do  not  infer  a  title  from  the  indi- 
cia of  ownership.  Nor  is  their  position  changed  by 
dealing  with  the  firm  as  owners  of  the  property.    The 

75 


§34-  Antecedents.  Pt.  i,  Ch.  2. 

partnership  is  not  in  fee  or  for  life.  The  transfer  of 
propert}'  is  restricted,  like  the  partnership,  to  a  given 
period,  or  is  at  will.  They  know  that  the  title  remains 
in  the  contribnting  partner,  subje6l  only  to  the  firm's 
right  to  control  the  title  during  the  partnership.  This 
is  equivalent  to  the  firm's  use  of  the  property  which 
remains  in  the  contributing  partner,  and  at  his  risk, 
though  temporarily  subjedl  to  the  enjoyment  of  the 
firm. 

I.  It  is  sufficient  to  refer  to  the  authors  -who  give  a  summary  of  the 
literature  upon  this  point :  lo  &  liicf'j  (S[autcrimc(  ber  -^anbccten,  p.  394 
<■/  st-(/.  <;9»i");  Troi'Long,  p.  6i  ctscq.,  ^587;  Judge  Hoffman,  iu  Has- 
hrouck  V.  Childs,  3  Bosw.  \\2ctscq.  The  exceptional  provision  of 
the  French  Code,  supra,  ^(31,  n.  3,  which  makes  the  contributions  firm 
property,  is  ascribed  to  Pothiek,  who  followed  ArETIn  against  the 
array  of  great  Civilians.  Troplong,  supra;  Vav.,  I85-94.  The  Ger- 
man and  .Austrian  codes  have  followed  the  Frendi.  supra,  ^29,  n.  i. 


§34. 


5n  p^nnsnltiania  tl)e  losses  of  capital  are  s\)axt\i  in  proportion 

to  tl)c  contributions. 

A  partner  contributed  $10,000,  the  co-partner  his 
services,  and  they  shared  the  profits  equally.  The 
capital  was  lost,  and  the  contributing  partner  sued  his 
co-partner  for  half  the  loss,  $5,000.  The  court  refused 
to  shift  the  loss,  or  any  part  of  it,  upon  the  defendant.' 
The  contribution  is  the  property  of  the  partner.  When 
the  title  passes  to  the  firm,  either  on  account  of  the 
nature  of  the  property  or  the  convenience  of  the  busi- 
ness, the  transfer  is  made  only  for  the  occasion,  that  is 
for  the  partnership.  Apart  from  the  business,  the 
property  belongs  to  the  contributor.       He  does  not 


Pt.  I,  Ch.  2.  Antecedents.  §35. 

give  his  property  away  after  the  partnership  is  ended. 
The  contribution  is  limited  to  the  duration  of  the  part- 
nership. When  the  partnership  is  dissolved  the  title 
reverts  to  the  original  owner.  The  purpose  for  which 
the  title  was  transferred  has  been  served,  and  the  pro- 
•  visional  title  of  the  firm  is  exhausted. 

I.     Everly  v.  Durborrow,  8  Phil'a  R.  93  (1871). 


§35. 


%  partial  loss  of  capital  mtist  bt  bistributeb  accorbinQ  to  i\)t 
t[)£orn  of  tl)e  contribution  u)l)icl)  prinaiis. 

The  question  presents  itself  frequently  where  there 
has  been  a  partial  loss  of  the  firm  capital.  The  loss 
must  be  distributed  either  according  to  the  theory  of  a 
debt,  or  of  separate  titles  in  the  partners.  By  the  debt 
theory  as  the  excess  of  capital  contributed  by  any  part- 
ner in  the  case  of  a  total  loss  must  be  made  up  by  the 
co-partners,  so  must  any  partial  loss  of  capital  be  made 
up  by  the  partner  who  contributes  less  than  his  co- 
partner in  the  ratio  in  which  he  shares  the  profits. 
The  effe61;  of  the  plan  is  to  make  the  partner  who 
contributes  no  capital  to  the  firm  stock  insure  the 
capital  of  his  co-partner  in  the  same  proportion  as  he 
shares  the  profits. 

A  contributes  $100,000,  B  his  services,  and  they 
share  the  profits  in  equal  parts.  A  loss  occurs  of 
$50,000.  B  owes  A  $25,000.  That  is,  by  the  debt 
theory,  the  firm  owes  A  $100,000,  but  A,  as  a  partner, 
owes  himself  $50,000,  and  the  loss  is  divided  between 
them,  $25,000  each. 

77 


§35-  Antecedents.  Pt.  i,  Ch.  2. 

The  English  theory  vests  the  title  to  the  contribu- 
tions in  the  partners  in  the  proportion  in  which  they 
share  the  profits,  but  this  theory  discloses  no  reason 
to  charge  the  non-contributing  partner  with  half  his 
co-partner's  loss  of  capital.  Each  partner  would  lose 
his  half  of  the  joint  property,  and  that  would  be  the 
end  of  it.  In  the  case  put,  each  partner  owns  $50,000 
of  the  capital,  and  after  sharing  the  loss  according  to 
his  ownership,  has  $25,000  left.  It  is  inconsistent  to 
make  the  partner's  ownership  in  his  co-partner's  con- 
tribution a  premium  paid  for  the  insurance  of  the  con- 
tribution to  a  corresponding  amount.  This  would 
make  the  contribution  a  debt  which  the  partner  owed, 
not  a  title  which  he  owned.  The  theory  has  no  founda- 
tion in  reason,  nor  is  it  maintained  with  the  steadness 
which  indicates  a  belief  in  its  soundness.  A  slight 
suggestion  of  a  different  intention  by  the  partners  is 
sufficient  to  supercede  the  theor}^  and  re-establish  a 
distribution  of  loss  according  to  the  contributions.^ 
In  fad,  the  readiness  to  revert  to  the  separate  titles 
of  the  partners,  in  order  to  measure  a  loss  of  the  con- 
triljutions  among  them,  is  proof  of  a  legal  instinct,  if 
not  of  a  conscious  apprehension  of  the  theory  which 
is  consistent  with  partnership."  The  theory  does  not 
prevent  the  partners  from  dividing  the  assets  in  a  pro- 
portion different  from  the  ratio  of  contributions,  if  they 
see  fit  to  make  such  a  contrad.  The  theories  which 
have  been  acted  on  are  inferences  drawn  by  different 
judges  from  the  conception  entertained  by  them  of  the 
partnership  relation,  and  are  superceded  by  any  agree- 
ment made  by  the  partners.'  The  inference  is  made 
only  in  the  absence  of  an  agreement  by  the  partners 
upon  the  point. 

78 


Pt.  I,  Ch.  2.  Antecedents.  ^^.i^-. 

The  question  does  not  affe6l  third  persons,  and  is  not 
affedled  by  their  right  to  make  the  contribution  firm 
property  for  themselves.  The  question  relates  to  a 
dornestic  arrangement  between  the  partners,  and  is  lim- 
ited to  their  rights.  The  adjustment  is  made  subject  to 
the  claims  of  third  persons,  and  embodies  the  ultimate 
settlement  between  the  partners  after  all  claims  against 
the  firm  have  been  disposed  of.  The  intention  of  the 
partners  regulates  the  matter;  which  is  confined  to 
themselves,  and  controls  the  construction  of  the  courts. 

If  the  contribution  belongs  to  the  partner  making 
it,  the  title  will  measure  the  loss.  He  takes  the  risk 
of  his  property,  which  he  staked  in  the  business.  As 
each  contributing  partner  does  the  same,  a  partial  loss 
of  capital  is  divided  between  partners  in  proportion  to 
the  amount  contributed  by  them. 

The  contributions  of  two  partners  were  as  three  to 
one,  A  $9,000,  B  $3,000,  but  the  profits  were  divided 
equally.  The  partial  loss,  $3,000,  was  divided  between 
them  in  the  ratio  of  3  to  i.  $2,250  by  A,  $750  by  B, 
the  assets  left  being  the  property  of  each  partner  in 
the  proportion  in  which  he  contributed  them,  A 
$6,750,  B  $2,250.' 

I.  In  England,  the  partners  agreed  to  divide  the  assets 
according  to  their  interests  in  them.  The  EngHsh  con- 
stru6lion  makes  the  interest  of  a  partner  in  the  capital 
stock  correspond  with  his  share  of  the  profits,  but  the 
agreement  indicated,  it  was  thought,  an  intention  to 
divide  the  assets  according  to  the  contributions  made 
by  the  partners,  and  superceded  the  constru(5lion  of  law. 
Paiiners'  agreement  to  divide  surplus  assets  according  to  interests 
in  them  overrides  legal  constmElion  of  provision  to  share  profit  and 
loss  equally,  and  divide  assets  according  to  contributions.  A  &  B, 
partners,  agreed  to  share  profits  and  losses  equally,  and,  i;pon  dissolu- 
tion, to  divide  the  surplus  assets  according  to  their  interests  iu  them. 
'Ine  contributions  by  A  &  B  were  as  i  to  2,  and  carried  interest.  Either 
partner,  who  might  let  his  profits  accumulate,  would  be  paid  interest 
"^n  the  additional  capital.     B  made  advances,  apart  from  his  contribu- 

79 


§jO.  Antecedents.  Pt.  i,  Ch.  2. 

tion  an<l  :uiuuiulaU'd  interest.  On  settlement,  the  assets  amounted 
to  /,  vooo ;  A's  cajiital  to  /830,  and  R's  to  /4.000.  B,  who  wound  up 
the  business,  took  the  assets  for  his  excess  of  capital.  A  sued  for  a 
share  of  the  assets  proportioned  to  his  capital. — Recovered.  The 
assets  are  the  capital,  and  distribution  accordinj^  to  interests  in  them 
is  acconlinji  to  contributions,  and  excludes  equal  liability  for  them  as 
debts  ;  which  nuist  Ije  paid  before  ecjual  distribution  of  profit  and  loss 
couUl'be  made.  The  advances,  independent  of  contribution,  charge 
both  i)artncrs  e(iuallv.  as  a  debt.  Wood  v.  Scoles,  L.  R.,  i  Ch.  369 
(iS66). 

2.  A  partner,  contributing  $75,000,  guaranteed  his  co- 
partner, contributing  |io,ooo,  profits  to  the  extent  of 
$10,000  the  first )  ear.  The  year  showed  a  loss  of  $10,000. 
The  guaranty  re\^ersed  tlie  Massachusetts  constrtidlion  of 
law,  and  made  the  guarantor  pay  his  co-partner  $10,000, 
instead  of  colledl  $5,000  from  him. 

C.uarantv  of  profits  consistent  ivith  partnership.  A  contributed 
^^75,000,  and  R  |io,ooo.  Profit  and  loss  to  be  divided  equally  during 
continuance  of  firm.  For  first  year  A  guaranteed  B  that  his  profits 
should  not  be  less  than  f  10,000;  notwithstanding  losses  to  any  extent. 
Dissolution  at  end  of  first  year,  and  loss  .of  al^out  |;io,ooo. — B  took 
^10,000,  and  remainder  divided  between  them,  "according  to  their 
respedlive  proportions."    Grant  v.  Bryant,  loi  Mass.  567  (1S69J. 

3.  A  supercargo,  paying  $1,000,  stipulated  for  a  salary 
and  a  fifth  interest  in  the  ship  and  cargo,  which  cost 
between  $15,000  and  $18,000.  The  agreement  was  suffi- 
cient in  Massachusetts,  where  a  non-contributing  part- 
ner has  no  title  to  firm  stock,  to  give  him  title  to  1-5  of 
the  assets. 

Affrecinent  ivill  re,^ulate  a  paHner's  share  in  the  firm  property, 
independent  of  the  amount  of  his  contribution.  By  the  articles,  B 
furnished  a  vessel  and  cargo,  at  a  cost  of  from  |i5,ooo  to|;i8,ooo,  and 
A  was  supercargo,  at  Iso  a  month  and  1-5  interest  in  vessel  and  cargo, 
for  which  he  paid  |i, 000.  On  dissolution,  A  claimed  1-5  interest  in 
the  property. — Recovered.  Partnership,  with  1-5  interest  to  A,  not- 
withstanding salary  and  the  disproportion  of  his  cash  contribution. 
Julio  V.  Ingalls,  i  Allen  41  (1861). 

4.  Christmau  v.  Baurichter,  lo  Phil'a  R.  115  (1874). 


§3e. 


^\\t  ratio  of  profits,  if  not  tkc^  bn  agreement,'  mill  be  aster- 
tainc^  bij  tl)c  junj,  in  orkr  to  be  anailable  as  a  stanbar^  for 
bistributinoi  tl)c  loss  of  capital  among  tl)e  partners. 


8'j 


Ft.  I,  Ch.  2.  Antecedents.  §36. 

No  ratio  may  have  been  agreed  upon  for  sharing 
the  profits.  In  this  event  the  Code  Napoleon  ena6ls : 
"  That  when  the  contra(ft  of  partnership  does  not  de- 
"  termine  the  share  of  each  partner  in  the  profits  or 
"  losses,  his  share  is  in  proportion  to  his  contribu- 
"tion.""  This  provision  embodies  the  general  view 
of  Civilians  in  reference  to  a  partnership  for  gain.'' 
But  the  German  Bmpire,  as  well  as  the  Austrian,  has 
adopted,  in  the  absence  of  a  different  agreement,  the 
rule  of  equality  for  sharing  the  profits  of  a  business 
partnership.  The  Commercial  Code  says :  "Profit  or 
"  loss,  in  default  of  any  other  arrangement,  is  divided 
*'  among  the  partners  by  heads. "^  The  English  plan 
refers  the  ascertainment  of  the  parts  to  the  j  ury .  That 
means  a  reference  to  the  men  ens^asfed  in  such  a  busi- 

o     o 

ness,  who  are  alone  competent  as  experts  to  testify  what 
elements  enter  into  a  determination  of  the  question.'^ 
But  sharing  the  profit  and  loss  does  not  mean  sharing 
the  contributions.  They  are  between  the  partners 
separate  estate,  and  the  firm  looks  for  its  profits  to  the 
surplus  which  is  left  after  the  partners  have  re-taken 
their  contributions,  and  makes  up  the  deficit  which 
remains  after  the  contributions  have  been  lost.  It  is 
only  when  the  amounts  contributed  by  each  partner 
are  not  known,  andean  not  be  ascertained,  that  the  ratio 
of  profit  and  loss  measures  the  interest  of  the  partners 
in  the  assets  which  belong  to  the  firm,  because  they 
cannot  be  identified  b}^  the  partners.  There  is  no  pre- 
sumption of  law,  and  the  presumption  of  fa6l  arises 
only  on  default  of  any  clue  to  the  intention." 

I.  Profits  shared  according  to  contribjitio7ts  by  contrafl.  C,  in  expedta- 
tion  of  a  Government  contract,  agreed  with  A  &  B  to  furnish  half  the 
capital,  and  they  one-fourth  each,  in  order  to  carry  it  out,  and  to  share 
the  profits  and  losses  according  to  the  contributions.  C  furnished  no 
capital.     A  &  B,  who  supplied  the  capital  and  did  the  work,  claimed 

81 


I 


§37-  Antecedents.  Pt.  i,  Ch.  2. 

the  sum  which  C  recovered  from  the  Governmenl.^udj^ment  for  A 
&  B.   Hobbs  V.  McLean,  117  U.  vS.  567  (1886). 

2.  "  Ivorsque  lacle  de  societe  ne  determine  point  la  part  de  chaque 
"  "associe  dans  les  benefices  ou  pertes,  la  part  de  chacun  est  en  pro- 

•'  portion  de  sa  misc  dans  Ic  fonds  de  la  societe.  A  I'egard  de  celui 
"qui  n'a  apportc  que  sou  industrie,  sa  part  dans  les  benefices  ou  dans 
"  les  pertes  est  reglee  coinnie  si  sa  mise  eut  ete  egale  a  celle  de  I'as- 
"socie  qui  a  le  moins  apporte."  C.  C.  1853. 

3.  17  Durantou,  Cours  de  Droit  Frau^ais,  438. 

4.  Sl'cr  (iiODinit  obcr  ikrhift  Jxnrb,  in  Grmangetung  eincr  anbercn  isereiiu 
barung,  unter  bte  Ciiefellfd^aftcr  nad;  itcpfctt  bertfjeilt.  Com.  Code,  ^109. 

5.  /;/  default  of  as:reeincnt,  jury  settles  diz'isioii  of  profits  and  presiitncs 
equality,  unless  inconsistent  circumstances  appear.  Court  below  re- 
ferred to  jury  the  fa(5t  of  partnership,  and,  in  default  of  agreement, 
the  proper  division  of  profits. — Submission  sustained.  In  the  absence 
of  agreement,  the  jury,  or  the  judge  sitting  as  a  jury,  must  find  the 
probable  intention.  Equality  a  presumption  of  facl,  which  becomes 
controlling  in  default  of  all  guiding  circumstances.  Tomson  v.  Camp- 
bell, 5  Wilson  &  vShaw  16.    s.  c,  Thomson  v.  Williamson,  7  Bligh  432 

6.  Contributions  and  shares  in  profits  presumed  to  be  equal.  A,  B  &  C, 
partners  by  oral  agreement,  each  contributing  personal  and  real  estate: 
A  and  B  350  acres  each,  and  C  640.  With  the  proceeds  of  the  real 
estate  they  purchased  a  ferry  franchise  and  property,  which,  on  dis- 
solution, formed  the  chief  asset.  The  evidence  indicated  that  D  was 
also  a  partner.  There  was  no  agreement  for  a  division  of  the  profits, 
and  the  amounts  which  each  contributed  were  apparently  not  proved. 
A  and  B,  in  account,  claimed  against  C  a  2-3  interest  in  the  assets. — 
Each  received  a  1-4,  because,  in  the  absence  of  proof,  the  shares  were 
presumed  to  be  equal.   Knott  v.  Knott,  6  Oregon  142  (1876). 

Partners  share  stock  and  profits  equally.  A  &  B,  partners.  B  died, 
and  A  was  his  adminstrator.  No  agreement  fixing  share  of  stock  or 
profits. — Equal  shares.  In  absence  of  agreement,  shares  presumed 
equal.   Unruh's  Estate,  13  Phila.  337  (iSSo). 

Presumption  of  equality  in  capital  and  profits.  A  &  B,  partners, 
submitted  to  arbitration.  By  the  award,  uncolledted  assets  were  di- 
vided equally.  A  had  a  claim  against  the  firm.— B  owed  1-2  the  debt. 
There  being  no  evidence  of  the  partners'  interests  in  profits  or  capital, 
their  shares  were  presumed  to  be  equal.  Farr  v.  Johnson,  25  111.  522 
(1S61). 

Partners'  interests  presumed  equal.  A,  B  &  C  owned  a  farm  in 
common,  and  managed  it  in  partnership.  A  lent  money  to  the  firm. 
His  executor  brought  account  against  B  &  C.  A  entitled  to  credit 
for  his  loan.  There  being  no  evidence,  the  interests  presumed  to  be 
equal.  Roach  v.  Perry,  16  111.  37  (1854). 


§37. 


^\\t  onin  pccnltaritTi  of  a  special  partner's  contribution  is  il)e 
statiitcinj  requirement,  tl)at  it  must  be  mabe  to  tlje  firm. 


82 


Pt.  I,  Ch.  2.  Antecedents.  §37. 

The  constru6lion  put  upon  the  statutory  mandate, 
enadled  to  enforce  the  special  partner's  contribution, 
is  a  marvel  of  hermeneutics.  The  courts  do  not 
recall  the  historical  facfl  that  the  partner  who  does 
not  join  in  the  management  of  the  business,  but 
makes  a  special  contribution,  has  never  been  charged 
with  unlimited  liability  by  the  LaAV  Merchant,  which 
England  adopted.  Having  lost  sight  of  his  original 
Status,  they  regard  him  as  an  exceptional  freak  of 
legislation,  and  proceed  to  put  him  outside  the  pale 
of  judicial  reasoning.  Whenever  a  special  partner's 
rights  are  at  stake,  trifles  become  the  staple  of  argu- 
ment, and  captiousness  the  ruling  spirit.  The  finical 
objections  constantly  taken,  in  order  to  charge  the  spe- 
cial partner  with  unlimited  liability,  are  incompre- 
hensible, especially  in  contrast  to  the  encouragement 
given  to  de  fafio  corporations  (§24),  which  are  advo- 
cated when  they  are  admitted  to  be  usurpations.^ 
The  reason  alleged  for  extirpating  a  special  partner- 
ship applies,  with  the  added  force  of  numbers,  to  dc 
faflo  corporations,  and  adds  a  new  gloss  to  the  biblical 
aphorism,  "strain  at  a  gnat  and  swallow  a  camel," 
and  exemplifies  in  law,  the  domestic  economy,  which 
"holds  in  at  the  spigot  and  lets  out  at  the  bung." 
Even  the  member  of  a  legal  corporation,  who  claims 
exemption  from  any  liability  beyond  his  contribution, 
can  make  out  his  immunity  only  through  the  pedigree 
of  the  special  partner. 

In  an  admirable  summary  of  the  authorities,  BATES 
has  stated  how,  though  that  was  not  his  purpose,  the 
statutes  enabled  in  the  different  States,  to  re-establish 
the  special  partnership,  which  the  courts  originally 
excluded,  have  been  used  by  them  to  frustrate  the 

83 


§27-  Antecedents.  Pt.  i,  Ch.  2. 

iuleiition  of  the  parties  to  this  commercial  contra6l.'' 
Out  of  the  letters  of  the  Statute,  as  SwiFT  did  out  of 
the  letters  of  the  paternal  will/'  they  made  for  a  com- 
mercial ena(5lment  an  artificial  construdlion,  which 
ignored  its  niison  (Tetre. 

Special  partnership  embodies  a  principle  necessary  for 
the  developement  of  modern  law.  It  is  a  general  principle 
of  the  connnercial  law  of  Europe,  and  of  America.''  The 
courts  of  England,  however,  excluded  special  partnership, 
although  the>-  professed  to  adopt  the  Law  Merchant.  The 
legislature  intervened,  to  correcft  the  blunder  and  to  re- 
establish a  limited  liability  in  commercial  enterprises.'' 
But  a  statutory  is  not  equal  to  a  judicial  developement, 
and  no  discrimination  was  made  between  the  joint  stock 
companies  which  could  be  organized  under  general  stat- 
utes. The  association  exists  on  the  continent  of  Europe 
without  legislation,  either  as  a  limited  or  as  a  special 
partnership.  Each  kind  may  be  formed  with  joint  stock, 
and  the  shares  will  represent  the  interests  of  the  partners. 
The  special  partnership  is  called  Societe  en  commandite 
par  aclions^  or  Gommanbitgcjeirfrfrnft  auf  2ktien ;  the  limited  part- 
nership, societe  anonyme^  or  2lctiengefeEfrf)aft.  The  vital  dif- 
fereuce  between  them  was  overlooked  by  Parliament. 
The  exemption  from  unlimited  liability  in  a  special  part- 
nership organized  as  a  joint  stock  company  extends  only 
to  the  members  who  take  no  part  in  the  management  of  the 
association,*^  but  extends  to  every  member  of  a  limited 
partnership  so  organized.  Two  evils  resulted  from  the 
refusal  of  the  courts  to  recognize  the  institute  as  part  of 
the  Law  Merchant.  First:  They  abnegated  the  judicial 
fundlion,  which  consists  in  working  out  the  principles  of 
law  into  a  coherent  system,  and  brought  about  what  they 
professed  to  abhor.  They  drove  away  applicants  who,  for 
refuge,  went  to  the  legislature,  which  permitted  partners 
to  organize  as  a  company,  and  restrict  their  liability  to 
the  amounts  contributed.      Second:    The  community  lost 

84 


Pt.  I,  Ch.  2.  Antecedents.  ^T^y, 

the  intelligent  direction  of  the  courts  in  working  out  the 
principles  of  partnership  law.  The  security  and  efficiency, 
which  result  from  the  unlimited  liability  imposed  by  the 
commercial  law  upon  the  managing  members  of  a  special 
partnership  association,  have  been  abandoned.  It  is  the 
want  of  this  wholesome  restraint,  and  of  the  caution  induced 
by  it  in  transacting  business,  that  accounts  for  the  exhibi- 
tion witnessed,  unfortunately  on  a  grand  scale,  of  specula- 
tion and  corruption,  by  companies  which  have  been  improvi- 
dently  substituted  for  special  partnership  associations.  A 
further  evil  resulted  from  throwing  upon  the  legislature  the 
work  which  belongs  to  the  courts.  The  exemption  from 
liability,  as  it  was  acquired  by  statute,  was  mistaken  for  a 
State  prerogative,  and  a  joint  stock  company  lost,  in  general 
estimation,  its  distincStive  character  as  a  private  organization, 
and  became  the  delegate  of  a  public  franchise.  This  miscon- 
ception obliterated  the  distin6lion  between  a  corporation  and 
a  company,'^  and  led  parties  to  seek  incorporation,  which 
was  the  avowed  grant  of  a  franchise.  The  universal  resort 
to  incorporation  for  private  enterprises,  led  the  State,  from 
weariness,  to  abandon  the  grant  of  charters,  and  to  permit 
self-incorporation  under  general  statutes.  The  State,  over- 
taxed by  the  applications  for  incorporation,  abnegated  its 
prerogative  and  deprived  itself  of  an  essential  fundlion. 
The  State  has  lost  its  initiative  in  public  enterprises,  and 
has  granted  indiscriminately  to  private  associations  the 
sovereign  prerogative,  which,  by  right,  can  be  exerted  only 
for  a  public  use,  or  for  the  common  benefit  of  all.  ® 

1.  In  his  dissenting  opinion,  Pa.  R.  R.  v.  St.  Louis,  A.  &  T.  H.  R.  R.  Co., 
(?24,  note7)Mr.  Justice  Bradley  urged  that  the  ursurpation  of  a  fran- 
ciiise  was  equal  to  a  charter.  This  redu/Iio  ad  absurdicm  is  in  glaring 
contrast  with  the  refusal  to  admit  a  special  partner's  legal  status,  unless 
he  sets  it  up  by  way  of  defence.  The  plaintiff  is  entitled  to  assume 
that  he  is7iot  a  special  partner,  and  to  proceed  against  him  asagenerat 
partner.  B  special,  C  and  D  general,  partners.  A  sued  all  three  for 
goods  sold  the  firm.  B's  defence  :  A  special  partner.  A  offered  to 
prove  B's  non-compliance  with  statutory  requirements. — Competent. 
Acflion  lay  on  general  liability  as  partners.  It  is  only  the  defence 
which  puts  A  to  proof  of  B's  failure  to  comply  with  the  Statutes. 
Sharp  V.  Hutchinson,  loo  N.  Y.  533  (1885) 

2.  The  Law  of  Limited  Partnership,  by  ClEMENT  Bates,  1886. 

85 


§27.  Antecedents.  1't.  i,  Ch.  2. 

3.  v^wii'T  jnils  llie  case  of  three  sons,  wlio  were  embarrassed  by  a 
commaiul  imposed  by  their  father:  "The  paternal  will  was  very 
"  precise,  and  the  main  precept  in  it  was  with  the  greatest  penalties 
"annexed,  not  to  add  to  or  diminish  from  their  coats  one  thread, 
"  without  a  positive  command  in  the  will.  Now  the  coats  their  father 
"had  left  them  were,  it  is  true,  of  very  good  cloth,  and  besides  so 
"neatly  sewn,  vou  would  swear  they  were  all  of  a  piece;  but  at  the 
"same'time  very  plain,  and  with  little  or  no  ornament,  and  it  hap- 
"pened,  that  before  they  were  a  month  in  town,  great  shoulder  knots 
"came  up;  straight  all  the  world  wore  shoulder  knots;  noapproach- 
"  ing  the  ladies  ;7^r//«  without  the  quota  of  shoulder  knots.  .  .  . 
"Our  three  brethren  soon  discovered  their  want,  by  sad  experience, 
"meeting  in  their  walks  with  forty  mortifications  and  indignities. 
".  .  In  this  unhappy  ca.'-e  they  went  immediately  to  consult  their 
"father's  will,  read  it  over  and  over,  but  not  a  word  of  the  shoulder 
"knot:  What  should  they  do?  What  temper  should  they  find? 
"Obedience  was  absolutely  necessary  and  yet  shoulder  knots  ap- 
"  peared  extremely  requisite.  After  much  thought  one  of  the  broth- 
"ers,  who  happened  to  be  more  book  learned  than  the  other  two 
"said,  he  had  found  an  expedient.  It  is  true,  said  he,  there  is  noth- 
"  ing  here  in  this  will,  tot  idem  verbis,  making  mention  of  shoulder 
"knots;  but  I  dare  conje(5lure,  we  may  find  them,  inclusive  ox  to'i- 
"detii  sytlahis.  This  distin6lion  was  immediately  approved  by  all ; 
"and  so  they  fell  again  to  examine ;  but  their  evil  star  had  so  directed 
"  the  matter  that  the  first  syllable  was  not  to  be  found  in  the  whole 
"writing,  upon  which  disappointment,  he,  who  found  the  former 
"evasion  took  heart,  and  said.  Brothers,  there  are  yet  hopes;  for 
"though  we  cannot  find  them  totidem  verbis,  nor  totidem  syllabis,  I 
"  dare  engage  we  shall  make  them  out  tertio  uiodo,  or  totidem  Uteris. 
"This  discovery  was  also  highly  commended,  upon  which  they  fell 
"  once  more  to  the  scrutiny,  and  soon  picked  outS,  H,  O,  U,  L,  D,  E,  R; 
"when  the  same  planet  enemy  to  their  repose  had  wonderfully 
"  contrived  that  a  K  was  not  to  be  found.  Here  was  a  weighty  diffi- 
"culty,  but  the  distingviishing  brother  for  whom  we  will  hereafter 
"  find  a  name,  now  his  hand  was  in  proved  by  a  very  good  argument, 
"thatK  was  a  modern  illegitimate  letter  unknown  to  the  learned 
"ages,  nor  anj'whereto  be  found  in  ancient  manuscripts.  It  is  true, 
"  said  he,  the  word  Calcndae  hath  in  Q.  V.  C.  been  sometimes  written 
"with  a  K  but  erroneously ;  for  in  the  best  copies  it  has  been  ever 
"  spelt  with  a  C.  And  by  consequence  it  was  a  gross  mistake  in  our 
"language  to  .spell  knot  with  a  k  but  from  henceforward  he  would 
"take  care  it  should  be  written  with  a  C.  Upon  this  all  further  diffi- 
"  culty  vanished.  Shoulder  knots  were  made  out  to  be  clearly  jure 
''patenio."    Swift's  Works,   "Tale  of  a  Tub,"  III  Vol.  82,  ed.  1S03. 

The  courts  took  the  .statutory  language,  and  spelt  out  the 
word  N,  O,  N,  D,  E,  S,  C,  R,  I,  P,  T,  for  the  special  partner. 
They  did  not  classify  him  as  a  partner,  except  to  vidlimize 
him  for  the  non-observance  of  any  trifling  formality,  but  they 
treated  him  as  an  anomaly  in  law.  If  the  legislature  had 
not  ena6led  him  a  partner,  the  profession  would  have  made 
him  a  creditor.  ^  As  it  is,  he  runs  the  gantlet  of  the  Pro- 
fession.^ 

86 


Pt.  I,  Ch.  2.  Antecedents.  §37. 

a.  "Au  foncl,  obje6tera-t-on  que  la  limitation  de  la  responsabilite  aux 
"  mises  des  associes  est  contraire  a  ce  priucipe  du  droit  civil  d'apres 
"  lequel  quiconque  s'oblige  tous  ses  biens?  Mais  ce  principe 
"  n'est  qu'une  regie  geuerale,  susceptible  d'etre  amendee  par  conveu- 
"  tion  ;  caril  est  incoutestablenientpertnis  delimiter  son  engagemeut 
"a  certain  biens;  cette  limitation,  qui  devient  la  regie  dans  lessocietes 
"  commerciales,  serait  valable  a  titre  d'exception,  dans  les  societes 
' '  civiles  ordinaires,  et  obligatoire  vis-a-vis  des  tiers  si  elle  etait  connue 
"  d'eux.  Or  cette  connaissance  leur  sera  donuee  au  moyen  de  la  pub- 
"  licite  exigee  par  la  loi  comnierciale."     Vav.,  s   34S. 

vSpecial  partnership  is  not  a  kind  of  partnership,  but  is  a  modifica- 
tion of  general  partnership.  Marshall  v.  Lambeth,  7  Robinson  La.  47 
(1844). 

Foreign  speaal partnership  recognized  by  comity.  B,  special,  and 
C  and  D  general  partners,  in  Cuba,  trading  as  C,  D  &  Co.  B,  who 
had  never  adled  or  held  himself  out  as  a  partner,  failed  to  observe  the 
statutory  requirements  of  contribution  in  cash,  and  of  recording  cer- 
tificate, which  were  held  direcftory  in  Cuba.  A  lent  the  firm  money 
in  N.  Y. ,  and  sued  B  as  a  general  partner. — ^Judgment  for  B.  Cuban 
special  partnership  recognized  by  comity.  King  v.  Sarria,  69  N.  Y.  24 
(1877). 

Foreign  process  against  special  partnership  regulated  by  foreign 
law.  B,  general,  and  C,  special,  partners,  who  traded,  in  Massachu- 
setts, in  B's  name,  suspended  payment.  D,  a  Massachusetts  creditor, 
attached  debts  due  the  firm  B,  in  New  York,  Alabama  and  Arkansas, 
and  recovered  the  claims.  A,  B's  assignee  in  insolvency,  sued  D  for 
the  amount  colledled. — Judgment  for  D.  Though  equity  would  not 
let  D  obtain  a  privilege  by  attaching  insolvent's  property  in  another 
State,  the  law  does  not  take  away  the  privilege  when  thus  obtained. 
The  attachments  against  B  bound  the  firm,  because  the  Massachusetts 
Statute  made  B's  name  the  firm  designation,  and,  although  without 
extra  territorial  force,  is  recognized  as  the  law  of  the  partnership. 
Though  attachments  invalid  and  payment  by  garnishees  voluntary, 
A  could  not  recover  from  D ;  the  judgments  cannot  be  impeached 
in  this  collateral  suit.  Special  partner,  if  unknown,  should  no  more 
be  joined  as  defendant  than  dormant  partner.  Lawrence  v.  Bacheller, 
131  Mass.  504  (1881). 

b.  Law  of  Partnership,  by  NathaxieIv  Lindley,  i  vol.  6,  et  seq. 

c.  Renaud,  ^13,  p.  94. 

d.  "Confirmatio  (apud  Anglos  'charter')  Societatis  a  Principe  impe- 
"trata  num  ad  valorem  contradlus  requiratur,  fludluat  sententiajuris- 
"consultorum.  Alii  enim  utique  eam  desiderant,  alii  omitti  posse 
"aiunt,  alii  pro  casuum  diversitate  mode  hoc  modo  illud  statuunt 
"verum  esse.  Re  accuratius  perpensa  verius  mihi  hoc  visum  est. 
"  Distiuguendae  sunt  societates  innominatae  ex  diversitate  opens, 
"quod  faciendum  suscipitur.  Illae  enim,  quarum  finis  est,  ut  res 
"aliqua  negotiumve  ad  imperantis  jura  pertinens  expediatur,  valide 
"iniri  absque  Principis  assensu  nequeunt.  Ita  ad  rem  metallicam 
"  exercendam,  ad  Salinas  struendas  non  sufficit  privatorum  conventio, 
"quoniam  regalibus  ista  accensentur;  neque  ad  canales  fodiendos 
"ferreasve  vias  sternendas  sufficit  societas  privata,  quia  territorio 
"opus  est  et  inviti  ad  vendendos  fundos  domini  expropriationis  lege 
"  compellendi  sunt.  Huiusmodi  igitur  societates  validae  esse  absque 
"confirmatione  non  possunt,  quia  antequam  haec  impetrata  est, 
"parum  constat,  liceatne  opus  perficere  nee  ne. "  Societates  Innomi- 
natae, by  Dr.  Fred.  Fransc.  FiJssEL,  ch.  Ill,  ^3,  Lipsiae,  1842.    This 

8  7 


5r- 


Antecedents.  1't.  i,  Ch.  2. 

view  IS  rotisistont  with  thai  of  the  I-aculty  of  Ivcipsif,' jurists  :  "Quae 
••  »4K-ut;iUiii  aiioiivmain  statuit  esseuniversitatem,  additque, pa<5tum, 
•'iiu..  i-.insiiiuaiiti'ir  uiiivcrsitates,  jure  Romano  non  msignitum  nom- 
"  iiic  iKCiihari.  non  aliud  esse,  ac  quod  in  constituenda  republica'  pac- 
"tum  unuinis  et  ordinationis'  soleat  dici ;  ipsam  universitatem  ab  eo 
"  imlf  monicnto  txisterc,  quo  membra,  se  earn  ])ro  constituta  habere, 
"(Ictlaraverint;  confirmationeni  publicam  uonnisi  positivo  jure  Ro- 
'•  mano  et  particulari  rcquiri,  ideoque  etiam  absque  hac  a  membris 
"ipsis  cotnunctioncm  illam  pro  universitate  esse  agnoscendam." 
SiH-irtiitrs  Inuomiuatac,  supra,  <(4,  n.  23. 
S^aft  JlcticnUKfcn,  w\\  S.  3lucrbadi,  1873,  ^p.  3-i. 

e.  "The  r.encral  Assembly  shall  not  pass  any  local  or  special  law  .  . 
"  creating  coq)oratious,  or  amending,  renewing  or  extending  the 
•'charters  thereof,  .  .  .  nor  indiredlly  enadl  such  special  or  local 
"  law,  bv  the  jjartial  repeal  of  a  general  law."  Constitution  of  Penn- 
sylvania, 1874,  Art.  Ill,  'i~. 

/.  Special  partner's  interest  a  chose  in  aflion.  A,  B  and  C,  special 
partners,  D  general  partner.  On  E's  execution  against  A,  sheriff 
sold  his  interest  in  the  firm  to  K,  without  levy  upon  or  view  of  the 
stock.  A  claimed  the  share. — Recovered.  His  interest  a  chose  in 
action,  and,  tlierefore,  not  subje<5lto  execution.  There  could  be  no 
levy  on  the  stock  to  sell  special,  like  general,  interest,  because 
special  partner  has  uo  right  of  control  over  firm  property.  Resem- 
bles a  debt  rather  than  an  interest  in  property,  or  even  a  share  of 
coqwrate  stock.  Probablv  not  a  debt  at  all.  Harris  v.  Murray,  28  N. 
Y.  574(1864). 

Special  partner  cannot  claiui  re-payvtcnt  of  loan  made  apart  from 
his  contribution,  unfit  firm  creditors  are  satisfied.  Special  partner, 
A,  lent  money  to  the  firm  beyond  his  contribution,  and  claimed  as  a 
creditor  against  th'.-  fund  in  the  hands  of  B,  the  receiver.  Defence : 
Statute  postpones  A  to  firm  creditors.  Reply  :  Loan  made  not  as  a 
contribution,  but  as  an  independent  transaction. — ^Judgment  for  B. 
Statute  makes  no  distindlion,  but  puts  all  loans  on  the  footing  of  the 
contribution.  White  v.  Hackett,  20  N.  Y.  178  (1859). 

g.  ExaR  compliance  ii'ith  statutory  requirements  necessary  to  proteEl 
special  partner.  B,  general,  and  C,  special  partner.  All  the  statutory 
requirements  were  observed,  but  the  advertisement  contained  a  mis- 
print of  the  amount  contributed  by  C,  which  was  announced  as  $5,000, 
uistead  of  |2,oocj.  A  sued  C,  as  general  partner,  for  goods  sold  to  the 
firm.— Recovered,  (ieneral  lialjility  the  penalty  for  the  inaccurac}-. 
Argall  v.  Smith,  3  Denio  435  (1846). 

A  et  al.  sued  15,  special  partner  in  C  &  Co.  Affidavit  of  C,  for 
renewal  of  partnershij),  stated  that  B  had  contributed  |.5o,ooo,  and  it 
^'remains  in  the  common  stock  of  said  firm."— Liable.  Affidavit 
insufficient,  because  it  did  not  explain  the  state  of  the  contribution. 
Haddock  v.  C.rinnell  IManuf'g  Corp'n,  16  W.  N.  549  (1S85).  ' 

Chaui^e  of  place  of  business,  zvithout  recording  certificate,  charges 
shenal  a%  general  partner.  Insolvency  of  surviving  partner,  found 
but  not  defined,  presumed  to  be  total  after  juds:menCas:ainst  survivifig 
and  executors  of  deceased  partner.  B,  general,  and'c,  special,  part- 
ners in  New  York.  I'irm  moved  its  place  of  business  to  Kings  Co., 
but  did  not  record  a  certificate  there.  A. sold  goods  to  the  firm  in 
Kings  Co..  and  .sued  B  and  executors  of  C.  Referee  found  B  insolvent. 
iJefence:  In.solvency  ambiguous.  Plaintiff  must  show  total  insolv- 
ency-, or  execution  unsatisfied.— Recovered.  C  liable  as  general 
partner.     C  should,  at  the  reference,  have  compelled  A  to  prove  that 

88 


Pt.  I,  Ch.  2.  Antecedents.  §37. 

he  had  exhausted  B's  resources.  Afterwards,  total  insolvency  is 
presumed,  iu  order  to  uphold  the  judgment.  Riper  v  Poppeuhausen, 
43  N.  Y.  68  (1870). 

Special  partner  becomes  general  bv  disposing  oj  Jinn  assets  after  its 
failnre.  Contracl  to  pay  jinn  liabilities  not  merged  in  indemnity  to 
jinn  and  to  contraFling  partner.  C  agreed,  in  April,  1872,  to  furnish 
means  and  merchandise  to  carry  on  firm  of  B  &  Co.,  and  indemnify 
A,  the  special  partner,  if  he  would  continue  his  contribution  for  two 
years.  B  &  Co.  failed  in  May,  1872,  and  all  the  partners  were  ad- 
judged bankrupts.  C  assigned  for  creditors,  to  I)  &  Co.,  and  all  his 
creditors  joined  in  the  deed  in  November,  1S72.  Then  a  settlement 
was  made  among  all  the  parties:  A  gave  up  the  agreemei;t  of  April, 
surrendered  claims  against  C,  agreed  to  pay  commercial  paper  nego- 
tiated for  B  &  Co.,  and  paid  C  |;37,ooo.  The  bankruptcy  proceedings 
were  dismissed  by  consent.  B  &  Co.  assigned  their  assets  to  C,  who 
agreed  to  pay  B  &  Co. 's  debts  and  indemnify  B  &  Co.  and  A.  D  & 
Co.  guaranteed  C's  contracfl.  A  sued  D  &  Co.  Defence:  As  A  did 
not  pay  debts,  he  cannot  claim  reimbursement. — Contract  to  pay 
independent  of  indemnity,  and  covered  liabilities.  A,  by  joining  in 
assignment  of  B  &  Co.  and  advancing  money  to  C,  became  liable  as 
general  partner,  and,  as  such,  had  been  adjudged  bankrupt  by  final 
decree.  A  obtained  relief,  C  firm  assets  and  A"s  cash  to  meet  his 
liabilities,  and  D  &  Co.  possession  of  C's  property.  Guaranty  part 
of  settlement.  C  would  have  recourse  in  equity  for  endorsement 
made  for  B  &  Co.   Farnsworth  v.  Boardman,  131  Mass.  115  (1881). 

Creditor  of  general  partners^  ivithout  knowledge  of  the  special  part- 
nership, may  hold  firm  assets  received  in  satisfaBion  of  his  claim 
against  a  firm  creditor's  attachment.  A  dissolved  partnership  with 
B  and  C,  as  carriage  makers,  and  took  their  note  for  his  balance  of 
account.  B  &  C  continued  the  business  alone  for  a  month,  and  then 
formed  the  new  partnership  of  B  &  Co. ,  with  D,  E  and  F  as  special 
partners.  B  and  C  sold  A,  who  did  not  know  of  the  special  partner- 
ship, three  carriages,  in  payment  of  their  note,  which  A  surrendered 
to  them.  G,  creditors  of  the  special  partnership,  attached  the  car- 
riages as  its  property,  and  A  replevied  it.  Defence  :  B  and  C  could 
not  appropriate  firm  assets  to  the  payment  of  their  separate  debt. — 
Recovered.  The  special  entrusted  the  general  partners  with  authority 
to  dispose  of  the  firm  property  as  their  own,  and  their  separate  creditor 
may  receive  from  them,  in  payment  of  his  debt,  firm  assets,  which  he 
believes,  from  their  apparent  ownership,  to  be  their  individual  prop- 
erty. A  and  G  both  innocent  parties.  G  is  identified  with  B  &  Co., 
who  enabled  B  and  C  to  deal  as  owners,  and  must  bear  the  loss.  Locke 
V.  Lewis,  124  Mass.  i  (1878). 

The  whole  machinery  of  the  Statute  has  but  one  purpose, 
that  is,  to  notify  strangers,  who  is  the  special  partner,  and 
what  is  his  contribution.''  If  they  already  know  these  two 
fa6ls,  their  knowledge  dispenses  with  the  notice  for  which 
the  Statute  provides.  The  Statute  could  not  be  misunder- 
stood, for  it  enadled  the  commercial  principle,  which  pre- 
vailed everywhere  else,  in  order  to  make  it  a  part  of  the 
Common  law.  The  beacon  light  of  experience  was  equal 
to  the  illuminated  pathway  of  the  Israelites:    "The  Lord 

89 


§,7.  Antkcedents.  Pt.  I,  Ch.  2. 

"went  »K-forc  them  by  day  in  a  pillar  of  cloud,  to  lead  them 
•'the  wav;  and  by  ni^-ht  in  a  pillar  of  fire,  to  give  them 
"li>fht:  to  fro  In-  day  and  night.'"  Men  trusted  to  the  good 
faitli  of  the  judges  in  applying  the  language  to  business 
Iransaclions.  How  the  commercial  world  was  deceived  is 
shown  in  tlie  business  wrecks  among  special  partners. 
Look  at  the  method  of  constru6liou  resorted  to  by  the 
courts.  The  Statute  requires  a  contribution.  The  special 
partner  is  made  to  pa>'  it,  and  his  co-partners  to  swear  to 
tlie  ixiyment  on  the  date  of  the  contrail  of  partnership,  or 
of  its  renewal,  otherwise  the  payment  counts  for  nothing. 
The  s|x-cial  partner  ma)-  be  in  Europe  on  that  day.  The  im- 
possibility is  no  excuse  for  non-compliance.  If  the  special 
partner  anticipates  the  difficulty,  and  obviates  it,  by  giving 
liis  check  in  advance,  he  is  denounced  for  seeking  to  defraud 
the  Statute,  and  the  partners  are  charged  with  perjury, 
although  both  check  and  affidavit  relate  to  the  date"  of  part- 
nership, and  are  good  at  that  time.^ 

A.  Statiilory  requirements,  omitted  -in  forming  special  partnership, 
tntisl  he  constituents  of  it,  in  order  to  charge  special  as  general  part- 
tifr.  R  was  special  partner,  and  received  a  percentage  on  gross  sales, 
instead  of  a  share  in  the  profits.  He  once  consulted  wth  the  general 
p.irtjKTs,  and  telegraphed  the  standing  of  the  firm  to  N.  Y.  Minor 
rei|iiirements  of  the  Statute  \vere  not  observed  in  forming  the  part- 
nershij).  A,  et  al.,  sued  B,  as  general  partner. — Not  liable.  Record 
of  si)ecial  partnership  ample  protection  to  creditors,  and  irregulari- 
ties, not  inconsistent  with  special  partnership,  disregarded.  Tele- 
gram might  have  been  sent  by  a  stranger.  Ulman  v.  Briggs,  32  La. 
.•\n.  657  (1H80). 

/       2  Moses  xiii;  21. 

J.  Statement  and  payment  of  special  partner' s  contribution  must  coin- 
cide in  date  with  the  contrah  of  partnership.  B  special,  C  and  D 
general  partners.  Certificate  and  affidavit,  23  December,  1870,  stated 
amount  of  contribution  ])aid  in  cash  for  partnership,  to  begin  i  Jan- 
uary, 1.S71.  B  gave  his  check,  31  December,  1870,  which  was  paid  2 
January,  1871.  the  ist  being  vSunday.  A  sued  B,  C  &  D  on  promissorv 
.f  finn.— Recovered.     Certificate  and  affidavit  not  read  as  of  the 


L>uran 


'■>  which  they  referred  for  commencement  of  the  partnership. 
JU  V.  /Vrbeudroth,  69  X.  Y.  148  (1877);   97  N.  Y.  132  (1884). 


Pt.  I,  Ch.  3.  Antecedents.  §38-39. 

§38. 

^f  t\)c  contribution  nia^c  to  tl)e  tirni  bu  a  partner  consista  of 
fungible  propertn  roljici)  tiocs  not  belong  to  l)ini,  but  tol)icl)  l)as  been 
put  into  l)is  l)ani!is  for  use,  tlie  owner  cannot  reclaim  it  troni  tl]e 
firm. 

The  transfer  of  title  by  the  partner  to  the  firm  does 
not  exceed  his  authority,  as  it  is  a  use  by  the  partner 
in  conjunction  with  his  co-partners,  and  the  firm  ac- 
quires by  the  use  a  right  to  the  property.  If  the  owner 
deposits  money,  or  its  equivalent,  with  the  partner  for 
use  by  him,  the  deposit  is  in  effe61;  a  loan,  but  not  to 
the  firm.  A  debt  results  from  the  use  of  the  deposit 
by  the  partner  in  the  business,  and  the  owner  must 
look  only  to  the  partner  as  his  debtor.  The  firm, 
although  it  uses  the  deposit  as  capital  stock,  does  not 
owe  its  value  as  a  debt  to  the  proprietor.' 

I.  Firings  use  of  gold  deposited  with  partner  for  use  by  him,  does  not 
charge  the  Jinn.  A  sent  gold  dust  from  California  to  his  sister  B,  the 
wife  of  C.  D,  the  partner  of  C,  urged  both  A  and  C  to  use  it  as  stock, 
but  A  lent  it  to  C,  and  it  was  used  in  the  business.  C  died,  and  A  sued 
D. — No  acflion  lay.  The  fund  was  contributed  by  C,  and  the  firm  was 
not  liable  for  it.   Donnally  v.  Ryan,  5  Wr.  306,  Pa.  (1861). 


§39. 

(al)e  element  of  trust,  if  complicatei^  miti]  tl)e  contribution,  cljanges 
tl)e  djaracter  of  tl)e  transaction. 

Upon  what  theory  does  the  law  charge  a  trustee 
for  the  profits  which  he  makes  by  trading  with  trust 
funds?  It  has  been  said:  The  law  does  not  suggest 
a  breach  of  duty  and  impute  it  to  the  trustee,  but 
adopts  the  natural  inference  that  he  is  ailing  in  the 

91 


^-p^  Antecedents.  Pt.  i,  Ch.  2. 

performance  of  his  duty.  The  profits  belong  to  the 
iKMieficinrics,  because  the  trustee  a6led  for  them  in 
trading  with  the  trust  fund.  The  a(5l  being  done  on 
behalf  of  the  beneficiaries,  they  are  entitled  to  ratify 
it.  The  right  of  eledlion  results  from  the  trustee's 
a(5l  of  trading  for  them  with  the  trust  fund.'  But  the 
trustee's  conduct  does  not  admit  of  such  an  explana- 
tion. He  is  prohibited  by  law  from  doing  the  acft 
which  is  alleged  to  be  a  performance  of  duty.  With 
the  prohibition  staring  him  in  the  face,  he  refuses  to 
invest  the  fund  in  legal  securities,  as  he  is  direcfted  to 
do,  and  disobeys  the  iujunc^tion  of  the  law.  He  pro- 
ceeds a  step  further,  and  embarks  in  a  speculation 
witli  the  trust  fund.  The  acfl  of  the  trustee  is  a  viola- 
tion of  law  and  a  breach  of  the  trust  by  him.  The 
only  performance  of  duty  which  he  could  make  would 
be  a  legal  investment  of  the  fund.  Anything  else  is 
the  non-performance  of  duty. 

.\  partner,  therefore,  who  holds  trust  money,  with 
no  authority  to  contribute  it  to  a  firm,  and  who  does 
nevertheless  employ  it  for  that  purpose,  commits  a 
breach  of  trust.'"^  The  trustee  might  invest  the  trust 
fund  in  a  partnership  without  an  intention  to  defraud 
the  ccstuy  que  trusty  but  the  contribution  would  not  be 
a  lawful  investment.  There  would  be  no  tangible 
security  for  a  return  of  the  fund,  not  even  a  promise 
to  repay  it  by  the  partners.  The  money  would  be  at 
the  risk  of  the  business,  in  other  words,  a  speculation. 

1.  Lord  Ardmillan's  opinion,  Laird  v.  Chisholm,  ^o  Scottish  Tur. 
584(1858).  -^  -* 

2.  Ward  may  reclaim  the  funds  ivhich  guardian  used  as  a  partner  in 
his  firm,  from  assignee  for  creditors.  B,  guardian  of  A,  put  ward's 
money  in  the  firm  of  B  &  C.  B  died  insolvent,  and  his  sureties  were 
also  insolvent.  C  assigned  for  creditors  to  D.  A  brought  bill  against 
V.  ann  jj.  to  recover  trust  funds  in  preference  to  creditors.— Recovered. 
Larter  v.  Lipsey,  70  Geo.  417  (1883). 

92 


Pt.  I,  Ch.  2.  Antecedents.  §4xx 

§40. 

©[jE  orbinarp  fonseqnence  u)l)tcl)  follotus  t\)t  misuse  of  trust 
t'uniis,  enables  tl)E  ccstiiy  que  trust  to  redaim  from  tl)c  ttrm  X\\t 
moneg  coutributcLJ  to  it  bn  ti)£  trustee.. 

It  is  only  a  purchaser  for  value  and  without  notice 
who  prevents  a  pursuit  of  the  funds.  He  is  protedled, 
and  the  cestuy  que  trust  then  looks  to  the  considera- 
tion as  a  substitute  for  the  property.  The  firm  can- 
not deny  the  cestuy  que  trusfs  right,  and  claim  to  be 
considered  a  purchaser  for  value  and  without  notice, 
from  the  partner,  who  contributes  the  trust  funds. ^ 
The  firm  is  not  a  person  existing  apart  from  its  mem- 
bers, but  an  aggregate  of  the  partners.  The  contribu- 
tion does  not  pass  to  the  co-partners,  and  enable  them 
to  claim  it  as  purchasers,  for  then  it  would  be  their 
separate  estate.  So  far  as  the  separate  estate,  from 
which  the  consideration  moved,  is  involved,  they  are 
entitled  to  protection,  and  would  be  exonerated  from 
liability,  were  it  not  for  the  nature  of  the  C.  L.  contradl 
(§  102).  But  the  contribution  remains  the  property  of 
the  contributing  partner,  shared,  during  the  partner- 
ship, with  his  co-partners.  The  cestuy  que  trusty  in 
reclaiming  it  from  the  firm,  takes  it  back  from  the 
trustee,  and  from  his  co-partners,  who  have  paid  noth- 
ing for  it  out  of  the  joint  estate,  but  simply  added 
something  to  it  in  the  joint  stock.  The  firm,  there- 
fore, is  a  volunteer,  and  by  the  doctrine  of  equity  the 
trust  fund,  if  it  is  identified,  may  be  followed  into  the 
hands  of  the  trustee,  or  of  a  volunteer,  or  even  of  a 
purchaser  for  value,  if  he  had  notice  of  the  trust. 

The  character  of  a  partnership  is  often  overlooked, 
and  the  attributes  of  a  person  are  inadvertently  given 

93 


540.  Antecedents.  Pt.  i,  Ch.  2. 

to  the  firm.  It  is  said  that  a  partner  may  lend  trust 
fiuuls  to  his  firm,  and  if  his  co-partners  are  ignorant 
of  the  breach  of  trust  committed  by  him  in  making 
the  loan,  they  will  not  be  affec1:ed  by  the  breach,  but 
will  be  entitled  to  hold  the  funds  as  firm  property,  for 
which  they  will  be  indebted  only  to  the  co-partner  as 
;i  lender,"  who  will  alone  be  liable  to  the  ccstiiy  que 
trust?  But  the  distinction  taken  between  a  loan  and 
a  contribution  of  trust  funds  by  a  partner  to  his  firm, 
has  no  foundation.  If  there  were  any  difference, 
the  tort  of  a  partner  in  acquiring  his  contribution 
would  affecl  his  co-partners  the  least.  Inasmuch  as 
the  contribution  is  an  independent  transadlion,  ante- 
rior to  the  partnership,  it  might  be  urged  that  the  co- 
partners should  not  be  implicated  by  the  partner's 
fraud.  But  no  such  argument  could  be  made  when 
the  partner  procures  money  after  the  firm  has  been 
formed.'  He  cannot  a(5l  in  an  independent  capacity, 
for  he  represents  the  firm,  which  must  necessarily  be 
affe(5led  by  his  knowledge  acquired  in  the  very  trans- 
action. 

I.    The  suggestion  of  Mr.  Justice  Lindley,  i  Partnership  329. 

J.  LoUDji'STicE  James  speaks  of  the  eledlion  between  interest  and 
pruliLs  ill  the  case  of  "an  actual  loan  bv  a  trustee  in  breach  of  trust 
to  himself  and  others,"  meaning  partners.  Vyse  v.  Foster,  L,.  R.  7 
Ch.  334(1872). 

3.  ^  Parinci^s  use  0/ trust  funds  in  his  firm  does  not  charge  it.  B,  in  New- 
York,  and  C,  in  New  Orleans,  partners.  B  wentsurety  for  A.  Upon 
debtor.  IVs.  default,  lie  gave  for  A's  security  an  order  to  B,  though  in 
H  &  C's  name,  for  merchandise,  which  B,  without  C's  knowledge, 
sold  and  applied  for  the  firm.  A's  assignee  brought  assumpsit  against 
H.  iK-feucc  :  Nonjoinder  of  C— Recovered.  B's  separate  debt,  and 
L  not  made  a  co-debtor  by  application  of  trust  fund  for  firm.  Jaques 
V.  Miirquand,  6  Coweu  497,  N.  Y.  (1826). 


,  . „  .^^owledsre.     j.^^  y^^-^<, 

ZZL  ?nTf'^  ^"J  ^\  ,''"'^  embezzled  by  him.  A  &  Co.  brought  bill 
againsi  ji  6:  L.— Lial)le  to  account.  Misapplication  charged  fimi,  and 
repayment  to  partner  no  exoneration.  Rvan  v.  Morrell,  21  Reporter 
^,i,  Ky.  (1885).    Infra  <4i,  notes  i  and  4.' 

94 


Pt.  I,  Ch.  2.  Antecedents.  §41. 

Trust  funds  put  by  trustee  paiiner  in  his  firm  creates  a  firm  lia- 
bility. B,  acimiuistrator,  aud  also  guardiau  of  E,  lent  funds  of  dece- 
dent to  firm  of  B,  C  &  Co.,  which  became  insolvent,  and  executed  a 
note  for  the  loan,  and  a  trust-deed  of  lands  to  secure  it.  Firm  cred- 
itors attached  the  lands.  A  foreclosed. — Recovered.  Firm  liable  for 
fund,  and  security  binding.    Bush  v.  Bush,  33  Kan.  556  (1885). 

Partner's  conversion  of  trust  funds  to  firm  use  -makes  the  partners 
liable  to  the  cestuy  que  trust.  B,  United  States  deputy  collector  of 
internal  revenue,  with  knowledge  of  C,  his  co-partner,  converted 
money  received  by  him  to  the  use  of  firm  B  &  Co.,  which,  becoming 
insolvent,  executed  a  judgment  bond  of  indemnity  to  D  et  al.,  sureties 
on  B's  official  bond.  Judgment  entered  up,  and  firm  stock  sold.  A 
et  at.  enjoined  E,  sheriff,  from  paying  proceeds  of  execution  to  D  et  at. 
— Bill  dismissed.    Wharton  v.  Clements,  3  Del.  Ch.  209  (1868). 


§41. 


(^[]£  cestuy  que  trust  man  tuaice  tl]c  tart  of  tl]e  partner  in 
misapprcipriating  tl]e  trust  funibs,  anb  rrcocrr  of  tl)c  ttrm  in 
assumpsit  tl]e  proreebs  us£li  in  tl)e  business. 

The  tort  of  a  partner  does  not  implicate  his  co- 
partners, unless  they  derive  a  benefit  from  the  wrong 
which  he  has  committed.  If  the  firm  received  the 
proceeds  of  the  tort,  the  defrauded  owner  may  waive 
the  tort,  and  recover  the  proceeds,  or  its  equivalent. 
The  recover}'-  is  not  founded  on  a  contract,  or  a  debt. 
The  proprietor  simply  follows  his  property  into  the 
hands  of  the  firm,  which  has  no  title  to  it,  and  compels 
a  surrender  of  the  possession.  If  restoration  can  not 
be  made,  an  equivalent  is  exadled,  in  lieu  of  the  prop- 
erty.' The  co-partners  can  make  no  defence  to  the 
reclamation  of  the  owner,  as  they  gave  no  value  for 
the  proceeds,  and  though  the}'  had  no  knowledge  of 
the  fraud,  equity  requires  a  purchaser  for  value  to 
intervene  before  it  will  arrest  the  proprietor  in  the 
pursuit  of  his  property. - 

95 


5^1  Antecedents.  Pt.  i,  Ch.  2. 

Following  trust  fuuds  into  partnership  seemed  nat- 
ural among  the  Romans,  because  no  individual  lia- 
bility of  an  innocent  partner  was  involved.  The  firm 
ha.s  received  the  funds,  and  is  obliged  to  restore  them, 
with  the  penalty,  or  profits  acquired  by  their  employ- 
ment. The  right  of  the  ccstny  que  trust  to  waive  the 
tort,  and  proceed  direclly  for  the  money,  is  a  clear 
equity.  The  collision  of  rights  occurs  when  an  inno- 
cent party  is  brought  into  the  transaction.  The  part- 
ner who  was  not  concerned  in  the  breach  is  made  to 
pay  the  money,  though  this  would  simply  make  him 
the  victim,  instead  of  the  cestuy  que  trust.  The  loss 
is  shifted  from  one  innocent  man  to  another.  The 
Romans  limited  the  recovery  to  partnership  assets, 
and  this  makes  a  simple  case.  If  we  could  limit  the 
firm  liability,  when  once  admitted,  to  the  joint  effe6ls, 
the  problem  would  be  solved.  Should  the  innocent 
partner  pay  for  his  co-partner's  theft?  It  would  seem 
not.  if  he  did  not,  in  the  language  of  Ulpian,^  know  of 
it.  If  ignorant  of  the  fraud,  he  should  be  exempt  from 
personal  liability.  The  rights  being  equal,  the  loss 
would  not  be  changed,  but  would  remain  where  it 
originally  stood.  The  liability,  ///  persojimn^  of  a 
partner  arose  only  when  his  co-partner  put  the  con- 
sideration into  the  firm  assets.  Then  the  firm  re- 
ceived the  benefit,  and  as  each  received  the  goods  in 
facl,  each  must  restore.  The  a6lual  receipt  by  the 
firm  is  the  facl  which  fixes  the  partners'  liability."* 

'  ■  C7'',"T  ^  ""'  ("f  trust  funds  in  the  firm  charges  his  co-partners.  B 
III  I  l)jl;i.lelplna.  and  C  and  D,  in  New  Vork,  partners  as  stock-brokers. 
I),  executor  of  A,  without  B's  knowledge,  except  in  one  instance,  lent 
securities  of  A's  estate  to  the  firm,  which  used  them  in  its  business. 
On  iLs  failure,  A's  administrator  d.  b.  n.  sued  B  in  assumpsit.— Re- 
V^^.  f  M  ^^  '*"•  ■^•''"^'^'  ^vithout  notice  of  the  borrowing  or  con- 
version of  the  securities.  Guillou  v.  Peterson,  8  Norris  163,  Pa.  (1870). 

96 


Pt.  I,  Ch.  2.  Antecedents.  §42. 

2.  In  New  York  the  firm  is  regarded  as  a  purchaser  for 
value 

Trust  J'lDtdx  cannot  be  recovered,  altlwui!;li  identified.  B  <S:  C,  part- 
ners for  purchasing  and  couducfting  a  hotel.  B  contributed  trust 
funds  of  A,  without  C's  knowledge.  B  sold  his  share  to  D,  who  had 
no  notice  of  the  trust.  A  sued  for  as  much  in  the  value  of  the  hotel 
as  his  money  had  purchased.  D's  defence  A,  B"s  creditor,  and  enti- 
tled only  to  account  of  B's  interest, — Defence  sustained.  D,  a  bona 
fide  purchaser  for  value.  Hollemback  v.  More,  44  N.  Y.  Sup'r  Court, 
107  (1878). 

The  cestuv  que  trust  cannot  prove  even  against  the  joint  estate. 
Millett  V.  Stringer,  17  Abb.  Pr.  152,  N.  Y.  (1858). 

3.  D.  17,  2,  55. 

4.  Firm's  receipt  of  trust  fund  charges  the  partners  for  its  return. 
Cestuy  que  trust  sued  surviving  partner  in  assumpsit,  for  trust 
monej-s  which  his  deceased  partner  had  employed  in  the  business 
without  his  knowledge. — Recovered.  Having  received  the  benefit 
of  the  trust  fund,  the  defendant  should  make  it  good  to  the  plaintiff. 
Welker  v.  Wallace,  31  Ga.  362  (i860). 


§42. 


5ll)e  cestuy  que  trust  is  entitleii  to  recanrr  not  onlii  tl^c  trust 
funli  £inploi]£ii  in  tl)c  tirm,  or  contributeii  to  it  bn  tl)C  trustee 
partner,  but,  in  abolition  to  it,  tl)e  sliare  of  profits  u)iyicl)  tl)e  firm 
maiie  bn  tl)e  use  ot  tl)e  funb. 

The  authorities  made  a  distindlion  between  the 
trustee  partner  and  his  co-partners.  In  this  aspe6l, 
the  co-partners  do  not  commit  a  breach  of  trust,  be- 
cause they  are  not  trustees.  No  obligation  rests  on 
them  to  invest  the  property  of  the  cestiiy  que  trust  in 
authorized  securities,  and  the  prohibition  not  to  trade 
with  trust  funds  is  not  directed  to  them.  The  benefi- 
ciaries may  reclaim  the  fund,  with  interest,  because  it 
does  not  belong  to  the  partners,  and  the  law  will  fol- 
low it  into  their  hands.  They  do  not  a(5l  in  a  fiduciary 
capacity  by  appointment,  and  unless  they  had  knowl- 
edge of  the  trust  and  of  its  appropriation  by  the  trustee, 

97 


^2.  Antkckdents.  Pt.  I,  Ch.  2. 

they  will  not  be  charged  for  diverting  the  fund  to  un- 
lawful uses.'  If,  however,  the  partners  had  such 
knowledge,  they  become  trustees  ex  tna/r/ido^  by  co- 
operating in  the  breach,  and  are  accountable  for  the 
profits  which    they  make  by  trading  with  the  trust 

fund. 

The  distinction  results  in  a  curious  refinement. 
The  fund  is  severed,  and  the  partners  are  treated  as 
strangers  to  each  other  with  reference  to  it.  The 
trustee  partner  is  not  liable  for  his  co-partners'  share 
of  the  profits  which  the  firm  made  by  the  use  of  the 
trust  fund.  He  is,  as  an  individual,  dereli6l,  and  is 
charged,  on  account  of  his  tort,  with  his  share  of  the 
profits,  but  his  co-partners  are  not  compelled  to  account 
to  the  crstuy  que  trust  for  their  shares.  The  co-part- 
ners are  liable  to  the  cestuy  que  trust  only  for  the  fund, 
with  interest.'^  The  theory,  if  it  could  be  maintained, 
involves  a  pro  tanto  dissolution  of  the  firm.  The 
trustee  partner  is  made  to  occupy  the  double  position 
of  a  stranger  and  of  a  member  of  the  firm.  But  as  has 
been  shown  (§40)  he  represents  the  firm  in  his  breach 
of  trust,  and  charges  his  co-partners  for  the  tort,  which 
he  commits.  They  can  no  more  retain  the  fruits  of 
the  fraud  than  he  can,  and  they  must  answer  for  them 
to  the  defrauded  cestuy  que  trust.  The  ignorance  of  the 
co-partners  would  be  a  difference  only  as  to  his  sepa- 
rate estate,  if  the  procedure  distinguished  between 
joint  and  separate  assets. 

But  the  segregation  of  the  trust  fund  from  the  joint 
stock  could  not  be  sustained  on  partnership  principles. 
The  profits,  in  theory,  correspond  with  the  contribu- 
tions, and  originally  the  law  made  the  adjustment. 
Subsequently,  the  correlation  was  left  to  the  partners, 

98 


Pt.  I,  Ch.  2.  Antecedents.  §42. 

but  the  law  assumes  that  they  adjust  the  profits  in 
proportiou  to  the  contributions  (§56).  The  contribu- 
tion, therefore,  of  the  trust  fund  is  matched  by  an 
equivalent  contribution  made  by  each  of  the  co-part- 
ners. The  profits  of  the  trust  fund,  if  divided  among 
all  the  partners,  entitle  the  trustee  partner  to  share, 
by  virtue  of  his  trust  contribution,  the  profits  of  all 
other  contributions.  The  result  is  equivalent  to  giv- 
ing him  all  the  profits  of  the  trust  fund.  This  con- 
clusion has  also  been  worked  out  by  Hamilton,  on 
business  principles.'* 

I.  Tlie  trustee  partner  answers  for  his  share  of  the  profits  made  by  the 
firm  in  trading  ivith  the  trust  funds,  but  not  for  the  shares  of  his  co- 
trustees or  co-partners.  They  ansiver  only  for  principal  and  interest. 
Articles  provided  for  paytneut  of  partner's  share  iu  instalments  within 
18  months  after  his  death.  D  died,  appointing  his  partner,  C,  and 
others,  trustees  and  executors.  C  alone  adled,  substituting  three  co- 
trustees, who  made  him  their  agent.  C  did  not  withdraw  D's  interest, 
but  left  it  in  the  firm.  The  beneficiaries  claimed  the  profits  made  in 
the  business  from  C,  and  from  his  co-trustees,  and  also  from  his  co- 
partners, although  they  were  not  parties  to  the  proceedings. — Re- 
covered from  C,  who  was  solvent,  profits  made  b}-  him.  Co-trustees 
would  be  liable  only  for  debt  and  interest  (dissent  would  charge  them 
jointly  with  C),  as  would  his  partners.  Laird  v.  Chisholm,  30  Scot- 
tish Jur.  582  (1858). 

Co-trustces  are  identified  zvith  the  trading  trustee^  and 
are  liable  for  the  profits  zvJiich  he  ear  tied  by  means  ofi  the 
trust  fiiind.,  although  they  received  nothing.  What  is  nec- 
essary in  order  to  charge  a  trustee  for  the  profits  made  by 
trading  with  trust  funds?  Must  the  profits  be  received 
by  him?  If  co-trustees  did  not  use  the  fund,  and  were 
not  enriched  by  the  profits,  they  could  not  be  said  to 
retain  the  profits  which  belonged  to  another,  for  they  did 
not  receive  any  profits.  The  question  may  be  asked: 
Do  they  not  answer  merely  for  negligence  in  not  pre- 
venting the  trustee  from  trading  with  the  fund  ?  The 
liability  for  neg-ligence  would  be  to  make  good  the  loss 
occasioned  by  the  trading  trustee.  This  would  be  com- 
pensation or  indemnity,  and  include  the  principal  sum 
employed  by  him  in  trade,  and  the  interest  upon  it. 
Would  the  co-trustees,  who  made  no  profits,  be  pun- 
ished, and  a  penalty  inflidted  upon  them  after  they  had 
made  up  the  loss  to  the  cestii  v  que  trust  ?     This  would 

99 


Ma. 


Antecedents.  Ft.  i,  Ch.  2. 

make  the  co-trustees  take  money  out  of  their  own  pock- 
ets, in  order  to  cnricli  the  beneficiaries  beyond  the  loss. 
The  answer  is:  The  trustees  are  a  unit.  All  are  deemed 
to  receive  the  profits,  because  the>'  have  the  control,  and 
are  char<,a-d  by  law  with  its  e.xertion.  They  do  not 
answer  for  the  profits  made  by  a  different  person,  but  ft)r 
the  profits  received  by  themselves  through  a  member 
identified  with  them. 

.     LoRO  Cairns.  Vyse  v.  Foster,  L.  R.  7  H.  L.  333-4  (.1874). 

l\trtnt-rs  traiiinff  -with  a.  bartner  who  contributes  trust  fund  mr 
liable  to  ccstuy  que  trust  for  interest,  or  the  profits  of  its  employmail. 
B,  executrix  of  husband,  C,  in  1S54,  took  his  assets  for  her  contribu- 
tion to  firui,  which  she  formed,  stipulating  for  profits  in  proportion 
to  contribution.  DifTerent  firms  succeeded  first  until  1864,  when  B 
went  out.  She  had  declared  trusts  of  fund  22  February,  1S62,  and 
ajjreed  to  indenniify  co-partners.  vShe  became  bankrupt.  Children 
of  C  brought  account.  D  partner  from  beginning,  and  E  from  i  July, 
1S62. — Decree.  They  appealed. — Afi&rmed.  Plaintiffs  entitled  to 
eiKjuiry,  in  order  to  elecfl  interest  or  profits  of  testator's  assets  em- 
ployed in  trade.  An  appropriation,  not  a  loan,  of  trust  fund,  which 
partners  acfjuired  with  knowledge  of  the  breach  of  trust.  Flocfton  v. 
Bunniug,  L.  R.  8  Ch.  App.  323  n.  (1864). 

,.  Cestuy  que  trust  entitled  only  to  trustee  partnei^s  share  of  profits 
made  bv  use  of  trust  fund.  By  settlement,  B  and  C,  trustees  were 
(lirecled  to  call  in  debt  of  ^350  from  banking  firm,  of  which  B  was  a 
partner.  The  debt  remained  uucollecfled  for  16  years,  when  the  firm 
wa.s  dissolved.  C  died  during  the  interval,  and  D  was  substituted  co- 
trustee. Cestuy  que  trust  brought  bill  against  B  for  profits  made  by 
use  of  the  trust  money. — PUititled  to  only  1-3,  or  B's  share  of  firm 
profit,  and,  therefore,  interest  with  annual  rests  allowed  at  eledlion. 
Jones  V.  Foxall,  15  Beav.  3S8  (1852). 

Contrail  for  purchase  of  deceased  partner's  share  by  surviving  part- 
ners executed,  in  spite  of  terms  unperformed  and  price  unpaid  for  2j 
years,  if  sale,  apart  from  its  formalities,  intended  by  the  parties ;  de- 
ceased partner's  legatee  could  not  impeach  sale  and  claim  profits 
because  executor  a  partner.  Partners  B  &  C,  with  capitals  respedlively 
/9^),f>xj  and  jr\v,,ooo,  had  received  equally  their  father,  the  firm 
founder's,  interest.  Remaining  partner,  D,  laad  ^'7,000  capital,  and 
new  partner,  E.  nothing.  Each  received  s  per  cent,  interest  on  his 
capiul  and  accumulations,  and  B  6-16,  C  5-16,  D  3-16,  and  E  2-16  of 
profits.  .At  different  periods  profits  were  re-adjusted  among  the  old 
r.ng  ])artners,  but  not  according  to  their  contributions.  By 
rviving  partners  should  take  deceased  partner's  share  at 

i ^^  '  ^^'i  last  account  of  stock,  and  pay  in  instalment  notes, 

maturmg  in  two  years  from  his  death.  B  died  in  1S55,  making  C, 
hissonC,  who  subsequently  became  partner,  and  H  his  executors. 
I  Jieyleft  B  s  share  in  firm  at  5  per  cent,  interest,  added  annually  to 
principal,  against  which  cestuy  que  trust  drew,  like  other  members 
01  the  family  against  their  deposits.  Eight  of  the  nine  legatees. 
testator  s  children,  and  the  annuitants,  his  widow  and  father,  ratified 
inc  sale.  But  A,  the  youngest  child,  who  attained  majority  in  1S65, 
a^^  ^  ",  ''•'^^;"'*  ^'  ^"  ^^70,  for  profits.-Dismissed.  ^  Articles 
ciiectea  a  sale  of  B's  share  to  co-partners,  who  became  debtors  for 
ine  pnce.     Though  negle(5t  to  withdraw,  a  breach  of  trust,  which 


'? 


Pt.  I,  Ch.  2.  Antkcedents.  §42. 

benefited  firm,  appointment  of  partner  executor,  which  extinguished 
debt  at  law,  and  left  it  only  a  debt  in  equity  released  executors  from 
performance  of  terms  available  only  for  legal  debts,  and  making  son 
co-executor,  who  could  not  enforce  terms  at  law,  also  indicated  a 
dispensation  of  executory  terms,  in  order  to  preserve  ancestral  busi- 
ness. By  ratification,  others  made  transacliou  lawful  with  them. 
Were  capital  the  only  source  of  profits,  the  children's  quotas,  princi- 
pal of  annuities  and  deposits  would  be  counted  with  partner's  contri- 
butions, and  A's  share  would  be  only  her  share  of  the  aggregate ;  but 
where  capital  is  a  facSlor  at  all,  it  is  never  the  leading  element  in 
profits.  The  main  source,  apart  from  the  good-will,  is  the  partner's 
capacit}'.  Their  shares  were  not  based  on  the  amounts  contributed, 
but  on  their  quotas  of  the  good-will  and  their  ser\dces.  Interest  was 
the  measure  of  capital  for  contributions  and  loans.  Recovery  could 
be  only  against  executor-partner,  and  for  proportion  of  profits  made 
by  him  with  trust  funds.  To  charge  him  for  co-partners'  profits 
would  not  be  equit}-,  but  punishment.  Vyse  v.  Foster,  L.  R.  8  Ch. 
App.  309  (1870). — Affirmed  on  appeal.  Testator  dispensed  with  per- 
formance, of  which  time  was  not  the  essence.  Delay  would  not  justify 
inference  of  coUedliou  and  a  re-loan.  Bill  incongruous  ;  could  not 
rescind  against  executor  partner  sale,  which  subsists  for  surviving 
partners ;  claim  for  interest  on  surviving  partners'  shares  as  a  creditor 
for  the  price  and  for  profits  out  of  executor  partner's  share  as  a  co- 
partner. Quer}' :  A(5live  breach  of  trust  would  charge  all  partners 
aware  of  it,  but  not  one  for  all.   L.  R.  7  H.  L.  318  (1S74). 

A  rough  estimate  is  sometimes  made  for  convenience 
sake,  in  order  to  avoid  the  trouble  of  ascertaining  the 
constituent  portions  of  the  profits.  An  allowance  is 
made  out  of  the  profits  to  the  firm  for  ser\dces,  and  the 
compensation  is  deducted  before  the  cestuy  que  trust '  s 
share  is  estimated.  An  allowance  of  1-3  for  manage- 
ment has  been  made  in  other  cases,  and  adopted  in 
partnership. 

If  decedent  s  business  is  carried  on  rcith  his  assets  by  administratrix , 
/lis  creditor  may  conipet  Iter  to  account  for  2-j  of  t  lie  profits.  B,  pawn- 
broker, died,  leaving  $3,000  assets,  with  which  C,  his  widow  and 
administratrix,  continued  the  business.  She  made  |ii,7oo  profits  a 
year.  A  obtained  judgment  against  B's  estate  for  $6,400,  and  claimed 
pavment  out  of  the  profits. — Entitled.  C  allowed  |;6oo  for  expenses, 
and  charged  with  |i,  100  as  net  profits,  aggregating  in  14  years $15,000. 
Robinett's  Appeal,  12  Casey  174,  Pa.  (i860). 

Ward  must  elecT.  in  advance  for  fund  put  by  guardian  in  Jiis  firm, 
eitlicr profits  of  business  or  principat  and  interest,  zait/wut  drawing 
court's  opin ion :  ivlietlier  tJie  profits  are  of  t/ie guardian  or  oftliefirm, 
and  zuitti  or  7>.'itJiout  atloTvances  to  partners  for  managoncnt.  B  put, 
in  1S66,  ward  A's  money,  $9,826.84,  in  firm  of  B  &  C,  C  going  surety 
for  B  as  guardian.  Account  in  firm  books  gave  credit,  with  6  per 
cent,  interest,  carried  to  guardian's  account  every  six  months,  after 
dedu6ling  A's  maintenance.  B  lent  trust  fund,  $39,000,  to  firm,  in 
April,  1S66.  His  contribution  was  $30,000,  and  C's  $95,000.  On  ist 
06lober,  1866,  B's  share  increased  from  1-3  to  1-2.  The  partners' 
capitals  varied  greatly  in  amount  during  the  partnership,  but  no 
other  change  was  made  in  their  shares,  the  capitals  for  the  time  be- 
ing carrying  6  per  cent,  interest.  In  1880,  on  C's  suicide,  A  attached 
B,  who,  eo  die,  paid  over  balance  due  A,  $13,691.11.     A  claimed  elec- 


^2.  Antecedents.  Pt.  i,  Ch.  2. 

lion  of  principal  and  interest  or  of  profits  in  B  &  C's  business  ;  but 
rcfusc<l  10  elect  until  courts  decided  what  share  A  had  in  firm  profits. 
On)ii»ms' Court  allowed  1-3  profits  to  partners  for  management,  1-2 
balance  to  each  ns  his  share  of  profits,  and  refused  to  surcharge  B  for 
C's  share  of  profits.  As  A  refused  to  elecl.  Orphans'  Court  entered 
decree  for  prnu-ii)al  and  interest.  A's  claim  :  vShare  as  quasi  partner 
iu  proiK>rlion  to  his  capital  used  in  business,  without  allowance  for 
co-i)artners*  services.  Defence  :  Interest  the  direcT;  measure  iu  value 
of  A's  fund.  Profits  retireseiit  good-will  of  business  and  capacity  of 
partners.— Affirmed.  Scguin's  Appeal,  7  Out.  139,  Pa.  (18S3). 

/f/Jit^  testator  provides  for  a  valuation  and  account  of 
his  share  by  the  surviving  partners^  the  iiifcrence  is  a 
sale  of  his  share  to  than.  An  element  is  frequently  in- 
trodiiced  which  changes  the  nature  of  the  relation.  The 
testator  clire(5ls  his  partners  to  liquidate  his  share  and 
pay  over  the  sum  to  his  executor.  The  diredlion  effec^ts 
a  sale  of  his  share  to  his  partners,  and  converts  the  rela- 
tion of  trustee  and  cestity  que  trust  into  that  of  debtor 
and  creditor.  The  change  saves  the  partners  from  lia- 
bility as  trustees  ex  vialefcio^  and  charges  them  simply 
with  interest  upon  the  testator's  share  as  a  debt." 

The  diredlion  may  be  to  liquidate  the  share  within  a 
given  period,  and  pay  it  over  to  the  executor,  but  a 
partner  may  be  appointed  the  executor.  The  appoint- 
ment deprives  the  estate  of  the  right  to  enforce  the  pay- 
ment at  law,  and  makes  the  claim  an  equity.  The 
courts  infer  from  the  appointment  that  the  testator 
meant  to  leave  the  withdrawal  of  his  share  to  the  dis- 
cretion of  his  executor.  If  he  does  not  colledl  the  debt, 
it  remains  in  the  firm  on  tlie  footino^  of  a  loan.'' 

o 

4.  He  sums  up  his  demonstration  in  figures:  "Let  the  total  profits 
'*  efjual  9,  then,  as  each  of  the  three  partners  has  one  equal  third  part 
"of  tlie  capital,  the  share  of  profits  earned  by  each  partner's  capital 
II  will  equal  3.  That  is  3+3+3,  the  sum  total  of  the  profits  so  made, 
II  each  share  of  capital  contributing  3,  amounts  to  9,  the  total  profits. 
!!  ^^"  *^'''-""'  ^''^  executor  partner  received  simply  the  profits  which  his 
||. share  of  capital  makes,  he  would  get  3;  as  it  is,  out  of  the  three 
'.l"!^'.'*^  '•>'  ^^'^  share  of  capital  he  receives  i  only,  the  other  2  being 
II divided  equally  between  his  partners.  The  argiiment  against  me 
^  IS,  I  subniit:  If  he  was  paid  the  whole  3  w^hich  his  share  produces, 
"  u  yyy  '^^  '"•'1'^^  to  account  for  that  3;  but  as  all  he  gets  is  i,  he 
^  shall  only  account  for  i.  I  answer,  he  gets  indeed  i  only  from  his 
^^own  share,  but  that  is  because  at  the  same  time  he  gets  i  from  each 
^^01  the  other  two  shares;  therefore  the  net  result  is,  that  instead  of 
^  Ketling  3  and  having  to  account  for  3,  begets  i  +  i+i,  which,  arith- 


metically, equal  3,  but  still  only  subjecl:  him  to  the  necessity  of 
a"-ounting  for j."    Critique  "On  the  Dodlrine  of  Vyse  v.  Foster," 
Dy  u.  i<.  M.\Mii.TON,  3  Law  Quarterly  Rev.  211  :  1887. 


accounting  forj." 
y  C'.   P.  n.\MII,TON 

Laird  v.  Chishoba,  supra.     Vyse  v.  Foster,  supra. 


Pt.  I,  Ch.  2.  Antecedents.  §43. 

§43. 

^\)t  Mfficultn  of  ascertaininoi  t\)t  sl^arc  of  profits  attributable 
to  tl)e  capital  in  a  business,  anii  cspecialln  in  a  partn£rsl)ip  busi- 
ness, boes  not  preuent  tl)e  cestiiy  que  trust  from  redainiinci, 
u)itl)  l)is  nionen  eontributei)  bu  tl)e  trustees,  tl)e  profits  inanieii  bn 
its  eniplonment. 

The  general  rule  that  a  trustee  must  account  for 
profits  made  with  trust  funds  applies  to  partnership. 
The  mystery  of  the  elements  involved  in  the  produc- 
tion seemed  to  form  a  barrier  to  an  investigation.  But 
unless  the  right  to  make  inquisition  is  acknowledged, 
the  trustee  would  take  advantage  of  his  own  wrong. 
He  could  create  the  complication,  in  order  to  profit  by 
it.  Equity  would  abnegate  its  prerogative  if  a  trustee 
could  defy  its  powers  and  neutralize  its  process.  The 
suggestion  could  not  be  entertained  by  a  chancellor. 
The  decree  for  an  investigation  must  be  granted.^ 

What  part  of  the  profits  is  the  product  of  capital  must  be 
left  open  for  iuvestigation  in  each  case.  It  being  established 
that  the  principle  of  equity  extends  to  funds  used  by  a  firm, 
and  entitles  cestuy  que  trust  to  elect  either  profits  or  interest 
in  return  for  the  employment  of  his  property,  the  question 
presents  itself:  What  part  of  the  profits  is  made  by  the 
capital?  The  query  suggests  another:  How  man}-  sources 
are  there  of  profits,  and  is  there  any  fixed  proportion  for 
the  co-operation  of  the  various  facfhors?  The  ratio,  it  is 
obvious,  may  var}'  with  the  kind  of  business. 

In  one  class,  the  estate  of  a  deceased  partner  might  be 
entitled  to  the  share  of  profits  which  the  partner  had  while 
living.  The  business  might  consist  in  dealing  with  patents 
owned  by  the  deceased  partner.  His  property  formed  the 
basis  of  the  firm  business,  and  continued  for  his  estate  the 
share  of  the  profits  which  he  enjoyed  in  his  life-time.*  In 
like  manner  the  good- will  and  connedlions  of  the  firm  may 

103 


^^,.  Antecedents.  Pt.  i.  Cii.  2. 

constitute  the  foundation  of  the  business.  The  deceased 
jKirtncr's  estate  shares  the  profits  which  result  from  the 
continuing'  operation  of  the  original  cause.**  So  a  partner 
nii^ht  contribute  the  capital  and  his  co-partner  his  services. 
Upt.n  the  copartner's  death  before  a  good-will  and  connec- 
tions were  established,  his  share  of  the  profits  would  also 
cease,  and  go  to  a  successor,  who  replaced  his  services. 

In  a  (lifTcrent  class  the  capacity  and  services  of  the  part- 
ners may  be  the  chief  elcinents  of  success  in  the  business. 
The  business  of  the  partnership  might  require  no  capital, 
and  trust  funds  deposited  in  the  firm  would  earn  no  part  of 
the  profits.'" 

The  question  is  not,  however,  an  alternative  of  a  con- 
tribution earning  all  the  partner's  profits,  or  earning  none 
of  them.  The  capital  generally  plays  an  intermediate  role, 
co-operating  with  the  other  fadlors  in  earning  profits.  The 
capital  makes  a  part  of  the  profits,  or  it  would  not  be  con- 
tributed to  the  firm.  But  the  nature  of  the  business,  the 
good-will  and  influence  attached  to  it,  the  capacity  and 
ser\*ices  of  the  partners,  must  be  taken  into  account,  as 
well  as  the  capital  contributed  by  them.  No  rule  can  be 
laid  down  which  will  work  out  a  uniform  rate  in  the  product 
when  the  factors  combined  to  make  it  do  not  remain  fixed, 
but  vary  in  the  combination.  The  contribution  itself  may 
vary  in  amount,  and  often  does  vary,  without  affedling  the 
ratio  of  profits  which  the  contributing  partner  takes.  ^ 

I.  Pifficully  of  asccrtaiyiins;  profits  of  trust  money,  no  answer  to  en- 
quiry. R  and  C,  executors,  who  had  authority  to  carry  on  testator's 
business  for  6  years,  continued  it  for  themselves,  and  in  settlement 
of  various  claims  of  the  estate  allowed  5  per  cent,  interest  on  the 
amounts  received.  The  sums  were  put  into  their  business.  Cestuy 
qur  trust,  .\,  brought  bill  for  account  of  profits.— Account  decreed. 
Docker  v.  Somes,  2  Mylne  &  Keene  653  (1834). 

B,  an  executor,  continued  testator's' business,  and  retained  testa- 
tor's fnnds,  which  he  employed  in  the  business.  B  traded  at  first 
alone.  an<l  then  in  partnership  with  diff'erent  persons.  A  asked  for 
accountofprofits.— Account  decreed.  Palmer  v.  Mitchell,  2  Mylne  & 
Keene  655  (1834). 

a.  Use  of  partner' s  share  after  dissolution  charges  continuim;  partners 
Jar  retiring  partner's  share  of  the  profits.  B,  C  &  D  manufadlured 
pumps  in  pc-ulnership,  under  original  patent  issued  to  B.  B  became 
Dankrupt.     C  &  D  continued  the  business  without  making  a  settle- 

104 


Pt.  I,  Ch.  2.  Antecedents.  5^43 

ment.  A,  assignee  of  B,  brought  bill  for  his  share  of  the  profits.  B 
was  indebted  to  firm,  and  continuing  partners  had  increased  the  cap- 
ital.— Decree.  As  the  co-partners  did  not  settle  with  B,  the  original 
adjustment  continued  unchanged.    Crawshav  v.  Collins,  15  Ves.  218 

(1808). 

b.  Rate  of  deceased  partner  may  continue  luith  the  business.  Articles 
allowed  C  to  continue  business  on  B's  death,  and  take  2-3  profits, 
provided  he  secured  B's  capital,  and  made  new  agreement  with 
estate.  B  made  his  partner,  C,  his  widow,  D,  and  another  executors. 
B  had  7-10  profits  in  one  branch  and  1-2  in  other  branch.  C  disre- 
garded provisions.  He  paid  5  per  cent,  on  testator's  money.  Cestuy 
que  trust  demanded  account  of  profits. — Account  decreed.  Willett  v. 
Blanford,  i  Hare  253(1842). 

c.  Trust  fund  charges  firm  for  profits  only  if  a  constituent  affirm  p7'ofits. 
Solicitor,  B,  with  power  to  sell  and  invest  for  A,  deposited  proceeds 
of  sale  with  bankers,  to  credit  of  B's  firm.  A  demanded  account. — 
Profits  refused,  because  money  not  employed  in  solicitor's  business, 
which  required  no  capital.  Interest  allowed.  Burdick  v.  Garrick,  L,. 
R.  5  Ch.  App.  233  (1870). 

d.  Supra  ^42,  n.  3. 


t>^ 


Part  II. 

Z\)t  priiuipUs  luhirh  i  cQulatc  partiursljip  buring  its  tnstmit. 


CHAPTER  I. 

THE  CONSTITUENTS  OF  PARTNERSHIP. 

§44. 

Partncrsl)ip  liabilitn  at  tl)c  (Eomman  lou)  takes  tl)e  form  of  a 
ioiut  obiuiation. 

By  the  Commercial  law  of  Europe  every  joint  a6l 
in  trade  was  a  partnership.  In  England,  however, 
tlicrc  was  no  partnership,  except  in  a  joint  undertak- 
iiij;  to  buy  and  sell,  but  the  measure  of  a  partner's 
liability  was  that  which  obtained  in  all  cases  of  joint 
obligation.'  With  reference  to  third  persons,  a  part- 
nership thus  became  a  species  under  tlie  genus  of 
joint  obligation."  In  a  proceeding,  therefore,  to  cliarge 
one  person  with  a  liability  in  conjun6lion  witli  another, 
the  issne  is  not  necessarily  upon  the  existence  of  a 
partnership  between  them,  but  upon  the  performance 
of  an  adl  to  which  the  law  attaches  a  joint  obligation. 
When  a  man  is  sued  for  an  adl  performed  in  conjunc- 
tion with  another,  he  is  liable  for  his  adls  as  if  per- 
formed alone.  To  admit  the  plea  of  no  partnership  as 
a  defence,  and  as  a  corollary  to  compel  the  plaintiff  to 
pr')ve  the  existence  of  the  relation,  abrogates  the  law 
by  displacing  the  point  of  controversy ;  which  is  made 


I 


Pt.  2,  Ch.  I.  The  Test.  §44. 

to  turn  upon  the  facl  of  partnership  inter  se^  instead  of 
upon  the  liability  of  a  man  for  his  a6ls.  The  change 
reverses  the  order  of  proof.  Every  person  who  per- 
forms an  a6l  is  liable,  whether  he  is  a  partner  or  not.* 
To  exculpg.te  himself  he  must  prove  that  he  did  not 
perform  the  a6l  at  all,  or,  if  he  did,  that  he  was  merely 
the  agent  or  instrument  of  another,  who  is  the  princi- 
,  pal.  The  burden  of  proof  is  upon  him.  The  plea 
that  no  partnership  exists,  when  made  by  him  who 
did  the  adl,  does  not  meet  the  cause  of  a6lion.  The 
exa6lion  of  the  law  is  the  proof  that  he  was  under- 
stood to  a<ft  as  an  agent.  In  accepting  a  denial  of 
partnership  as  a  defence  to  the  cause  of  a(5lion,  the 
claim  is  made  equivalent  to  an  averment  of  partnership 
inter  se^  and  the  fadl  must  be  proved  by  the  plaintiff. 
The  defendant  might  have  made  no  contrail  of  part- 
nership, nor  had  any  intention  to  become  a  partner, 
and  the  plaintiff  who  joins  issue  upon  the  existence 
of  a  partnership  iyiter  se^  will  be  unable  to  prove  it. 
The  defendant,  although  a  principal  in  the  transa6Lion, 
and  bound  in  law  to  disprove  his  liability,  does,  in  fa6l, 
prove  nothing,  yet  defeats  the  plaintiff's  recovery.^ 

As  partners  are  merely  joint  obligors,  a  firm  name 
is  not  necessary  in  pleading.''  The  law  looks  for  the 
principals  in  the  transaction,  and  not  for  names  or 
phrases.  The  mention  of  partners  "trading  as"  is 
surplusage.  The  name  is  simply  a  brief  designation 
of  the  individuals  who  use  it  for  their  convenience. 
A  partner  might  sign  the  names  of  his  co-partners  in 
full,^  or  if  they  failed  to  sele(5t  a  firm  name,  select  one 
for  them.^  Firms  may  trade  in  partnership,  each  using 
its  own  name  for  the  transadlions  made  on  joint  ac- 


197 


v^^  Till-  Tkst.  Pt.  2,  Ch.  I, 

count.     A  coiiiinon  name  would  be  both  inconvenient 

and  uncalled  for.' 

1.  Thf  test,  rx  lontraclu,  is  a  joint  interest  in  the  con- 
trud.  The  rule  of  liability  for  contractors  who  are  not 
partners  is  tluks  stated  b>-  Hammond: 

•  If  the  bcucfil,  ri},'ht  or  property  conferred  by  the  contradl  belongs 
••jus  Ijclwecii  thcni.selves  jointly  to  both  *  both  are  jointly  liable." 
.\  PracflJoal  Treatise  on  Parties  to  Adlions  and  Proceedings  Civil 
iind  Criminal ;  and  of  Rights  and  Liabilities  with  reference  to  that 
suhjcol,  l)v  Anthony  H.vmmond,  1822,  p.  62. 

The  joint  liability,  ex  contraclii^  is  thus  explained  by 
Ju(l}.(e  Hare: 

•.Vgreeably  to  the  tlnglish  law,  persons  who  enter  into  a  joint  ob- 
'•  ligation  are  as  nnich  bound  for  its  entire  fulfilment  as  if  the  obliga- 
"lion  were  several.  The  suit  and  judgment  should  regularly  be 
'•joint,  although  this  is  not  essential  in  the  absence  of  a  plea  in 
'abalcnicnl,  but  the  goods  of  each  co-contradlor  maybe  taken  in 
'•execution  for  the  whole  debt."  The  Law  of  Contradls,  by  J.  I. 
Clarke  Hark,  LL.  D.,  1887. 

A  joint  interest  makes  the  parties  interested  liable, 
whether  they  are  partners  or  not.  They  are  co-princi- 
pals iu  the  transaction,  and  are  liable  because  they  are 
principals.  This  is  explained  by  C.  J.  DoE,  who,  how- 
ever, must  not  be  understood  to  mean  that  all  co-prin- 
cipals are  partners.  The  object  of  his  exposition  was  to 
demonstrate  that  all  partners  are  co-principals,  and  the 
remark  that  all  co-principals  are  partners  should  be 
limited  to  trade,  or  business  transactions,  in  which  the 
joinder  of  principals  makes  a  partnership.  In  other 
instances,  where  a  partnership  is  excluded  by  the  nature 
of  the  transaclion,  co-principals  are  nevertheless  liable 
for  their  Joint  adis  The  difference  is  in  the  powers 
implied  from  the  joinder.  A  partnership  carries  the 
powers  originally  exerted  in  trade.  A  joinder  not  in 
trade  creates  no  implied  authority  in  the  co-principal. 
The  joinder  is  limited  to  the  acl  itself.  Thus  a  joint 
purchase,  either  of  real  or  of  personal  property,  charges 
each  purchaser  for  the  entire  price,  although  there  is  no 
partnership  between  them.  The  joint  use  and  posses- 
sion of  property  charges  the  possessors  for  the  use  and 
enjoyment,  without  reference  to  their  being  partners 
(§46.  n.  2).  Wherever  a  partnership  is  not  admitted  on 
account  of  the  nature  of  the  transadion,  the  joinder  of 
pnncipals  charges  them,  nevertheless,  with  a  joint  lia- 
bility. •* 


T08 


Pt.  2,  Ch.  I.  The  Test.  §44, 

Referring  to  a  case  put,  where  A  employs  B  to  make 
a  purchase  in  B's  name  for  him  (A),  upon  a  secret  agree- 
ment between  A  and  B,  that  A  is  not  to  be  responsible 
to  the  seller  for  the  price,  C.  J.  DoE  says: 

"A  difficulty  arises  from  an  ambiguity  in  the  terms,  'A  employs  B 
"to  make  a  purchase  in  B's  name  for  him  (A).'  Ifthismeans  that  A 
"  is  the  principal  and  B  his  agent,  A  is  liable  because  he  is  the  prin- 
"cipal.  Edmunds  V.  Bushell,  L.  R.  i  Q.  B.  97.  If  it  means  that  B, 
"as  principal,  is  to  buy  the  propert}-  of  C,  and  then  sell  it  to  A,  A  is 
"  not  liable  to  C  because  he  is  not  the  principal.  The  question  of  A's 
"liability  is  the  question  whether,  in  the  contrail  of  purchase  from 
"  C,  A  is  in  fa6l  the  principal,  and  B  his  agent,  or  whether  B  is  the 
"principal,  who,  after  he  has  bought  the  property  of  C,  is  to  sell  it 
"  to  A ;  whether  the  title  passes  direclly  from  C  to  A,  or  from  C  to  B 
"and  from  B  to  A;  whether  there  are  to  be  two  successive  purchases 
"of  the  same  property,  or  only  one;  whether  (in  the  contra<ft  of 
"purchase  from  C)  A  or  B  is  the  purchaser.  This  depends  (so  far  as 
"A's  liability  is  concerned,  and  aside  from  fraud  and  estoppel)  upon 
"  the  understanding  between  A  and  B.  If  they  understand  the  title 
"passes  directly  from  C  to  A,  and  not  through  B  as  an  intermediate 
"purchaser,  A  is  the  principal,  B  is  his  agent,  and  A,  as  the  pur- 
"  chaser,  is  bound  to  pay  C  for  the  property  which  he  bu3S  of  C.  A's 
"denial  of  the  fa(5l  that  he  is  the  purchaser,  has  no  more  effedl  than 
"his  denial  of  anj'  other  fa<Si;  an  agreement  between  him  and  B  to 
"  deny  the  fa(fl,  does  not  alter  the  fadl;  A,  being  the  purchaser,  is 
"responsible  as  the  purchaser  for  the  price ;  he  is  liable  upon  the  fa<5t, 
"  and  is  not  discharged  from  his  liability  by  an  understanding  between 
"him  and  his  agent  that  the  fa6l  should  not  be  disclosed  or  should  be 
"denied.  A  purchase  of  goods  is  a  sale;  and  a  sale  is  something 
"more  than  the  vendor's  parting  with  bis  property.  It  includes  pay- 
"ment  made,  promised  or  in  some  way  provided  for  by  the  other 
"party  to  the  contracft.  The  buyer,  i.  e.,  the  principal  who  buys,  is 
"  necessarily  a  pa3'er,  unless  the  vendor  agrees  he  shall  not  be.  If 
"the  agreement  between  A  and  B  is  made  known  to  C  during  the 
"negotiation,  and  he  expressly  or  implied!}'  agrees  not  to  look  to  A 
"  for  payment,  he  is  bound  by  his  agreement ;  but  he  is  not  bound  by 
"a  secret  agreement  between  A  the  purchaser  and  B  the  purchaser's 
"agent,  that  A  is  not  to  pay  C  for  property  bought  by  A  of  C.  When 
"  C  discovers  that  A  is  the  buj-er,  he  is  not  deprived  of  all  the  benefit 
"of  that  fadt  by  the  undisclosed  agreement  iiiter  alios  that  A  is  not 
"  to  pay  for  what  he  buys.  That  agreement  does  not  make  the  agent 
"B  the  purchaser  in  fa6l,  nor  relieve  the  purchaser  A  from  his  part 
"of  the  contract  of  purchase  made  with  C.  The  agent,  holding  hini- 
"  self  out  as  the  purchaser,  is  estopped  to  deny,  as  against  the  vendor 
"  C,  that  he  is  the  purchaser.  But  the  secret  agreement  l)etween  the 
"  real  purchaser  and  his  agent,  that  payment  is  to  be  made  by  the 
"latter  and  not  by  the  former,  is  no  part  of  the  contract  of  purchase: 
"  it  is  merely  an  extraneous  executory  agreement  inter  alios  to  which 
"the  vendor  is  not  a  party.  C  is  a  party  to  the  contra6t  of  purchase ; 
"and  if  A  is  the  purchaser,  he  is  liable  to  C  because  he  is  the  pur- 
"  chaser.  The  fa6t  that  he  is  the  purchaser  is  the  material  thing; 
"the  non-disclosure  of  that  fa(ft,  so  far  as  his  liability  is  concerned, 
"is  immaterial;  his  intention  not  to  pay  is  as  immaterial  as  it  would 
"be  if  he  had  held  himself  out  as  a  purchaser,  and  had  omitted  to 
"disclose  the  fact  that  he  intended  not  to  pay.  The  question  whether 
"  A  is  a  principal  and  B  his  agent,  that  is  whether  A  authorizes  B  (o 
"make  the  eontradl  in  his  behalf,  is  often  a  difficult  question  of  facfl. 

109 


5^^  The  Test.  Pt.  2,  Ch.  1. 


••onu.  iiKil  till.-  (liicslion  whclber  A  is  a  principal  is  calk-da  question 
•■  of  nriiuipal  and  aueiU,  or  aj^^ency.  The  legal  charadler  of  the  ques- 
••  liwji  \\  Uflhcr  A  is  a  principal,  is  not  altered  by  the  circumstance  that 
•'  »  is  or  is  not  a  principal,  nor  by  the  circumstance  that  it  is  called 
"in  ouc  case  a  question  of  partnership"  (or  co-principalship),  "and 
"in  the  other  a  question  of  agency.  And  as  that  question  is  not 
"nffecled  by  the  name  given  it  by  the  tribunal  called  upon  to  decide 
"it.  so  it  does  not  depend  upon  the  name  given  it  by  A  and  B,  or 
"Iwlh  of  Ihem."   Eastman  v.  Clark,  53  N.  H.  292  (1872). 

2.  The  pleadinti^s  disclose  the  classification. 

.Van:  u^'aiiisf  c/i/i-iidau/s  sufficient,  zvitlwut  calling  them  partners, 
1/ cause  0/ act  ion  joint.  A  brought  assumpsit  against  B  &  C,  without 
averring  that  they  traded  as  B  &  Co.,  and,  under  common  counts, 
proved  note  signed  B  &  Co.  by  B.— Judgment.  Cause  corresponded 
to  aclioii  which  was  joint,  and,  as  defendants  need  not  be  partners, 
the  designation  would  be  surplusage.  Hawley  v.  Hurd,  56  Vt.  617 
(1SS4). 

Joint  afl  sufficient  to  charge  parties  jointly.  A  sued  B  &  C,  mill- 
owners,  for  equipment,  which  he  furnished  mill. — ^Joint  contracft, 
express  or  implied,  sufficient  for  recovery  without  proof  of  partner- 
ship. Sager  v.  Tupper,  38  Mich.  258  (1878'). 

3.  The  sharer  0/ profits  is  a  partner,  and  the  sharer  of  gross  earnings, 
though  not  a  partner,  is  liable  for  his  aH-s.  B,  owner  of  a  lighter,  let 
it  to  C,  a  lighterman,  who  agreed  to  work  it  and,  by  the  first  evidence, 
to  share  the  profits  ;  by  later  evidence  the  gross  earnings.  A  sued  C 
for  rejiairs  ordered  by  him. — Liable,  because  he  ordered  repairs.  If 
gross  earnings  intended,  sharing  them  would  Ije  a  mode  of  compensa- 
tion for  wages  which  might  be  received,  although  no  net  profits  were 
made;  if  net  profits  intended,  B  and  C  would  be  partners.  Dry  v. 
Itoswell,  I  Camp.  329  (181S). 

linycr  liahlejor  goods  alone,  or  with  undisclosed  co-principal.  B, 
who  kept  a  drug  store  at  Cherokee,  bought  goods  of  A  and  stocked  a 
store  at  McCune.  He  agreed  to  give  C  all  the  profits  above  12  1-2  p. 
c.  for  managing  the  branch.  A  sued  B  for  price. — Recovered,  B 
liable,  either  as  sole  or  joint  proprietor.  Woodward  v.  Clark,  30  Kan. 
76(1883). 

4.  Joint  contract  to  pay.  A  and  B  engaged  C  to  build  a  mill.  B  was 
partner  with  D,  and  paid  for  mill  with  firm  funds,  with  the  knowl- 
edge and  assent  of  A.  When  B  &  D  dissolved,  B  promised,  for  him- 
self and  A,  to  repay.  D  sued  both,  as  partners,  on  this  promise. — A 
not  liable;  joint  undertaking  with  B  constituted  no  partnership. 
Porter  v.  McClure,  15  Wend.  187  (1836). 

Tlie  court  in  tliis  case  was  of  opinion  that,  primarily,  A  and  B  were 
jounly  hahle,  under  the  circumstances,  for  the  draft  upon  the  firm 
fuiKl-i  of  B  &  D,  but  that  B,  the  common  party  (not  common  partner), 
prevented  the  enforcement  of  the  demand  at  law ;  that  the  subsequent 
assignment  1j>-  B  of  all  his  interest  in  the  firm  to  I)  did  not  help  mat- 
ters. l)ecause  suit  must  still  be  brought  in  the  name  of  B  &  D  if  an 
attempt  were  made  to  recover  on  the  original  obligation.  But  this 
suit  wa.s  brought  in  the  name  of  D  alone;  hence  the  plaintifT must 
rely  on  a  subsequent  ])romise.  He  has  proved  a  promise  by  B  alone, 
mougb  perhaps  made  in  form  as  a  joint  promise  by  B  and  A.     This 


P'1.2,  Ch.  I.  The  Test.  §44.; 

promise  cannot  bind,  because,  though  he  is  a  co-principal,  he  is  not 
a  partner,  and  his  "liability  is  defined  b}'  his  express  contracSl."  In 
other  words,  the  plaintiff  had  a  right  without  a  remedy.  He  could 
not  bring  a  general  bill  of  account  for  a  settlement  of  the  affairs  of  B 
&  D,  and  of  A  and  B,  because  B  &  D  had  closed  up  their  affairs,  and 
there  was  nothing  to  be  accounted  for.  The  only  difficulty,  the 
equivocal  position  of  B,  had  been  eliminated  from  the  case  by  the  adt 
of  the  parties.  If  B,  by  borrowing  these  funds  with  the  knowledge 
and  consent  of  A,  had  been  able  to  charge  both,  were  the  plaintiff  a 
stranger,  why  would  not  his  promise  to  repay  I)  bind  both  as  soon 
as  it  appears  that  D  is  alone  interested,  for  it  is  not,  in  reality,  the 
creation  of  a  new  obligation,  but  the  giving  of  precision  to  the  old? 
A  was  admittedly  liable  to  D  in  such  a  way  as  to  sustain  a  subsequent 
promise  without  a  new  consideration.  But  a  consideration,  which, 
aside  from  the  question  of  waiver,  will  sustain  a  subsequent  promise 
must  be  such  as  will  give  rise  to  an  implied  promise,  on  which  suit 
may  be  sustained  without  anj-thing  further.  Upon  the  reasoning  of 
the  Court,  then,  A  must  have  been  liable  to  D  as  an  original  debtor, 
without  the  necessity  of  resorting  to  B's  subsequent  promise  and  the 
theory  of  a  partnership  by  which  it  was  to  be  made  effectual. 

A  fortiori  if  the  benefit  right,  or  property  is  in  one  he 
is  liable. 

Principal  escaped  liability  because  agenl  hoc  a  partner.  B,  who  had 
previously  employed  C  at  a  salary,  to  buy  and  sell  cattle,  agreed  to 
advance  |i6,5oofor  C  to  bu}',  keep  and  sell  cattle,  which,  while  kept, 
were  put  in  B's  brand.  Expenses  payable  out  of  capital  advanced, 
the  balance,  if  any,  belonged  to  B.  If  profits,  C  to  share  them  in  lieu 
of  salar}'.  A  joined  B,  as  partner,  in  suit  against  C  on  note  which  C 
gave  for  pasture. — Judgment  reversed,  because  no  partnership.  Buz- 
ardv.  First  Nat.  Bank  of  Greenville,  2  S.  W.  Rep'r  54  (1886). 

5.  Partner  a  fling  for  a  firm  and  for  himself  under  a  common  designa- 
tion pri}na  facie  charges  the  firm.  B  was  managing  partner  for  the 
firm  X,  and  did  business  on  his  own  account  under  the  name  of  Y. 
B  kept  but  one  bank  account,  and  habitually  signed  his  check  thus: 
'B,  agent.'  A  sued  the  members  of  X  on  a  check  so  signed,  calling 
them  Y. — Firm  name  surplusage.  The  firm  prima  facie  liable  on 
check.  Had  the  common  designation  been  emjjloyed  only  in  the 
business  of  X,  the  form  of  the  check  would  have  concluded  the  firm, 
but  now  X  might  prove  Y  received  the  proceeds.  Bank  v.  Dakin,  24 
Wend.  411,  N.  Y.  (1840). 

6.  N^o  firm  name.  Partnershipin  farming  and  coopering.  Presump- 
tion of  firm  tra7isa£lion.  B  C  &  D  C  were  partners  without  a  firm 
name.  B  C  gave  a  note  and  signed  it  B  C  &  D  C.  A  &  Co.,  the 
holders,  sued  and  proved  that  he  had  previously  given  two  notes 
signed  B  &  D.  C.  Defence :  The  note,  by  its  form,  is  an  attempt  to 
pledge  his  individual  credit. — Recovery.  Instrument  presumed  a 
firm  note,  and  designation  of  the  firm  sufficient.  McGregor  v.  Cleve- 
land, 5  Wend.  475,  N.  Y.  (1830). 

7.  Partner  may  use  his  name  and  add  Co.  for  co-partner.  B,  C  &  D 
had  entered  into  partnership,  but  had  not  adopted  a  name.  B  exe- 
cuted a  note  in  name  of  B  &  Co.  A  sued  the  partners. — Liable.  If 
no  name,  B  may  bind  co-partners  by  name  of  B  &  Co.  Austin  v. 
Williams.  2  Ohio  61  (1825). 

8.  Between  firms.  A  &  Co.  and  B  &  Co.  agreed  to  sell  grain  on  joint 
account,  making  contradls  for  delivery  at  a  future  day,  and  dividing 


e^-  Thk  Test.  Pt.  2,  Cvv.  i. 

nrofiLs  between  them.  IMaintilf  sucl  H  &  Co.  on  contract  made  by  A 
Tco  iTtTeir  oi'  name,  but  on  joint  account.-Members  of  both 
Lns'liuble:  contrad  bcinj,'  on  joint  account  need  not  be  in  joint 
nnme    Smith  v.  WriKht.  i  Abb.  Pr   243,  ^.\.  (i»54)- 

"  >.,  luthh-  on  onnwnrial  paper. i^ivn,  on  jinn  account,  though  no 
firm  nam,.  R.  in  Rochester,  and  three  others,  in  Albany  were  part- 
ners H  con.hiclLd  f.rm  business  at  Albany  in  his  individual  name, 
and  the  others  traded  at  Rochester  in  name  of  C,  an  agent  Articles 
nr..vi<le.l  that  no  commercial  paper  should  be  given.  B  drew  on  C 
n  A's  favor  in  firm  transaction,  and  C  accepted.  Partners  in  Roch- 
ester were  sued  a.s  acceptors.— Defendants  liable,  without  P.,  whose 
non-joinder  was  not  pleaded.  Prohibition  not  binding  on  strangers. 
Hankv.  Monteath.  i  Denio  402,  N.  Y.  (1845). 

Iirm  liable  on  commercial  t-iper  given  on  firm  account,  though  no 
Jinn  name  H,  in  Troy,  and  C  &  Co.,  in  Oswego,  were  partneis,  each 
trading  for  the  firm  in  his  own  city,  under  their  respedlive  names. 
C  &  Co  <lrew  on  B  in  A's  favor  for  firm  account,  though  on  separate 
cre<lit  B  refused  to  accept,  and  A  sued  B  and  C  &  Co.  as  drawers. 
—Recovered,  though  A  took  draft  on  C  &.  Co.'s  credit.  Wright  v. 
Hooker,  10  N.  Y.  51  (1854)- 


§45, 


(J  he  liabilitT}  bofs  not  bcpcntr  upon  tl)c  xntfntion  to  assume 

tlif  obluiation. 

Tlic  consent  of  the  parties  makes  the  contradl  of 
partnership,  and  they  agree,  let  it  be  supposed,  that  a 
partner  shall  not  be  liable.  Now  it  is  asked:  How  can 
he  be  bound  without  his  consent,  when  consent  is  the 
groundwork  of  his  liability  ?  The  question  betrays  a 
confusion  in  thought  of  a  partner's  rights  with  the 
rights  of  a  stranger.  The  liability  to  a  third  person 
does  not  grow  out  of  the  parties'  consent  to  be  liable. 
They  could  never  be  liable  to  him  on  the  contra61;  of 
partnership.  What  has  he  to  do  with  a  contrail  be- 
tween the  partners  to  which  he  is  a  stranger?  The 
obligation  to  him  is  independent  of  the  partnership 
inter  sc,  and  is  paramount  to  it.  It  is  the  perform- 
ance of  an  a6l  which  creates  a  liability  for  the  conse- 
quences, whether  done  by  a  single  individual  or  by 


Pt.  2,  Ch.  I.  The  Test.  §45.- 

several.  Each  one  engaged  in  the  transacftion  is  lia- 
ble for  the  a6l,  as  if  he  were  the  sole  principal.  The 
contra(5t  of  partnership  admits  that  the  partner  is  a 
principal  in  the  business,  and  his  liability  attaches  as 
a  matter  of  course,  because  he  is  a  principal.  The 
undertaking  carries  with  it  the  liabilities  which  arise 
out  of  the  business,  and  they  cannot  be  shaken  off. 
The  intention  of  a  principal  to  limit  the  extent  of  his 
liability,  or  not  to  incur  any  liability  in  the  business 
he  undertakes,  is  against  the  law,  which  makes  a  man 
answer  for  all  the  consequences  of  his  a6ls,  and  denies 
him  the  power  to  curtail  his  liability.  A  stipulation 
for  limited  liability  in  the  contradl  of  partnership  is 
like  the  intention  cherished  in  the  breast  of  a  principal 
that  he  will  not  be  liable  for  his  agent's  a6ts.  How 
can  the  partners  by  their  contra6l  give  away  a  stran- 
ger's right  of  redress? 

A  capitalist  and  builder  joining  in  a  building  opera- 
tion could  not  prevent  the  effe6l  of  the  joinder  which 
made  them  principals  in  the  business,  by  stipulating 
that  they  were  not  partners.  The  denial  of  partnership 
is  inconsistent  with  the  position  taken  by  them  as 
principals.  The  adls  of  the  parties  speak  louder  than 
words. 

Legal  ejfc Ft  of  agreeinoit  prevails  against  inte7ition  of  the  parties, 
even  inter  se.  A  &  B  bou.<i;ht  an  estate  for  building  improvements. 
B  furnished  the  capital,  which  carried  interest  at  rate  fixed  by  him- 
self. A  gave  his  experience  and  superintendence  to  the  operation, 
and  contributed  1-3  of  his  trade  discounts.  The  financial  manage- 
ment was  in  B's  discretion,  and  his  accounts  could  not  be  disputed 
by  A.  They  agreed  that  the  arrangement  should  be  limited  to  the 
estate,  improved  for  their  mutual  benefit,  and  should  not  be  con- 
strued a  partnership,  although  they  shared  the  profits  and  losses 
equally.  A  brought  a  partner's  bill  for  account. — B  held  a  partner, 
because  he  had  under  the  agreement  a  partner's  rights  and  obliga- 
tions, which  were  not  taken  away  by  the  stipulation  not  to  be  a  part- 
ner. Moore  v.  Davis,  11  Ch.  D.  261  (1879). 

A  corporation  and  a  patentee  joined  and  established 
a  foundry  for  the  manufadlure  of  materials  to  supply 
the  corporation.  The  parties'  disavowal  of  a  partner- 
ship did  not  neutralize  the  effe(!:l:  of  the  joinder  and  pre- 

113 


5^6.  Thk  Test.  Pt.  2,  Ch.  t 

vent  a  partnersliij).  The  result  is  a  conclusion  of  law 
fn)in  the  acls  of  the  jxirties,  and  a  partnership  contrac^t 
is  not  a  jjuhlic  statute  to  repeal  or  abrogate  the  law. 

The  le^al  in/tiriirr  of  partnership  is  not  negatived  by  the  parties' 
tHtentiou.  A  a>jree<l  with  B.  a  corporation,  to  nianufadlure  castings. 
\\  provided  founilrv.  at  rental  of  j4,ooo,  payable  out  of  proceeds,  and 
supplied  capital  for  tiie  business.  H  aj^reed  to  buy  all  castings  used 
l)V  the  corporation  from  foundry  at  market  rates,  and  to  use  A's  patent 
air  wheels;  .X  agreed  to  devote  his  labor  and  skill  to  the  business, 
and  to  make  over  the  exclusive  right  to  manufacture  and  sell  his 
patent  wheels.  The  net  profits  were  to  be  equally  divided,  and  the 
arrangement  to  continue  for  12  years.  The  net  profits  for  the  first 
year  were  ^^4,916,  and  fi,5oo  was  reserved  to  pay  employees.  B  ex- 
cluded .A  from  the  management,  and  A  obtained  an  injundlion.  B 
moved  to  dis.solve,  and  denied  A's  right,  by  virtue  of  the  agreement, 
to  share  in  the  nmnagemeut. — Injuuciion  dissolved,  because  answer 
averred  a  dissolution  by  mutual  agreement,  and  then  A's  remedy 
would  be  the  appointment  of  a  receiver;  but  B's  denial  of  partner- 
shin  did  not  negative  A's  equity,  as  partnership  is  an  inference  of  law, 
and  H  could  not  deny  the  legal  conclusion,  even  of  the  relation  inter 
se.  \'an  Kuren  v.  Trenton  Locomotive  and  Machine  Manufadluring 
Co.,  2  Heas.  302,  N.  J.  (1861). 


§46. 


(TIlc  lain  rl)arqc5  tl)c  principals  in  a  ioint  transaction  as  if  tl)CTi 
l)aii  (ontrattcLi  uiitl)  cad)  otl)cr  to  pcrfann  it. 

How  can  the  relation  of  partnership  be  e£fe(5led,  it 
may  be  asked,  without  intention  as  the  original  cause 
and  the  creator  of  the  partnership  ?  If  it  results  from 
a  coutradl,  and  the  parties  must  manifest  their  inten- 
tion by  making  a  contrad,  how  can  they  be  charged 
by  a  third  person,  except  by  proof  that  they  have  con- 
tracted to  become  partners  in  the  business?  But  is 
the  command  imperative?  Must  there  be  a  contrad 
between  co-principals,  whether  expressed  or  inferred 
from  the  facls,  contemplating  holding  in  embryo  the 
obligation  which  a  stranger  is  seeking  to  enforce,  and 
will  nothing  short  of  a  contrail  give  legal  expression 
to  the  liability?     The  law  provides  a  remedy  for  the 

114 


Pt.  2,  Ch.  I.  The  Test.  §47. 

enforcement  of  the  obligation  upon  the  theory  of  a 
contract:,  although  none  in  fa6l  exists.^  A  joint  con- 
trail served  as  the  type  and  furnished  the  means  for 
proceeding  as  if  the  parties  had  made  a  contrail.  It 
is  a  ^iiasi'-contrsLSi,  raised  by  the  construAion  of  law. 
For  an  a6l  done  on  behalf  of  several,  the  law  charges 
all  concerned  in  the  transa6lion,  whether  known  or 
not,  without  reference  to  any  agreement,  or  absence 
of  agreement,  upon  the  subje6l  of  their  liability.'^ 

1.  "There  is  a  class  of  legal  rights,  with  their  correlative  legal  duties, 
"analogous  to  Wi^  obligationcs  quasi  ex  contraRii  of  the  civil  law, 
"which  seem  to  lie  iu  the  region  between  contraAs  on  the  one  hand 
"  and  torts  ou  the  other,  and  to  call  for  the  application  of  a  remedy 
"not  diredlly  furnished  either  by  adlions  ex  contraRu  or  adlions  ex 
'^  deliilo.  The  common  law  supplies  uo  a6lion  of  duty,  as  it  does  of 
" assumpsit  or  trespass ;  and  hence  the  somewhat  awkward  contriv- 
"anceofthis  fidlion  (an  implied  contradl)  to  apply  the  remedy  of 
"  assumpsit  where  there  is  no  true  contradl,  and  no  promise  to  sup- 
"port  it."  Ladd,  J.,  Sceva  v.  True,  53  N.  H.  632  (1873). 

2.  "The  ground  of  the  implied  contra<5l  is  the  benefit  drawn  diredlly 
"from  the  use  of  goods  or  property  purchased,  which  property  has 
"been  received  immediately  from  the  creditor  in  such  a  manner  as 
"to  create  a  privity  of  relationship  between  the  debtor  and  himself; 
"and  what  is  true  of  one,  holds  equally  good  of  any  number  ofdebt- 
"ors."  Article:  "  Criteria  of  Partnership, "  by  S.  D.  Davies,  10  Am. 
Law  Register,  N.  S.  209  (1S71J. 


§47. 


If  sercral  nntl)l]oli>  propcrtn,  tlien  are  liable  to  tl)e  oroner  aa 
if  tl)cp  Ijab  coiitracteti  ta  pau  for  it. 

A  liability  is  imposed  by  law  upon  a  man  who  with- 
holds personal  property  which  does  not  belong  to  him, 
to  pay  an  equivalent  in  value  for  it  to  the  owner.  The 
obligation  becomes  joint,  if  there  are  two  persons  who 
withhold  the  possession,  and  each  of  them  is  liable  to 
the  owner  for  the  whole  value  of  the  property.'  The 
adl  is  a  tort,  but  may  become  a  contrail  by  ele^lion.^ 

115 


§47.  'I'HK    'I'KST.  PT.  2,  Ch.   I. 

The  owner  waives  the  Lort,  and  proceeds  as  if  upon  a 
contract/ 

1.  The  liabilitx-  f.x  diliclo  of  wrong  doers  is  thus  stated 
bv  Hammond :  .      , 

'•'Thcv  nrc  liable,  each  by  himself ;  since  the  entire  damage  sus- 
"laiucl'was  oocasionc.l  by  each,  each  san<5tioning  the  a^s  of  the 
"olluTs  so  that  bv  suing  one  alone  he  is  not  charged  beyond  his 
"just  t.n.nortion.  'Thcv  are  liable  altogether,  as  are  any  number  less 
•'than  the  whole;  beca'use  each  is  answerable  for  his  companion's  ■ 
••  act  ■  and  besides,  if  this  -s\"re  not  allowed,  not  only  would  useless 
"litigation  be  incurred,  the  plaintiff  might  be  reducedin  his  security 
"to  one  cfTender,  since  after  a  judgment  obtained  against  one,  he 
"would  be  i)recluded  suing,  or  continuing  his  suits  against  the  oth- 
"ers."  A  Traclical  Treatise,  &c.,  p.  iS5. 

Silt  is/an  ion  the  only  bar  to  separate  or  joint  smt  against  co-tort- 
feasors,  b,  constable^  attached  C's  wagon  under  writs  isued  by  attor- 
ney for  D  et  al.,  on  the  theory  that  C's  sale  of  it  to  A  was  fraudulent.— 
A  recovered  judgment  against  H,  and  also  judgment  against  D  et  al. 
for  the  conversion.  McAvoy  v.  Wright,  137  Mass.  206  (1884). 

B,  constable,  attached,  for  C,  hay  as  D's  property.  A  claimed  the 
hay,  and  sued  C  for  the  conversion,  and  recovered  for  part.  A  sued 
B  for  balance. — Cause  of  action,  satisfied  by  C,  released  B.  Westbrook 
v.  Mize,  10  r.  Rep'r  SSi,  with  note  of  cases,  1886,  s.  c.  35  Kan.  299. 

2.  The  tort  of  a  partner  charges  his  co-partner  only 
through  and  by  means  of  the  joint  business  (^24).  Since 
a  tort  of  this  kind  has  been  confounded  with  a  breach 
of  contract,*'  the  damages  recoverable  for  a  tort  or  for  a 
breach  of  contra(5l  have  been  assimilated,''  and  an  elec- 
tion of  either  remedy  follows  as  the  result. 

3.  /'>oul)te  proof  for  fyreaeh  of  trust  against  trnstec-partner  and  against 
his  firm,  u-hieit  used  the  trust  fund.  B,  trustee  for  A,  raised  ^'15,000, 
which  was  ])ut  in  the  hands  of  B  &  C,  solicitors,  for  investment  in  a 
spccificfl  mortgage.  They  misapplied  the  money  to  their  own  use, 
an<l  l>ecanie  bankrupt.  A,  by  substituted  trustee,  proved  against 
joint  estate,  and  also  against  B's  separate  estate,  for  ^'15,000  and 
interest. — .\llowed.  P^reach  of  trust  a  tort  arising  out  of  contract  of 
firm.  Implied  contract  of  fimi  on  receipt  of  money,  and  of  B,  who 
undertook  trust.  In  re  Parkers,  19  Q.  B.  D.  84  (1887)  (Hi)- 

Value  of  property,  if  converted,  recoverable  on  implied  contraB.  B 
sold  interest  in  mining  claim  to  A,  who  furnished  machinery,  tools, 
and  means  for  working  the  claim.  The  undertaking  turned  out  un- 
productive, and  B  relinqui.shed  the  claim  and  equipment  to  A.  Sub- 
seciuently  B  and  C  ejecled  A,  and  took  possession  of  the  property. 
A  suerl  them  for  its  value.— Judgment  for  A  reversed,  because  B  was 
n  partner,  and  could  not  convert  his  own  property.  Moreanstern  v 
Thrift,  66  Cal.  577  (18S5). 

a.  .^  Series  of  Essays  on  Legal  Topics,  by  James  Parsons,  pp.  50^5, 
1076. 

^'  I  o]8.\^  '"  Johnson  v.  Stear,  109  Engl.  Com.  I..  Rep's.,  N.  S.,  34X 
(IC69). 

116 


Pt.  2,  Ch.  I.  The  Test.  §48. 

§48. 

iA  partnersl)ip  as  to  tl]irb  persons  is  tl)e  kgal  aspect  of  t\)t 
relation  at  tl)e  present  ^an. 

Partnership  is  ordinarily  classified  as :  i ,  a  partner- 
ship between  the  partners  and,  2,  a  partnership  as  to 
third  persons.  The  second  class  has  been  said  not  to 
be  a  true  partnership,  and  has  been  termed  in  deroga- 
tion a  qimsi-'psLVtnQrsh.iip.  The  principles  of  partner- 
ship were  discussed  primarily  with  reference  to  the 
partners,  and  only  secondarily  with  reference  to  third 
persons.  This  method  of  treatment  corresponds  to  the 
historical  development  of  partnership,  but  is  anti- 
quated at  the  present  stage  of  its  progress.  The 
method  reverses  the  order  of  modern  partnership  law, 
which  does  not  turn  ujDon  the  rights  of  the  partners, 
but  upon  the  rights  of  third  persons  who  deal  with  the 
firm.  In  recent  times,  under  the  freedom  of  contract, 
the  partners  may  make  any  medley  of  partnership 
they  please.^  The  provisions  of  the  articles  constitute 
a  domestic  law  for  themselves.^  It  is  only  when  the 
rights  of  third  persons  are  at  stake  that  the  effeA  of 
the  domestic  arrangement  must  coincide  with  the  legal 
struAure  of  the  relation.^ 

I.  A  partner  may  indemnify  his  co-partner  against  loss, 
and  give  him  all  the  profits.  The  agreement  to  indem- 
nify a  partner  has  been  thought  to  lack  consideration, 
and  to  be  inconsistent  with  partnership.*  But  the  con- 
trail of  partnership  has  a  consideration,  and  the  special 
provisions  are  sustained  by  the  general  consideration.'' 
The  stock  illustration  of  an  impossible  partnership, 
stated  by  the  civilians,  would  not  be  a  valid  partner- 
ship, at  the  common  law,  between  the  partners.  But 
the  partner  who  assumed  all  the  debts,  and  received 
none  of  the  profits,  might  be  a  principal  in  the  business 

117 


^^^  The  Test.  Pt.  2,  Ch.  i. 

(^74)  and  if  he  had  more  than  one  co-partner,  his  motive 
miirht  be  to  establish  one  co-partner  m  business.  It 
would  be  a  Rift  of  his  credit  and  services  to  that  co- 
n-irtner  and  his  share  of  the  profits,  increased  by  the  gift, 
would  lie  the  consideration  paid  by  the  third  co-partner." 
2  S7;<;/r  in  profits  Lnves  sharer  vo  title  to  proceeds  of  snoods  By  prior 
■  aerceuK-iits.  \\  a  broker,  who  bought  for  A,  took  1-4  profits  and  i-S 
losses  of  adventures,  in  lieu  of  bis  commission.  A  continued  l(j 
employ  n,  as  agent,  but,  by  a  new  agreement,  gave  him  1-3  profits 
aiKlmade  no  provision  for  losses.  B  drew,  as  a  partner,  upon  tlie 
proceeds  deposited  bv  A  with  C,  his  bankers.  A  became  bankrupt, 
and  his  assignees  .sued  C  for  amount  of  A's  deposit.— Recovered,  as 
H  had  no  title  to  the  goods,  or  to  the  proceeds  which  represented 
thenj,  but  was  merely  entitled  to  a  share  of  the  profits.    Smith  v. 

Watson,  2  B.  &  C.  401  (1824).  •  ,   j  .     ,     ,      -.t.  -„ 

Kt,XK. C  would  be  a  third  person,  and  entitled  to  deal  with  B  as 

a  partner.  This  would  be  a  defence,  if  B  had  not  indemnified  C,  and 
made  the  controversy  inter  se. 

Loan,  with  interest,  and  a  share  in  the  profits  does  not  make  part- 
nership inter  sc.  A  lent  B  /20  to  start  in  business,  and  he  agreed  to 
pay  5  ji.c.  interest,  and  subsequently  1-8  profitsiu  addition,  by  monthly 
instalments.  A  brought  a  petition  to  put  B  into  bankruptcy.  An- 
swer :  Loan  usurious  or  creditor  a  partner,  and  account  necessary.  — 
A's  right  as  petitioning  creditor  sustained.  Striking  monthly  balance 
ascertains  debt,  and  would  make  partner  a  creditor  for  it,  although 
partnership  continued,  but  as  no  intention  to  stake  money  iu  the 
business,  or  renounce  right  to  repayment  in  any  event,  A  was  a  lender, 
and  not  a  partner  with  B,  except  as  to  third  persons,  and  B  "could 
not,  after  borrowing  money  of  A,  turn  round  upon  him,  and  say,  you 
are  my  partner  by  operation  of  law,  and  therefore  I  will  not  pay  your 
debt."  Ex  parte  Briggs,  3  Dea.  &  Ch.  367  (1833). 

Consideration  for  a  loan  may  be  a  share  in  business  and  profits,  and 
yet  loan  recoverable  as  a  de'^t from  co-partner.  A  lent  B  ^59  for  1-3 
interest  in  his  inventions  and  in  the  profits  of  manufadluring  and  sell- 
ing them.  B  agreed  to  repay  the  loan  in  any  event.  A  sued  B  for  the 
advance.  Defence  :  A  was  a  partner. — Recovered.  Although  the 
consideration  for  the  loan  was  a  share  of  inventions  and  profits,  the 
contrac-t  to  repay  at  all  events  prevented  the  loan  from  becoming 
partnership  funds.  Elgie  v.  Webster,  5  M.  &  W.  518  (1839). 

HoldiniT  out  does  not  make  a  partner  in  interest.  A  sued  B  for 
price  of  merchandise.  He  pleaded  non-joinder  of  C.  A  called  C  as 
a  witness,  who,  on  his  voir  dire,  testified  that  business  was  carried  on 
in  name  of  A  &  C,  and  that  he  accepted  drafts  for  firm,  but  had  no 
share  in  the  business  as  a  partner. — Competent,  for  not  a  partner  in 
interest,  though  he  held  himself  out  as  a  partner.  Parsons  v.  Crosby, 
5  Esp.  199(1805). 

3.  Sharine;  profits  for  loan  of  credit  and  trouble,  no  partnership  inter 
sc.  n,  not  having  sufficient  credit,  induced  A  to  buy  goods  with  him 
for  an  adventure,  and  agreed  to  give  him  half  the  profits.  The  sale 
was  made  to  both,  and  A,  who  had  been  compelled  to  pay  the  price, 
sued  J5's  executor  to  recover  it. — Recovered.  Though  a  partnership 
as  to  third  persons,  none  inter  se,  because  profits  merely  compensa- 
tion to  A  for  his  trouble  and  credit,  Hesketh  v.  Blanchard,  4  East. 
144(1803). 


118 


Pt.  2,  Ch.  I.         •  The  Test.  §49. 

a.  Diilum:  partner's  indcDDiity  of  cu-parincr  ituduiii  paclniii.  A 
advanced  the  capital.  B  furnished  the  skill  and  did  the  work.  Profits 
divided  equally.  B  indemnified  A,  and  gave  collateral.  Loss  beyond 
collateral.  A  claimed  reimbursement  in  account.  Arbitrators  ig- 
nored guaranty. — Award  conclusive;  but  gusLvaniy  -nudinii  paflum, 
and  A  charged  with  1-2  the  loss.  Brophy  v.  Holmes,  2  Mollov,  Ir., 
Ch.  I  (1S28). 

b.  Partner  may  uidemnify  co-parlncr  against  loss.  A,  author,  and  B, 
publisher,  agreed  that  profits  of  every  edition  should  be  divided 
equally,  after  deducing  10  p.  c.  for  commissions  and  as  indemnity 
against  bad  debts.  B  assumed  the  risk.  A  brought  bill  to  rescind, 
averring  an  agency.  B  claimed  an  irrevocable  license. — Decree  for 
dissolution.  A  partnership,  though  B  stood  the  whole  loss.  Reade 
V.  Bentley,  4  Kay  &  J.  657  (1858). 

A  partner,  though  salaried  and  indemnified  by  a  pledge  of  the 
profits,  should  be  joined  as  co-plaintiff.  A  &  B  were  in  partnership 
as  solicitors.  By  the  articles,  B  stipulated  against  any  liability  for 
losses,  and  had  a  lien  on  the  profits,  to  indemnify  him  if  charged  with 
any  losses,  and  bargained  for  ^300  a  year  out  of  the  profits,  a  sum 
equal  to  1-5  the  then  profits.  A  &  B  sued  a  client  for  services.  Plea: 
B  not  entitled  to  recover  as  plaintiff. — B  rightly  joined.  The  fee  be- 
longed to  both  until  the  accounts  were  settled  and  the  sum  divided. 
The  fadl  that  B  was  indemnified  did  not  take  away  his  right  to  the 
fund  which  was  pledged  for  his  security.  Bond  v.  Pittard,  3  M.  &  W. 
357(1838). 

Pai'tner  need  not  share  loss.  A  &  B,  upon  dissolution,  submit 
accounts  to  arbitration.  Award  :  A  to  receive  no  compensation  for 
services,  nor  pay  for  any  losses  during  the  years  when  no  profits 
made.  A  sued  to  enforce  award. — ^Judgment.  Partners  competent 
to  agree  that  one  should  b^ar  losses,  and  presumption  that  award 
based  on  such  agreement.  Cochran  v.  Bartle,  3S.  W.  Rep'r854  (1887). 

c.  Managing  firm  business  but  an  indication  of  membership.  B  fur- 
nished D  &  C,  partners,  brewery,  machinery  and  capital  to  carry  on 
the  business,  stipulating  for  ^^700  a  year  for  the  use  of  his  property. 
He  bought  and  sold  for  the  firm,  and  paid  the  debts  from  the  pro- 
ceeds of  the  business.  A  sued  B,  as  partner  in  the  firm  of  D  &  C,  for 
the  price  of  goods.  Defence :  No  partnership,  but  B's  agency  and 
loan  a  benevolence  to  D  &  C,  his  relatives  B  informed  A  of  this  at 
the  time  of  purchase.  Court  below  rejected  evidence  of  motive. — 
Reversed.  Evidence  competent  for  jury.  Agency  but  an  indication 
of  B's  membership,  and-rebutted  by  proof  of  a  motive  consistent  with 
the  adls.  Tracy  v.  McManus,  58  N.  Y.  257  (1874). 


§49. 


It  is  tl)e  business  tul)icl]  iutiests  tl)e  partners  luitl)  romnier^ 
cial  prerogatiDes,  anb,  unless  engagelr  in  a  business,  tl)e  prin- 
cipals in  a  joint  transaction,  altl)ougl)  liable  for  tl)e  act,  l)ax)£  no 
partnersl)ip  potoers.^ 

119 


^^  Ttik  Test.  Pt.  2,  Cn.  i. 

A  joint  purchase  makes  the  purchasers  principals, 
and  each  liable  for  the  whole  price.  The  contribu- 
tion charges  the  solvent  buyers  for  the  insolvent's 
quota  of  the  price.'  Why  are  not  the  buyers  partners 
in  the  purchase?  They  join  as  principals  in  the  trans- 
action. The  answer  is:  The  Common  law  does  not 
admit  a  partnership  in  buying.'  As  trade  consists  of 
bu}-ing  and  selling  (§7);  the  transaction  does  not 
come  within  the  province  of  commerce,  and  is  not 
governed  by  the  Law  Merchant  (§4).  The  joint  pur- 
chase is  left  to  be  interpreted  by  the  tradition  of  ten- 
ures, and  holding  property  in  common  does  not  con- 
vert the  possessors  into  partners.^  The  purchase  is 
presumed  to  be  for  division  or  for  holding  in  common. 

The  purchase  must  be  joint,  or  the  point  does  not 
present  itself.  The  purchase  by  several  may  be  joint 
in  form,  but  separate  in  interest.  The  effect  is  a 
separate  purchase  by  each.'^  If  the  purchase  is  by 
one  for  several,  he  could  not  charge  each  principal  for 
more  than  his  quota.  The  agency  was  limited  to  buy- 
ing a  specific  amount  without  any  joint  purchase  by 
all.' 


I.  Twenty-three  underwriters,  who  had  insured  a  ship, 
which  was  abandoned  by  the  owner,  took  the  vessel, 
each  settling  for  his  proportion  of  the  risk  with  the 
owner.  They  sold  the  ship  to  divide  the  loss.  A  joint 
sale  was  not  the  purpose  the  insurers  had  in  view  when 
they  took  the  vcs.sel,  but  that  was  merely  an  incident. 
They  were  compelled  to  buy  the  ship,  not  as  an  article 
of  traffic,  to  make  a  profit  by  selling  it,  but  to  get  rid  of 
it  and  divide  the  loss.'' 

A  joint  purchaser,  hound  to  pay  the  whole  price,  could  not  acknowl- 
edge it  by  accepting  for  his  co-purchaser  the  seller's  draft,  though  ac- 
ceptance is  less  than  payment.  R  &  C  boutrht  land  of  D,  who,  to  pay 
off  A's  hen,  drew  upon  them  for  price  in  A's  favor.  B  accepted.  A 
sued  on  draft.  Defence :  Faihire  of  consideration  as  D  no  title- 
Judgment  for  A  reversed,  because,  at  best,  not  being  holder  for  value 

I  20 


Pt.  2,  Ch.  I.  The  Test.  §49. 

ou  account  of  a  debt  past  due,  be  took  subjecl:  to  acceptor's  defence 
against  drawer.  Schaeffer  v.  Fowler,  i  Am.  451,  Pa.  (1886). 

2.  A  joint  purchase  charges  each  buyer  for  the  whole 
price.  The  contribution  among  the  buyers  is  an  adjust- 
ment made  by  equity  of  the  consideration  in  proportion 
to  their  interests. 

Joint  adventure  a  patinership,  and,  though  quotas  specific,  liability 
in  addition  for  insolvent  party's  quota.  A,  and  four  other  firms, 
agreed  to  take  1-5  interest  each  in  1200  tons  of  sugar  ordered  by  B. 
As  bills  would  be  drawn  on  B,  he  should  have  power  of  sale,  though 
each  party  undertook  to  pay  his  quota  of  drafts,  and  assumed  1-5  of 
the  risk.  Adventure  resulted  in  a  loss,  and  two  firms  failed.  A,  who 
paid  the  bills,  sued  the  two  solvent  firms  for  contribution.  Defence: 
Each  liable  for  only  1-5  of  loss. — Contribution  enforced  against  each 
for  1-3,  because  a  joint  venture  of  the  five,  which  rendered  solvent 
parties  liable  for  quotas  of  insolvent  parties.  Mclnroy  v.  Hargrove, 
16  L.  T.  509  (1867). 

3.  The  books  speak  of  a  partnership  in  buying,  and  a 
joint  purchase  would  naturally  make  the  purchasers 
partners,  as  they  are  co-principals  in  the  transadlion  ; 
but  the  feudal  tradition  of  holding  property  yielded  as 
little  as  possible  to  the  commercial  principle,  which 
makes  it  an  article  of  traffic.  The  transa(5lion  not  being 
within  the  technical  definition  of  trade,  was  excluded 
from  the  operation  of  its  laws. 

4.  Purchase  of  interest  no  partnership  if  division  intended.  A  bought 
1-6  interest  in  cotton  owned  by  B  et  al.,  en  route  for  N.  Y.,  to  be 
divided  or  sold  on  arrival.  None  was  ever  sold,  tliough  part  was 
divided.  B  sent  the  rest  to  his  N.  J.  fadlory.  A  sued  lor  conversion. 
Defence  :  Partnership. — Recovered.  Agreement  alternative ;  partial 
division  of  cotton  a  determination  against  a  partnership.  Ward  v. 
Garnet,  6  Duer  257  (1857). 

5.  Gibson  v.  Lupton,  9  Bing.  297  (1832)  ^7,  n.  i. 

6.  Hoare  v.  Dawes,  i  Douglas,  371  (1780)  ^7,  n.  3. 
Coope  V.  Eyre,  i  H.  Bl.  39  (1788)  ^.7,  n.  i. 

a.  Joint  owners.  A  insured  cargo ;  and  B  &  C,  vdth  22  others,  as 
separate  underwriters,  insured  ship.  Ship  captured  by  enemy,  and 
abandoned  by  owners  to  underwriters,  who  paid  as  for  total  loss. 
Captain  ransomed  ship  with  portion  of  cargo,  and,  out  of  proceeds 
of  residue,  sold  at  port  of  destination,  repaired  ship.  A,  paying  in- 
surance on  cargo,  was  subrogated  to  owners'  title.  He  sought  to 
charge  B  &  C,  as  partners,  for  amount  expended  in  repairs. — Liable 
only  for  quotas  as  co-owners.  Not  partners,  though  they  designed 
to  sell  ship,  because  not  voluntary  purchasers,  but  owners  by  neces- 
sity. United  Ins.  Co.  v.  Scott,  i  Johns.  106.  N.  Y.  (1806). 


121 


§5o.  The  Test.  Pt.  2,  Ch.  i. 

§50. 

iilloiiiJil)  tlic  ciisteiifr  of  a  partncrsl]ip  inter  se  is  bctcrmineb 
bn  tl)c  intention  of  tl)c  parties,  itii  ctTcct  is  to  make  tl)an  priuci- 
pals. 

Where  there  is  a  contraA,  what  the  parties  intended 
is  ascertained  by  the  ordinary  rnles  of  constru6lion. 
What  is  the  real  nature  of  the  undertaking?  This  is 
the  fa6l  to  be  established.  Does  the  undertaking  pro- 
vide for  a  transadion,  or  a  series  of  transactions,  in 
reality,  onbehalf  of  all  ?^  If  a  partnership  is  intended 
by  the  parties,  no  disguise  of  the  operations  under  any 
other  relation  will  prevent  the  law  from  attaching  to 
the  members  all  the  incidents  of  partnership,  and  the 
chief  incident  is  liabilit}^  as  a  principal.  The  law  does 
not  determine  who  are  partners  inter  se.  The  parties 
create  their  own  relations.  The  law  simply  imposes 
upon  the  parties  an  adherence  to  the  positions  which 
they  have  taken,  not  in  semblance,  but  in  fa6l  (§44.  n. 
I,  and  §45),  and  charges  them  as  principals.' 

The  controversies  about  the  existence  of  partner- 
ship arise  from  inattention  to  the  prohibition  by  law 
of  piecemeal  partnership,  except  so  far  as  it  is  limited 
to  the  partners  themselves.  The  relation  is  a  well- 
known  association  with  definite  traits  and  results. 
The  freedom  of  contradl  does  not  permit  the  parties 
to  remodel  the  stru(5lure  of  the  partnership  relation, 
except  for  themselves.  They  are  powerless  to  alter 
its  constituents  as  to  strangers;  and  when  they  do 
come  iuto  confli(5l  with  third  persons,  they  are  com- 
pelled to  accept  or  rejecT;  the  status  of  partners  as  an 
ap-rregate.  The  confusion  arises  from  the  mistaken 
V-iief  of  the  parties,  who  think  they  have  the  right  to 


Pt.  2,  Ch.  I.  The  Test.  §50. 

coutraA  for  any  portion  of  a  partner's  attributes,  with- 
out being  bound  to  assume  the  rest  of  them,  if  they  are 
expressly  excluded  by  the  contra6l.  The  only  diflEi- 
culty  for  the  courts  is  to  decide  whether  the  part  con- 
tra6led  for  is  sufficient,  or  not,  to  carry  the  whole.^ 

1.  The  attribute  which  distinguishes  a  partner  from  all 
who  are  not  partners  is  undertaking  a  business  and  be- 
ing a  co-proprietor  of  it.  The  business,  if  not  carried 
on  by  each  partner,  is,  at  least,  carried  on  for  him.  It 
is  his  right  to  have  the  business  condu6led  as  he  planned 
and  started  it,  although  he  should  take  no  part  in  its 
control  or  management.  The  fa6l  that  the  business  is 
carried  on  by  his  will,  and  for  his  benefit,  shows  that 
he  is  a  principal.  Being  a  proprietor,  it  is  immaterial 
whether  he  participated  in  the  management  or  not,  as, 
for  example,  a  dormant  partner.""  Although,  in  his 
case,  the  impulse  was  imparted  at  the  outset,  the  origi- 
nal force  continues  and  sustains  the  business.  When 
withdrawn  by  the  demand  for  an  account,  which  involves 
a  settlement  of  the  business,  the  partnership  comes  to  an 
end.  The  power  which  created  and  can  terminate  the 
relation  perpetuates  it  by  permitting  it  to  stand. 

2.  Sharing  profits,  'cvith  absolute  control  of  bnsincs^,  makes  a  partner. 
B,  owner  of  a  mill,  agreed  witii  A  to  manufacture  cotton.  B  was 
allowed  ;^300  for  rent,  and  5  p.  c.  for  the  capital,  which  was  all  ad- 
vanced by  him.  A  had  entire  control  and  management  of  the  busi- 
ness, and  received  ^150  a  year  and  1-5  profits.  The  book-keeper 
rendered  account  to  both,  and  A  agreed  to  engage  in  no  other  trade. 
B  expelled  A,  who  sued  to  be  reinstated  as  a  partner. — Reinstated. 
A's  absolute  control  of  the  business,  and  his  dire(5t  sharing  the  profits, 
showed  the  parties'  intention,  that  he  should  be  a  partner.  Green- 
ham  V.  Grey,  4  Ir.  C.  L.  501  (1855). 

3.  A  loan,  if  a  cover  for  a  contribution,  charges  tlie  lender  as  a  partner. 
B  &  C  agreed  to  raise  for  a  business,  by  contributions  2-3,  and  by 
loans  1-3,  of  the  capital,  which  was  divided  into  60  shares,  the  loans 
to  be  made  under  28  &  29  Vidl.  c.  86.  A  loan  admitted  the  lender 
to  the  rights  of  a  contributor,  and  entitled  him  to  share  the  profits  in 
])roportion  to  his  share  in  the  capital.  He  could  compel  B  &  C  to 
cpndu(5l  the  business  according  to  the  deed,  to  exhibit  periodical 
accounts,  and  permit  him  to  inspect  the  books.  If  he  became  bank- 
rupt, they  were  to  pay  him  off,  and  to  refund  his  loan  at  termination 
of  the  partnership,  unless  on  a  settlement  his  share  of  losses  equalled 
the  loan,  though  he  was  not  liable  beyond  it.  B  &  C  failed,  and  A, 
the  holder  of  a  draft,  sued  D,  who  took  shares  by  way  of  a  loan,  as  a 
partner. — Liable,  as  a  dormant  partner.  The  lending  a  pretence  to 
conceal  partnership.  Pooley  v.  Driver,  5  Ch.  D.  458  (1876). 

123 


§5<^- 


Thi-  Test.  Pt.  2,  Ch.  i. 


Sharini:  ptofits  indefinitely,  and  also  losses  until  1-2  advances  lost, 
and  option  to  reclaim  balance  exerted,  make  a  partner.  A,  by  28  & 
ju  Via  c  S6,  i)ut  /  io,(x>o  in  a  firm,  uiulcr  articles  which  stipulated 
thai  H  &  C  should  be  partners  for  three  years,  a  period  subsequently 
renewed;  but  that  A  should  not  be  a  partner.  The  /i 0,000,  with 
such  advances  as  auv  party  should  make,  constituted  the  capital, 
whirh  carried  5  p.  c.  interest.  A  took  1-4  the  profits  and  losses,  the 
JMilancewas  divided  between  B  &  C.  Periodical  accounts  were  ex- 
hibited to  A,  who  had  option,  if  his/ 10,000  was  reduced  1-2  by  losses, 
or  if  either  partner  died,  to  dissolve  partnership  and  become  liquidat- 
injj  partner,  or  let  surviving  partner  continue  the  business  and  divide 
decease!  i)artner's  share  with  A,  though,  if  he  died,  his  executors 
were  not  to  withdraw  capital  until  expiration  of  term.  He  had  right 
to  sell  out,  and  IJ  *:  C  the  right  to  pay  him  off.  They  failed,  and  A 
offered  to  prove  for  /6,ooo,  subsequently  advanced  by  him,  and  in- 
terest.— Rejected,  because  A  was  a  dormant  partner.  He  shared 
profits  indefinitely,  though  his  right  to  withdraw  capital  when  re- 
duced to  a  moiety  by  losses,  made  him  share  them  only  to  a  limited 
extent.  He  had  control  over  destination  of  his  capital.  B  &  C  were 
not  his  debtors,  and  he  could  reclaim  but  a  portion  of  his  advance. 
I-:x  parte  Delh;isse,  7  Ch.  I).  511  (187^)- 

Advance,  coupled  with  partnership  privileges,  tnakes  lender  a  part- 
ner. H  advanced  C,  for  his  contemplated  business,  /500,  stipulating, 
I,  that  C  should  repay  the  loan  within  48  hours  after  demand,  and,  2, 
until  payment,  5  p.  c.  interest  and,  3,  in  addition  to  interest,  a  sum 
equal  to  1-2  the  net  profits  of  the  business,  less  a  salary  of  ^4  a  week 
for  C's  inanageinent ;  4,  that  C  should  devote  his  whole  time  to  the 
business  until  repayment;  5,  that  he  should  keep  books  of  account 
open  to  Bs  inspection  ;  6,  that  a  half  yearly  account  and  valuation 
snould  be  made  by  C,  at  his  expense,  for  B,  and,  7,  that  C  should 
furnish  B  every  facility  to  verify  the  account.  A  sued  B  as  a  part- 
ner—Liable. Act  28 '&  29  Vict.  c.  86,  s.  I,  enables  lender  to  take 
a  share  of  profits  without  on  that  account  alone  being  held  a  partner. 
But  the  sharing  is  not  excluded  as  a  constituent  when  combined  with 
other  .stipulations.  Clauses  I,  2  and  7  indicated  a  loan;  3  and  4  a 
partnership,  and  5  and  6  either  a  loan  or  a  partnership.  Froude  v. 
Williams,  56  Law  Times  Rep.,  X.  S.  441  (1887).  Comment,  83  Law 
Times  92-3. 

Nor  do  the  Frencli  permit  any  disguise  of  a  partner- 
ship. 

,/  loan  with  a  partner's  rights  makes  lender  a  partner.  A,  pre- 
vented by  his  office  of  sheriff  from  engaging  in  commercial  business, 
lent  3-.V>o  francs  to  B,  to  develope  a  quarrv.  An  equal  amount  was 
contribute<l  by  B,  and  al.so  by  C.  If  the  partnership  continued  ten 
years,  A  could  take  13  the  capital,  in  the  internal  he  shared  the 
profits  in  lieu  of  interest  equally  with  B  &  C,  had  the  rii^^ht  to  inspecl 
the  ))ooks  advise  and  vote  on  partnership  questions,  prevent  liqui- 
dation or  dissolution,  and,  upon  its  happening,  he  had  1-3  of  assets 
on  account  of  his  loan.  A  took  part  in  managing  the  business,  and 
dealt  \^nth  others  as  partner.— In  the  liquidation,  A  must  be  treated 
as  a  partner.  Like  his  co-partners,  he  must  bear  the  losses  as  he 
^"^r*  A  XJ.°^^^' '"  P''oportion  to  his  loan,  which  was  a  contribution. 
i>oci€te  de  1  Is6re,  5  Revue  des  Soci^t^s  266.   1S87. 

■ .  •  ^°'"{'J3^'"^y  ""•  dormant,  on  contract  with  ostensible,  partner  B 
timber  broker,  suggested  to  C  the  purchase  of  a  cargo  of  timber  from 
A.      The  invoice  was  made  out  to  C,   and  R  drew  on  him  for  the 

T24 


Pt.  2,  Ch.  I.  The  Test.  §51. 

freight,  which  C  paid.  A  sued  B  &  C,  as  partners,  for  the  price. 
Some  evidence  of  joint  shipment.  Objedlion  :  Contra6l  by  C. — 
Plaintiff  might  show  B  was  interested  in  the  contradl,  as  a  dormant 
partner.   Ruppell  v.  Roberts,  4  N.  &  M.  31  (1834). 


§51. 


Ipropertp  is  tl)c  mcbium  of  partn£r8l)ip,  anb  partners  are 

:propriftors  of  tl)c  stock. 

As  trade  consists  of  buying  and  selling,  its  subjedl- 
matter  is  merchandise.  Without  property  there  could 
be  no  trade.  Property,  as  the  medium  for  partnership 
adts,  and  the  substance  of  its  transadlions,  is  the  trait 
(T union  of  partners. 

A  principal  in  the  business  means  a  proprietor  of 
the  stock;  one  who,  by  virtue  of  his  dominion,  buys 
and  sells  the  property  of  the  firm.^  If  he  is  invested 
with  the  prerogative  of  dominion,  although  he  has, 
in  fa6l,  no  title  to  the  property,  he  is  none  the  less 
assumed  to  be  a  proprietor  by  those  who  deal  with 
the  firm  (§4,  §25)."  The  domestic  arrangement  be- 
tween the  partners  does  not  affe6l  the  position  which 
is  created  by  the  nature  of  trade. 

Sharing  the  profits  and  losses  of  a  business,  if  not  by  co- 
owners,  forms  a  distinct  class  of  association  in  the  Civil 
law,  called  association  en  participation^  and  is  contrasted 
with  partnership,  which  is  a  sharing  by  co-proprietors.'' 
By  the  Common  law,  the  sharing  of  profit  and  loss  by 
proprietors  identifies  them  with  the  business,  and,  being 
jointly  interested  in  the  business,  they  are  partners.  The 
Civil  law  does  not  judge  the  party  by  his  interest  in  a 
transaction,  but  charges  him  only  upon  his  avowed  con- 
tract.''    The  undisclosed  principal  not  beino;-  liable  under 


§5^ 


Thk  Test.  Pt.  2,  Ch.  i. 


that  system  wlu-n  discovered,  the  cases  in  which  he  escapes 

liability  are  j^aouped  under  the  association  en  participation.'' 

I  IfMotits  shiin\l  as  proprietors  Joint  aRion  lies.  A  &  C  shared  profits 
of  purchase  mid  sliiinneiit  of  cotton.  A  sued  both. —Charge  .sustained, 
that  iMirtics"  inlt-ntion  was  not  controlling,  but  a  joint  interest  would 
)(ivc  a  joint  cause  of  action.  Stevens  v.  Gainesville  Nat.  Bank,  62 
Texas  499  \  18X4). 

liuviiii:  laud  for  capitalist  -with  tialf  profits  of  sale,  a  partnership. 
\\y  oral  ngrccnRiit,  A  was  to  furnish  money,  with  which  B  was  to  buy 
lun<l.  taking  title  in  A's  name.  A  received  for  his  capital  10  p.  c.  iu- 
Icrcs't  an<l  half  profits  from  sale  of  land.  A  brought  account  against 
B.— Account  lay.     A  &  Ji  partners.   Richards  v.  Grinnell,  63  Iowa  44 

liuxins:  laud  on  joint  account  of  capitalist  and  prospector,  a  part- 
nership. H  received  money  of  A,  to  be  invested  on  joint  account  in 
buying  land  ;  if  no  investment  made,  to  be  returned.  Administrator 
of  A  sued  B. — Verdict  for  plaintiff  set  aside.  B  notatrustee  or  agent, 
but  j)arlner  of  A.   Hill  v.  vSheibley,  68  Ga.  556  (1882). 

Proprietors  shariuir  profits  are  partners.  A  undertood  to  look  up 
and  bid  for  desirable  lands  at  tax  sales,  to  procure  deeds  from  the 
State,  and  to  i)ut  title  in  B ;  who  agreed  to  furnish  money  for  the  pur- 
chases, and  to  hold  title  for  both.  The^-  were  to  sell  the  land  and, 
after  repaying  H  his  advances,  share  the  proceeds.  A  brought  ac- 
count;  B  denmrred.  —  Decree.  Joint  owners  of  land,  each  exerting 
the  ])owers  of  ])roprietors  and  sharing  the  profits  of  aggregate  trans- 
a<flions.  Hunt  v.  Erikson,  57  IMicli.  330  (1885). 

Sharing  profits  and  losses  by  co-owners,  at  least  in  part,  makes  joint 
business.  B  gave  C  the  use  of  54,000  for  1-4  interest  in  a  patent,  to  be 
repaiil  solely  out  of  first  profits,  without  recourse  to  C.  C,  the  sole 
and  salaried  manager,  was  entitled  to  retain  1-2  of  B's  profits  until 
they  amounted  to  5'5.ooo.  They  agreed  not  to  be  partners,  but  co- 
owners.  C  rented  a  store,  and  signed  the  lease  as  president  of  the 
"C"  Co.  A  sue<i  B  &  C  on  the  lease  for  balance  of  rent. — Recov- 
ered. Sharing  in  profits,  with  a  limited  share  in  losses,  makes  a  busi- 
ness carried  on  for  joint  benefit.  Manhattan  Brass  and  Mfg.  Co  v. 
Sears.  45  N.  V.  797  (1871),  reversing  i  Sweeney  426. 

Cullivatin;r  peach  trees,  and  sharing  the  profits  of  crops,  no  part- 
nership. B  furnished  2.700  trees.  C  planted  and  cultivated  them  on 
his  farm.  He  agreed  to  pick  and  market  the  fruit  during  the  life  of 
trees,  at  jf)int  expense,  and  account  to  B  for  1-2  net  profits.  B  died, 
anil  his  administrators  sold  his  interest  to  A,  who  demanded  specific 
perfonnance  and  an  account  of  1-2  profits.  Defence:  C  surviving 
partner,  an<l  A  no  standing.— Contract  enforced,  because  no  partner- 
shin  without  joint  ownership  of  funds.  TransaAion  a  sale  of  trees, 
and  the  price  1-2  jjrofits  of  the  fruits.  Robbins  v.  McKnight,  i  Hal. 
Ch.  645,  E.  &  A.,  N.  J.  (1S47).  ^ 

2.  The  control  as  if  owner  and  sharing  profits.  A  owned  saw-mill 
and  tiniVier ;  B  conduaed  business,  receiving  1-3  profits.  B  paid  in- 
dividual debt  with  timber  from  mill.  A  sued  creditor  in  assumpsit. 
He  objected  non-joinder  of  B.— Non-suit,  because  the  control,  with 
servKes  and  share  in  profits,  made  partnership.  Dob  v.  Halsev,  16 
Johns.  ,^4.  N.  Y.  (1819).  ^  i-  y. 

Temporary  proprietorship  sufficient  for  partnership.  B,  owner, 
executed  deed  in  escrow  to  C,  D  et  al.,  for  half  interest  in  a  mine,  to 
be  dell  vered  on  payment  of  price  within  90  davs.  E,  manager,  bought 
tools  and  supplies  for  working  the  mine,  and  sued  C.  D  etal.  for  price. 

126 


Pt.  2,  Ch.  I.  The  Test.  §51. 

Defence  of  C  &  D  ;  Attorneys  employed  to  secvire  property  and  inter- 
est given  for  services. — Recovered.  Partners  in  working  mine,  though 
not  proprietors.  Manville  v.  Parks,  7  Col.  128  (1883). 

Dealing  with  the  title  for  the  purpose  of  gain  shows 
a  partnership  inter  se  when  the  nature  of  the  business 
excludes  the  partners  from  an)'  beneficial  interest  in  the 
property  itself. 

Exerting  tlie  fimilion  of  proprietors  and  sharing  tlie  profits  in  alee 
partners  in  a  single  venture.  If  partners  broilers  for  sale,  and  sale 
becomes  impossible,  a  partner  may  buy  for  himself.  B,  having  an 
option  to  sell  4-5  of  a  mine,  and  A,  the  agent  for  sale  of  1-5,  agreed, 
in  case  they  effecfled  a  sale  of  the  lode,  to  divide  the  expenses  and 
share  the  profits  between  them.  The  option  was  extended  to  Decem- 
ber 10,  by  putting  up  a  forfeit  of  1 1,500.  C,  the  only  prospective 
purchaser,  had  forfeited  ^2,500  to  A  &  B  by  his  failure  to  purchase 
within  a  limited  time.  At  the  last  moment  before  the  option  expired, 
but  after  the  negotiation  with  C  had  failed,  B,  without  A's  knowledge, 
advanced  the  price,  |;i 7.000  for  4-5  and  ^3,000  for  1-5,  and  took  title 
himself.  Theforfeitof  |;  1,500  reduced  the  cash  paid  for4-5to  115,500. 
A  promised  B  f  1,500  out  of  his  profits,  and  induced  B  to  give  C  five 
days  additional  time,  but  C  failed  to  purchase.  Question  whether 
advance  of  |;  1,000  by  B  to  owner,  when  extension  obtained,  was  out  of 
the  12,500  firm  assets  or  out  of  his  separate  property.  A  brought  bill 
for  1-2  interest  of  mine  and  its  produdl. — Bill  retained  for  account  of 
assets  or  A's  share  of  ^^2,500  less  |;i,5oo,  that  is  |,i,goo  less  expenses. 
Partnership  to  effedl  sale  of  property  belonging  to  others,  without 
any  interest  in  the  title.  B,  in  buying,  did  not  represent  the  partner- 
ship, for  it  could  not  outlast  its  obje(5l,  which  had  ceased  to  exist. 
The  |ir,5oo  was  saved  to  firm  by  B's  purchase  and  the  extension  of 
time  for  C  renewed  the  business.  At  best,  the  |;i,ooo  was  used,  not 
to  sell,  but  to  buy,  the  title,  a  purpose  foreign  to  the  partnership. 
Kayser  v.  Maugham,  8  Col.  232  (1885). 

a.  "  Cassaregis,  dont  I'opinion  est  si  puissaute  en  droit  commercial,  fait 
"  aussi  une  difference  sensible  entre  la  participation  et  la  societe  :  les 
' '  participans  ue  lui  appraissent  par  comme  de  vrais  associes.  Et  pour- 
"qoi?  par  le  motif  donue  par  Deluca:  parce  que  les  participans  ne 
"  sont  pas  coseigneurs  de  Paffaire:  '  iVon  sunt  socii,  neqiie  in  jure 
'^formali,  negotii  considerantur  condoinini ;  sed  solum  sunt partici- 
"■  pes. '  De  la  cette  conclusion  :  '  Ma.vima  est  differentia  inter  socium 
'''■  et  participem,  et  sic  diversi  in  jure  producuntur  effeHus,  quorum 
" praecipui  sunt,  ut participes  iwn  teneantur  nisi  ad  ratam  capitalis 
"pro  quo  participant  in  negotio ;  neque  ipsi  agere  possunt  contra 
' '  debitores  societatis,  neque  conveftiri  valent a  creditoribus societatis. ' ' ' 
Troplong,  des  Socidtes,  ^494. 

h.  "Ne  pent  constituer  qu'une  association  en  participation,  et  non 
"une  societe  en  nomcolledlif  quiserait  nulle  pour  defautdepublica- 
"tion,  lamiseen  commun  d'operationscommerciales,  quel  qu'en  soit 
"I'objet,  entre  divers  commercants,  si  chacuu  des  interesses  agit  en 
"son  nom  seul,  sans  reveler  aux  tiers  avec  lesquels  il  traite  qu'il 
"represente  d'autres  interets  que  les  siens  propres."  RousSEAU, 
Societes  commerciales,  ^1736. 

"  D'abord  elle  est  occulte,  essentiellement  occulte.  Quel  que  soit 
"son  objet,  si  elle  se  mauifeste  au  public,  elle  n'est  pas  une  partici- 
"pation.  *  *  des  I'instant  qu'elle  ne  reste  pas  concentree  dans  des 
"  rapports  int^rieurs,  elle  est  une  societe  colledlive ;  le  nom  de  par- 

127 


(I^i.  Thk  Tkst.  Pt.  2,  Ch.  I. 

•ion  est  mculeur,  il  ne  lui  apparticiil  psus."    Troploxg,  des 

■  11  Hii'i-iifui  recouiiu  que-  le  caraclijre  essentiel  et  dominant  de  la 
nartinp.ition  (/tail  d'Otre  occulte,  tie  ne  point  se  manifester  aux 
licrs.  tic  se  rcsunicr  dans  un  compte  de  benefices  ou  pertes  entre 
les  assocics."  Vavasskir,  des  Societds,  ^315. 

' ' Priinihr  fombinaisoti.  Vn  navire  arrive d' Am^rique  a  Bordeaux, 
churKe  do  niarchandises.  Un  ncK'ociant  de  ce  port  envoie  a  son  cor- 
resiHiii.lant  de  Havonue  le  detail  de  la  cargaisou  et  lui  propose 
d"ai  hcltr  avec  lui  une  partie  de  cafe,  qui,  suivant  toutes  Its  appar- 
cncisde  la  place,  pourra etre reveudue avec  de  grands avautages,  le 
prianl  de  lui  faire  connaitre,  en  cas  d'affirniative,  pour  quelle  part  il 
desire  entrer  dans  cette  speculation.  Le  negociaut  de  Bayonne 
repond  qu'ilaccepte  I'affaire  pour  un  tiers,  etqu'ilentrera  dans  cette 
projKjrtiou  dans  les  profits  et  pertes.  I.a-dessus,  le  negociaut  de 
liordcaux  achele  la  niarchandise  en  son  noiu,  et  par-la  se  fomie  une 
association  en  participation,  que  Ton  appelle  aussi  co»ipte  en  partici- 
pation, parce  qu'el le  se  resout  en  uu  compte  entre  les  deux  negocians. 
Dans  cette  position,  il  est  clair  que  le  negociaut  bordclais,  g^ui  aura 
achetddu  niaitredu  navire  la  partie  de  cafe,  sera  stul  oblige  envers 
lui ;  le  negociaut  de  Bayonne,  au  contraire,  u'aura  coutraCte  aucune 
obligation ;  et  si  le  Bordelais  vient  i  faire  faillite,  le  vendeur  n'aura 
pas  (le  recours  contra  son  participant.  Dcuxihne  combinaison,  Je 
me  suis  rendu  adjudicataire  de  la  femie  de  I'octroi  d'uue  grande 
ville;  mais,  pour  me  procurer  des  resources  dont  j'ai  besoin,  j'ad- 
mets  plucieurs  capitalistes  a  participer,  avec  moi,  aux  profits  et 
pertes,  nu)yennant  qu'ils  me  fournissent  des  fonds  jusqu'  a  une  cer- 
taine  somme  con  venue.  Du  reste,  cette  particij)ation  doitdemeurer 
inconnue;  je  suis  seul  oblige  comme  fermier  de  la  ville;  tousles 
aclfs  se  font  en  mon  uom.  Ciiiquic)ne  coynbinaison.  Outrouve  en- 
fin  la  siinjjle  participation  dans  I'espece  suivante.  Deux  ou  trois 
marchands,  voyant  que  le  ble  est  cher  en  France  et  bou  marcbe  a 
Odessa,  couviennent  que  Pierre,  I'und'eux,  ira  dans  cette  ville  pour 
faire  un  achat  considt^rablede  taut  de  sacs  de  froment,  et  pour  en- 
voyer  ensuite  ces  grains  dans  le  port  de  Marseille  a  Joseph,  autre 
participant,  charge  d'en  faire  la  revente.  Du  reste,  comme  il  ne 
s'agit  que  d'une  seule  affaire  determinee,  ces  marchands  ne  pren- 
nent  pas  de  raison  sociale.  Un  seul  achete  ce  qui  est  convenu ;  un 
autre  revendseul,  et  rend  compte  a  ses  associes,  anonymes  pour  le 
public.  Cesdeniersne  sont  pas  engages  envers  les  vendeurs  des 
Iromens ;  ils  n'ont  pas  agi  colleclivement.  Celui-la  seul  qui  a  paru 
a  contracl^  des  obligations;  les  tiers  ne  conuaissent  pas  les  autres 
et  nepeuvent  de  leur  chef  les  rechercher."  Troplong,  desSocietes, 
?482-3.  J.485,  ({488.  The  French  cases  are  colledted  by  RoussEU,  des 
Societ<?s,  ch.  XII.  "  I.e  participant  quiagit  n'estpasnecessairement, 
"comme  dans  la  societe  colle<<tive,  le  mkndataire  de  celui  qui  n'agit 
pas.  Pre-scjue  toujours  I'afiaire  est  sieune;  il  opere  en  droit  soi, 
comme  dit  Savary,  et  alors  on  ne  pent  lerevoquer;  car  ce  serait 
vouU.ir  lui  enlever  le  domaine  de  sa  chose.  Le  fermier  de  I'oAroi 
aui  a  des  participans.  le  negociaut  de  Bordeux  qui  achete  une  portion 
de  cafe  de  compte  A  dcmi  avec  le  negociaut  de  Bavonne,  le  marchand 
^ui  vaarbeterdubled  Odessa,  tons  font  leur  affaire  propre  :  s'ilsont 
-,  cest  pour  partager  les  gains  et  les  pertes,  mais  pas  pour 
'  :lt  la  propnete  meme  de  I'operation.    Cependant,  il  pent 

ii;.  .,  ,:, , ,  .tr  c^ue  le  participant  aclif  soit  le  mandataire  de  I'autre 
pourconduire  a  fin  I'affaire  dont  les  resultats  doivent  etre  partages. 
bi  1  icrre,  qui  va  partir  pour  le  Levant  sur  le  navire  I'Ajax,  est 


Pt.  2,  Ch.  I.  The  Test.  §5-2. 

"  charge  par  Paul  d'operer  a  Smyrne,  de  compte  a  demi,  la  vente  de 
"certaiues  marchandises  qu'il  lui  confie,  Pierre  joue,  dans  cette 
"  societe  en  participation,  le  role  de  mandataire  de  Paul. "  Troplong, 
des  Societes,  ^503-4. 


§52. 

0[]armg  tl)e  profits  bij  t\)t  proprietors  of  tl]e  stock  ronnerts 
tl)£  sl)ar£-tak£rs  as  priunpals,  tijrougl]  tl)£  imbiuni  of  property. 

The  phrase,  sharing  profits  'as  profits,'  attempts  to 
say  that  the  title  to  a  share  of  the  profits  depends 
upon  a  corresponding  ownership  of  the  firm  stock. 
As  property  is  at  the  owner's  risk,  a  loss  of  it  falls 
upon  him.  Dividing  the  loss  is  the  counterpart  of 
sharing  the  profits.  He  takes  the  benefit,  and  he 
bears  the  burden  of  ownership.  To  a  dealing  with 
property,  as  a  means  of  gain,  correspond  the  lia- 
bilities incurred  in  the  business.  If  profits  are  treated 
as  the  increase  of  property  made  by  trading  with  it, 
the  share-taker  would  be  considered  a  proprietor,  and 
suffer  any  loss  caused  by  the  transactions  as  a  de- 
crease of  his  propert}'.  It  was  upon  the  property- 
theory  that  sharing  the  profits  was  conclusive  of  a 
partnership. 

Proprietors,,  buying  and  selling  slock,  partners  A  &  B  agreed 
to  buy  eggs  with  money  contributed  by  each,  store  them  with  B,  and 
each  sell  and  share  the  profit  and  loss.  A,  who  performed  his  part 
of  the  contradl,  sued  B  for  ueglecl  in  taking  care  of  eggs.  Demurrer. 
—Action  lay,  though  partners.  Bohrer  v.  Drake,  t,t,  Minn.  408  (1881). 

Interest  of  proprietors  in  the  business  and  its  profits  makes  partner- 
ship. B  agreed  to  lend  C  &  D  |;5,030  from  titne  to  time,  according 
to  requirements  of  their  business,  manufacfturiug  and  selling  segars, 
and  let  loan  remain,  as  a  permanent  fund  in  the  business,  from  one  to 
five  years,  at  his  option  ;  C  &  D  to  devote  all  their  time  and  skill  to 
the  business,  which  should  be  confined  to  manufacl;uring  and  selling 
segars ;  to  keep  account  of  all  purchases  and  sales,  and  from  and  to 
whom,  and  when,  made  ;  and  of  all  receipts  and  payments,  and  to  pa)% 
every  six  months,  3-5  profits,  with  a  guarantee  of  at  least  53,000  a  year 
to  B,  who  should  have  a  lien  on  all  firm  property,  as  security.     Breach 

129 


§52 


TnK  Tkst.  Ft.  2,  Ch.  1. 

of  contraift  hy  C  &  D  ]>ut  :m  end  to  loan,  and  authorized  B  to  take 
IH.SKcssiou  of  assets,  and  sell  them  to  satisfy  his  loan.  A  sued  B  on 
notes  made  bv  C  6c  I)  in  the  business.— Recovered.  No  repayment 
of  loan,  no  rate  of  interest.  C  cS:  1)  not  sole  proprietors.  Guarantee 
for  Hsbeiietit.   Rosenfield  v.  Hai^ht,  53  Wisconsin  260  (1881). 

Shannt:  f>rojHs  as  pivfyriiiors  is  partnership.  B,  owner  of  planta- 
ticm.  owed  C  Ji.ocx).  Thev  agreed  to  raise  a  crop,  B  furnishing  outfit 
anil  land,  and  advancing  n'loney  to  pay  hands  and  carry  on  business ; 
C  hiring  hands,  superintending  business,  and  reimbursing  B  half  his 
outlav  of  51.000.  B  mortgaged  crop  to  A,  and  C  .sold  bales  of  cotton 
in  dispute  to  D.— Judgment  for  D  reversed.  Partnership,  because, 
as  proprietors,  they  looked  only  to  profits.  Reynolds  v.  Pool,  84  N. 
C.  ^7  ( 1881 ).  .Affirmed  in  mining  partnership.  Mauney  v.  Coit,  86 
N."C.  463(1882).  ^,       .,. 

\\  ^:  C  agreed  to  raise  and  dismantle  sunken  steamer,  B  furnishing 
machinery,  C  funds  and  labor.  The  material  recovered  to  be  sold  by 
B  on  joint  account,  advances  made  by  C  being  first  repaid.  A  sup- 
plied articles  to  C,  and  sued  both. — Recovered.  Partners.  Lynch  v. 
Thompson.  61  Miss.  354  (1883). 

\,  H.  C,  I)  &  E  agreed  to  cut  and  sell  ice,  dedu<5l  expenses,  in- 
cluding their  labor,  from  proceeds,  and  divide  the  residue  in  equal 
shares.  K,  with  concurrence  of  C  and  D.  sold  ice  to  F.  A  and  B, 
being  dissatisfied  with  price,  demanded  account  of  C,  D  and  E  for  2-5 
full  price,  and  made  F  co-defendant. — Bill  dismissed  as  to  F.  Decree 
against  C,  D  and  E  for  acflual  price.  Partners.  Each  has  jus  dis- 
ponrtidi,  and  majority  controls.  Staples  v.  Sprague,  75  Me.  458  (1883). 

//  broker  joins  in  purchase  on  his  own  account,  and  takes  an  inter- 
est instead  of  a  cointnission,  he  is  a  partner.  A,  a  merchant  in  Lon- 
don, directed  B,  a  broker  at  Liverpool,  to  buy  cotton,  and  allowed  him 
1-3  interest  in  profit  and  loss  of  adventure,  instead  of  a  commission. 
The  transacftion,  which  lasted  three  months,  was  treated  in  the  cor- 
respondence as  a  joint  purchase,  and  the  cotton  was  stored  in  build- 
ing rented  by  B.  B  pledged  the  cotton  to  D,  who  thought  B  w  as  the 
owner.— A  brought  trover  for  2-3  the  cotton.  D  entitled  to  it,  as  B 
was  a  partner,  and  had  the  right  to  pledge.  Reed  v.  Holliugshead,  8 
R.  cS:C.  878(1825). 

.Sharins^  partnership  fund  and  a  sum  out  0/ profits,  make  a  part- 
ner. B  advanced  /"24,cxk)  to  C  &  D,  who  were  in  partnership,  as 
brewers,  and  the  three  executed  a  deed,  by  which  a  partnership  stock 
wa.s  created,  as  their  joint  property.  B  had  no  aliquot  share  of  the 
profiLs,  but  the  right  to  an  account,  in  order  to  get  /'2,ooo  or  ^■2,400 
out  of  the  profits.  C  &  D  became  bankrupt,  and  A  sued  B,  as  a  part- 
"^^r.- Liable,  because  a  joint  owner  of  the  partnership  stock,  and 
entitled  to  a  sum  out  of  the  profits,  though  not  to  an  aliquot  share. 
I-:x  parte  Chuck,  8  Bing.  469  (1S32). 

f'roprietary  interest  in  prcjits,  coupled  icith  an  advance,  makes  a 
partnership.  B  lent  C  &  Co.  |2,ooo,  and  took  1-3  of  profits  in  lieu  of 
interest,  stipulating  for  semi-annual  settlements,  and  an  option  to 
become,  by  an  additional  payment,  a  partner  at  end  of  the  year.  A 
sued  B  as  partner.     Defence :  Share  in  profits  compensation  for  loan. 

-rroMt.s  not  compensation  if  partaker  also  makes  advance  to  firm. 


•'  ,  '/'  ^y  •'"'jj<.i-i--"iui.ici ,  ajLLu  coniroi  ana  snare  tn  pronis, 

make  a  partner.  B  procured,  for  C  &  D,  a  contract  for  building  a 
railroad  and  agreed  to  give  his  skill  in  construAing  it.  They  agreed 
to  give  hini  1-3  net  profits  made  out  of  the  contraa,"and  1-3  net  profits 
01  operating  the  road.     B  assigned  his  interest  under  the  contxadl  to 

130 


Pt.  2,  Ch.  I.  The  Test.  §53. 

E  &  F,  for  |20,ooo.  C  &  D  agreed,  in  consideration  that  E  &  F 
would  raise  funds  for  the  enterprise,  to  dedudl  the  ^20,000  out  of  the 
1300,000,  and  share  the  profits  of  the  contra<5l  equally.  The  business 
was  carried  on  in  the  name  of  C  &  D.  A,  a  track-layer,  sued  the  four 
on  a  note  given  him  by  C  &  D.  E  made  defence  :  Not  a  partner. — 
Liable.  He  had  a  joint  interest  in  working  the  contradl.  Voorhees 
V.  Jones,  5,  Dutch.  270  (1865). 


§53. 


(Si\)t  titk  to  profits  ^£pm^s  upon  otoncrsliip,  not  upon  part- 
ner sl]ip. 

The  right  is  created  by  the  law  of  property,  not  by 
the  law  of  relation,  and  property  includes,  not  only 
the  tangible  stock,  but  the  capitalized  services  of  the 
partners.  The  profits  are  an  incident  of  dominion, 
as  rent  is  an  incident  of  proprietorship  in  land.  They 
are  the  result,  or  consequence,  of  business,  a  produ(5l 
of  the  partnership.  The  partners  share  the  profits, 
because,  upon  a  dissolution  of  the  firm,  the  members 
inherit  its  property.  A  division  of  the  firm  property, 
whether  it  consists  of  profits  or  of  stock,  puts  an  end 
to  the  firm.  As  to  that  property,  the  partnership  is 
dissolved.  A  partnership  in  a  single  transacftion  dis- 
closes the  process.  At  the  instant  the  partner's  right 
to  share  the  profits  accrues,  the  partnership  ceases  to 
exist.  In  every  partnership  the  right  to  share  the 
profits  of  the  firm,  or  its  stock,  can  be  enforced  only 
by  a  final  account,  which  means  a  dissolution.  The 
right  to  share  in  the  profits  is  an  individual  or  several 
right,  which  takes  effe6l  after  the  joint  right  is  dis- 
solved into  its  constituent  parts.  Partnership  brings 
its  members  into  combination,  and  makes  them  a  unit. 
The  rights  of  the  partners  are  so  exclusive  that  the 

131 


^53.  Tin-  Test.  Pt.  2,  Ch.  i. 

exertion  of  a  several  right  dissolves  the  relation.  The 
ctxalled  right  to  share  the  profits  during  the  partner- 
ship is  not  a  right  at  all,  but  a  threat.  It  takes  effed 
as  a  condition,  reserved  at  the  outset,  to  sever  the  re- 
lation altogether,  unless  a  partial  dissolution  is  con- 
ceded for  the  occasion.  The  joint  right  of  ownership 
is  inconsistent  with  several  rights  of  ownership  in  the 
same  propertyj  and  cannot  co-exist  with  them.  The 
individual  title,  if  permitted  for  convenience,  to  ex- 
clude the  joint  proprietorship  of  the  firm,  is  not  recog- 
nized, except  as  an  indulgence.  The  sanAion  which 
gives  legal  validity  to  the  right  makes  a  dissolution 
of  the  partnership  the  only  means  of  enforcement. 
The  right  of  the  partner,  therefore,  is  to  dissolve  the 
firm,  in  order  to  get  his  share  of  the  profits. 

The  co-incidence  of  profits  is  not  with  partnership, 
but  with  trade.  They  belong  to  trade,  and  they  dis- 
close their  identity  with  it.  As  the  desire  for  profits 
is  the  motive  which  creates  the  business,  they  are  the 
cause  of  trade,  because  they  are  the  produ(5l  of  its 
transadlions.  The  profits  became  a  constituent  of 
partnership,  on  account  of  the  field  of  its  operations 
being  limited  to  trade.  It  is  the  business  which  is 
concerned  with  profits,  and  the  profits  make  the  trader. 
The  partner  is  a  trader,^  and  as  trade  is  buying  and 
selling  property,  he  is  a  proprietor. 

The  partners  have  a  joint  title  to  both  contribution 
and  assets.  The  separate  titles  do  not  come  into  ex- 
istence until  the  joint  title  is  exhausted.  The  part- 
ners, as  debtors,  do  not  obtain  a  clear  title  until  their 
creditors  are  paid.  Nor  can  they  compete,  by  means  ' 
of  their  separate  titles,  with  the  firm-creditors,  who  are  i 
also  subrogated  to  their  separate  rights.     The  credit- 

132 

i 


Pt.  2,  Ch.  I.  The  Test.  §54. 

ors  rely  upon  both  the  joint  and  separate  titles  of  their 
debtors  for  satisfaAion.  The  profits,  when  shared,  are 
separate  estate,  but  the  partner  cannot  take  or  hold 
them  against  the  creditors,  to  whom  he  pledged  his 
title.  He  renounced  his  separate  title  in  advance,  and 
postponed  his  right  of  property  in  favor  of  the  creditors 
until  they  were  satisfied.  This  is  the  pledge  of  part- 
nership. 

I.  Salary.  A  took  1-4  profits  in  lieu  of  salary.  Plaintiff  joined  him 
as  partner. — Net  partner,  because  not  a  principal  trader  in  the  busi- 
ness. Dissent. — vSharing  profits  in  lieu  of  salary  makes  partnership 
as  to  third  persons.  A,  not  being  principal,  could  not  join  as  plaintiff; 
such  right  depends  on  existence  of  partnership  inter  sc.  But  he  may 
be  made  defendant  as  partner  quoad  alios.  Burckle  v.  Eckhart,  3 
Comst.  132 ;  s.  c.  I  Denio  337  (1849). 


§54. 


IpartncrB,  b£ing  nott]ing  but  co-proprietors  in  business,  prov- 
ing tl)e  inliicia  of  owncrsliip,  d)arg£S  a  principal  u)l)o  coulti  not 
otl)crn)is£  be  ibentifiei)  as  a  partner. 

It  is  in  this  way  that  sharing  the  profits  established 
the  title  of  a  proprietor,  and  hence  a  partnership.^ 
It  makes  no  difference  what  distribution  the  partners 
have  made  of  the  contributions  among  themselves.  A 
partner  who  is  excluded  from  all  participation  in  the 
stock  will  be  none  the  less  a  co-owner  of  it  for  the  pur- 
poses of  the  business.  As  to  third  persons,  the  con- 
tributions belong  to  the  firm,  and  the  title  is  vested  in 
all  the  partners. 

The  suggestion  might  be  thrown  out  that  others 
besides  partners,  upon  the  same  principle,  contribute 
to  the  firm  stock,  and  would  be  entitled  to  share  the 


§54.  The  Test.  Pt.  2,  Ch.  i. 

profits  as  proprietors.  If  the  services  of  a  partner 
can  be  discounted  in  advance  and  turned  into  money 
at  their  ultimate  worth,  the  process  is  available  for 
the  services  of  anybody  else.  The  agent,  manager, 
superintendent,  clerk  or  servant  might  commute  his 
services  into  gold  with  equal  facility,  and  claim  the 
profits  as  a  co-proprietor  of  the  stock  employed  in  tlie 
business.  The  answe^-  to  the  suggestion  is,  that 
capitalizing  services  against  a  contribution  is  a  ques- 
tion of  intention.  If  they  are  accepted  as  a  contribu- 
tion, they  invest  the  person  who  renders  them  with 
the  title  and  prerogatives  of  a  proprietor. 

The  position  of  a  proprietor  is  contrasted  with 
that  of  a  creditor.  The  partner  renounces  all  profits 
until  the  creditors  are  paid.  If  lie  takes  profits,  he 
proclaims  his  position  as  a  partner,  for  they  are  what 
remain  after  all  claims  are  paid.  A  creditor  is  not 
entitled  to  the  profits,  and  if  he  claims  a  part  of  the 
profits,  the  demand  is  inconsistent  with  his  position 
as  a  creditor.  The  proprietor  alone  is  entitled  to  the 
profits.  The  primary  effed  of  taking  profits  is  to 
exclude  all  who  are  paid  out  of  the  capital  or  its  pro- 
duel,  and  this  leaves  only  the  partners,  who  are  enti- 
tled to  the  profits.  It  would  be  an  anomaly  to  break 
the  connection  between  the  proprietor  and  his  profits. 
Yet,  apparently,  this  is  done  whenever  a  creditor  is 
permitted  to  take  a  portion  of  the  profits  without  alter- 
ing his  relation.  It  is  the  existence  of  this  apparent 
exception  which  has  produced  such  confusion  and  puz- 
zled the  profession.'  It  would  be  an  exceptional  freak 
of  the  law  to  invest  a  creditor  with  the  proprietor's 
right  of  dominion  without  changing  his  status  as  a 


i.U 


I 


Pt.  2,  Ch.  I.  The  Test.  §54. 

creditor.  No  wonder  sucli  a  mongrel  notion  could  not 
be  brought  into  consistency  with  principle. 

The  right  to  take  the  profits  revealed  a  proprietor. 
No  one  else  could  touch  them,  except  by  his  permis- 
sion. If  any  other  person  did  claim  them,  he  would 
be  compelled  to  make  out  his  claim  from  and  through 
the  proprietor.  There  is  but  one  mode  in  which  this 
could  be  done :  The  creditor  must  exert  his  right  in 
the  name,  or  by  the  authority,  of  the  proprietor.  The 
creditor  is  the  appointee  of  the  proprietor,  and  exerts 
a  delegated  right.  The  power  is  undoubtedly  coupled 
with  an  interest,  and  cannot  be  revoked,  but  it  is  still 
nothing  but  a  delegation  of  authority.  By  law,  the 
profits  belong  to  the  proprietor,  and  he,  by  virtue  of 
his  dominion,  empowers  the  creditor  to  take  them. 
This  explains  the  profit-sharing  theory,  and  makes  it 
intelligible.  It  explains,  also,  the  creditor's  profit- 
sharing,  and  makes  it  consistent  with  the  theory  of 
partnership. 

The  exception,  which,  however,  has  been  shown  to 
be  only  apparent,  was  suf&cient  to  prevent  the  infer- 
ence of  a  partnership  from  being  conclusive,  and  led 
to  a  rejeAion  of  the  profit-sharing  as  a  test  of  partner- 
ship. The  question  turned  upon  the  capacity  in  which 
the  recipient  took  the  profits.  But  the  capacity  is  in- 
volved in  the  profits,  and  cannot  be  severed  from  them. 
The  failure  to  observe  this  connection  has  led  to  the 
exclusion  of  profits  as  an  element  in  determining  the 
capacity  of  the  recipient,  and  made  the  ascertainment 
of  the  capacity  simply  a  question  of  fa6l,  independent 
of  the  property  element.  It  is  denied  that  the  element 
of  projDerty  enters  into  the  partnership  relation.  The 
law  of  property  is  excluded  and  treated  as  foreign  to 

135 


§^^^  Thk  Tkst.  Pt.  2,  Cn.  i. 

the  relation.  Tlic  propert}'  involved  in  a  partnership 
is  regarded  as  an  extraneous  fact,  without  any  con- 
net5\ion  in  law  with  the  partnership.  The  profits,  in 
this  aspecl,  have  nothing"  to  do  with  the  law  of  part- 
nership, and  the  effe(5l  of  sharing  them  does  not  raise 
a  question  of  law  for  the  court,  but,  if  any,  a  question 
of  facl  for  the  jury.-'  As  an  extraneous  fa6l,  taking 
profits  is  no  more  evidence  that  the  recipient  is  a  part- 
ner than  that  he  is  a  creditor.  The  profits  ma}'  belong 
to  a  creditor,  with  as  much  right  as  to  a  partner.^  This 
is  the  conclusion  which  results  from  excluding  the 
property  element  from  the  law  of  partnership,  and 
from  tr3-ing  to  constru(5l  the  principles  of  partnership 
out  of  nothing  but  the  abstract  do6lrines  of  principal 
and  agent. 

Taking  profits,  therefore,  is  not  an  indifferent  fa(5l, 
which  fails  to  indicate  whether  the  taker  is  a  partner 
c)r  a  creditor;  on  the  contrary,  it  reveals  a  proprietor. 
The  creditor  himself  can  take  them  only  in  right  of 
the  proprietor.  Therefore,  it  is  not  until  the  creditor 
has  proved  his  right  to  them,  by  the  appointment  from 
the  proprietor,  that  he  is  permitted  to  disavow  his  title 
as  a  proprietor.  The  law  of  property  makes  him  a 
partner,  unless  he  can  prove  that  he  takes  by  the 
authority  of  another,  who  is  the  proprietor.  This  is 
the  principle  which  underlies  the  proposition  that 
sharing  the  profits  \^  prima  facie  evidence  of  partner- 
ship. The  profits,  as  a  matter  of  evidence,  apart 
from  the  element  of  property,  would  prove  nothing 
either  wa^^. 

1.  rndisdoscd  principal  in  a  joint  venture  a  dormant  partner.  B 
>)ought  coffee  on  a  joint  venture  with  C,  who  paid  his  part  of  the 
price.  H  had  the  inanaj,'ement  of  the  transadion,  and  deposited  the 
coffee  wiUi  A,  who  debited  B  with  the  advances  upon  it,  and  did  not 

136 


Pt.  2.  Ch.  I.  The  Test.  §54. 

kuow  of  C's  interest  in  the  venture.  The  coffee  was  sold  at  a  loss, 
and  a  commission  in  bankruptcy  issueci  against  K,  and  another 
against  C  A  proved  for  his  balance  against  B,  and  offered  to  prove 
against  C. — Entitled,  because  C  a  dormant  partner  and  undisclosed 
principal.    Ex  parte  Crellar,  i  Rose  297  (1812). 

Control  and  interest  in  stock.  A,  in  China  trade,  at  N.  Y.,  with 
branch  at  Canton,  appointed  B  to  take  charge  of  Canton  business, 
giving  him  1-5  profits.  Neither  could  engage  in  other  business  at 
Canton.  B  to  have  his  living  expenses,  but  to  allow  profits  to  ac- 
cumulate in  the  business.  Decree  upon  account  stated  between  A 
and  administrator  of  B.  Bill  to  open,  and  for  account  as  partner. — 
Though  partnership,  because  of  control  and  of  interest  in  stock,  i.  e., 
labor  and  share  of  accumulated  profits,  bill  dismissed,  on  ground  of 
laches.  Ogden  v.  Astor,  4  Sandf  311  N.  Y.  (1S50). 

Buying  and  selling.  Judgment  against  A  &  B,  as  endorsers. 
Debtor  indemnified  them,  by  giving  them  salt.  A  sold  the  salt  on 
joint  account,  and  applied  proceeds  in  discharge  of  judgment.  He 
had  given  a  note  of  A  &  B  for  freight  to  defendant,  who  transferred 
it  to  plaintiff,  with  guarantee  of  colleRion  (not  payment).  Plaintiff 
never  enforced  payment,  supposing  B  was  not  a  partner,  and  hence 
not  liable.  B  had  since  become  insolvent.  Plaintiff,  to  excuse  laches, 
denied  partnership. — B  held  a  partner,  because  a  joint  purchase,  and 
agreement  to  share  profit  and  loss  of  sale.  Cumpston  v.  McNair,  i 
Wend.  457,  N.  Y.  (1828). 

Purchase  by  one  for  joint  commercial  adventure  chars;es  him  as  a 
partner.  A  &  B  took  bonds  in  payment  of  a  debt  to  them  as  part- 
ners. On  dissolution,  they  divided  the  bonds,  and,  being  advised  by 
counsel  engaged  in  litigation  about  them  to  buy  more,  B  bought  22 
additional  bonds  in  his  own  name.  The  litigation  was  successful, 
and  B  sold  out  at  a  profit.  A's  executors  sued  B's  executors  for  half 
the  profits  of  the  transaction.  The  evidence  was :  i,  a  power  of  attor- 
ney given  to  B  by  various  bondholders,  to  control  the  market ;  B 
signed  for  29  bonds  owned  by  himself,  and  A  &  B  signed  jointly  for 
the  22  bonds  in  dispute;  2,  a  document  drawn,  though  not  used,  to 
request  a  trustee's  resignation  :  A  signed  for  29  bonds,  and  again  for 
the  22,  but  left  a  blank  for  another  signature  opposite  the  22. — Re- 
covery. A  joint  adventure.  Wilson  v.  Cobb,  2  Stew.  361,  N.  J.,  E. 
&  A.' (1878). 

2.  The  Professional  perplexity  is  manifested  in  the  enact- 
ment, which  makes  a  lender,  who  takes  profits  for  his 
loan,  a  cross  between  a  partner  and  a  creditor. ''^  If  a 
lender,  he  is  entitled  to  reclaim  his  loan,  like  any  cred- 
itor, and  could  not  be  postponed  ;  if  a  partner,  he  could 
not  reclaim  his  loan  in  competition  with  creditors,  or 
escape  his  liability  as  a  partner. 

3.  In  trying  to  re-adjust  the  English  cases  prior  to  Cox 
V.  Hickman,  to  the  theory  of  principal  and  agent,  C.  J. 
Doe  has  endeavored  to  make  out  that  the  English  judges 
confounded  the  distindlion  between  law  and  fa6l.  Rut 
he  lost  sight  of  the  property  element,  which  justifies 
them,  by  making  tlie  question  one  of  law,  and  within 
the  judicial  province. 

Eastman  v.  Clark,  53  N.  H.  276  (1872). 
137 


§55.  Thk  Test.  Pt.  2,  Ch.  i. 

4.  Disregard inpf  the  li^^^ht  of  tlie  profits,  or  treatin^r  it  as 
ail  /'x^fi/s  /(r/ints  the  courts  are  at  the  dead  point,  and 
cannot  move  until  something  else  is  applied  as  a  momen- 
tum.    vSa\  s  C.  J.  Doe  : 

"Whether  in  a  ])articuhir  case,  'the  profit'  carries  the  one  nieaning 
"  or  the  other,  dejK'tuis  on  the  question  whether  he  is  a  principal  or  a 
"  creditor,  whidi  is  tl;e  first,  last  and  only  question  in  the  case.  We 
"cannot  know  in  what  sense  'the  profit'  is  used  by  the  parties  until  we 
"  discover  whether  A  is  a  j)rincipal  or  a  creditor.  How  can  that  be  a 
"method  of  answering  a  question,  which  is  a  dedu<5lion  from  the 
"answer,  and  cannot  be  known  until  the  answer  is  obtained?  If  A 
"  is  a  creditor,  he  is  none  the  more  and  none  the  less  a  creditor  by 
"rea-son  of  his  being  entitled,  as  a  creditor,  to  one-ninth  of  'the 
"profit;'  if  he  is  a  principal,  he  is  none  the  more  and  none  the  less 
"a  principal  by  reason  of  his  being  entitled,  as  a  principal,  to  one- 
"  ninth  of  'the  profit.'  When  A  and  B  agree  that  A  shall  have  one- 
"  ninth  of  'the  profit,'  they  may  mean  that  he  is  to  have  it  in  the 
"capacity  of,  and  by  virtue  of  his  being,  a  creditor;  they  may  mean 
"that  he  is  to  have  it  in  the  capacity  of,  and  by  virtue  of  his  being,  a 
"principal.  The  question  is,  Which  do  they  mean?  The  sharing- 
"  profit  test  merely  repeats  the  question  without  answering  it.  A 
"  may  l)e  entitled  to  one-ninth  of  a  fund  called  'profit,'  either  in  the 
"capacity  of  a  creditor  or  in  the  capacity  of  a  partner,  his  ambiguous 
"  right  is  not  a  test  of  the  capacity  in  which  he  holds  it.  Taking  part 
"of  the  profit  is  no  more  the  acft  of  being  a  partner  than  it  is  the  test 
"  of  his  being  a  creditor."  Eastman  v.  Clark,  53  N.  H.  296  (1872). 
a.     28  &  29  Vidl.  c.  86. 


§55. 


^\]t  title  to  profits,  like  t\)t  title  to  tl)c  rontrilnition,  is  a 
piopertn  rigl)!,  u)l)tcl)  taimot  be  asstvkh  atjaiust  tije  crtbitors 
of  tl)e  fuiti. 

Profit.s  result  from  the  use  of  the  contribution.  It 
is,  of  course,  a  mistake  to  represent  profits  as  the 
proclucl  of  nothing  but  the  material  capital  of  the 
firm.  They  are  the  product  of  all  the  faAors  which 
go  to  make  the  business  a  success.  But,  as  is  seen 
in  the  original  structure  of  partnership,  the  services 
are  summed  up  in  the  fundlion  of  buying  and  selling 
property.     The  process  is  accessory;    the  property  is 

1.^8 


Pt.  2,  Ch.  I.  The  Test.  §55. 

the  principal.    The  profits  have  no  independent  status, 
but  are  merged  in  the  contribution. 

It  is  because  the  profits  are  an  increment  of  the 
contribution,  that  the  right  to  them  discloses  a  part- 
ner. This  is  the  converse  of  the  proposition  that  a 
partner  is  a  proprietor.  What  would  be  thought  of  a 
claim  to  the  contribution,  if  made  by  a  stranger?  He 
would  claim  the  attribute  of  a  partner,  while  he  pre- 
tended not  to  be  a  partner. 

Mr.  Justice  DeGrey,  in  the  passage  which  has  be- 
come celebrated,^  meant  that  the  property-right  to  the 
profits  was  the  basis  of  liability  on  the  part  of  the 
trader.  He  is  a  proprietor,  and  is  liable  for  his  deal- 
ings as  such.  The  reason,  however,  which  the  learned 
Justice  gave  for  his  statement,  betrayed  his  confusion 
of  thought.  He  asserted  that  taking  profits  deprived 
the  creditors  of  the  fund  on  which  they  relied  for  pay- 
ment! But  this  is  the  exadl  result  which  is  excluded 
by  the  terms  of  the  proposition.  The  creditors  can- 
not rely  on  that  which  does  not  come  into  existence 
until  they  have  ceased  to  exist,  i.  e.,  are  satisfied. 
SULPICIUS  was  the  first  to  point  out  this  absurdity, 
which  he  did  in  his  notes  to  Scaevola.^ 

The  profits  are  no  more  a  part  of  the  fund  for  cred- 
itors than  losses  are.  The  word  'profits'  is  a  relative 
term,  and  has  a  meaning  only  for  the  partners  them- 
selves. It  is  only  between  them  that  any  portion  of 
the  assets  can  be  deemed  profits.  The  creditor  may 
demand  all  the  property,  or  assets,  of  his  debtor-firm, 
because  they  are  devoted  to  the  payment  of  his  claim. 
Should  the  partners  divide  the  joint  fund  among  them- 
selves, and  convert  the  joint  into  several  titles,  the 
withdrawal  would  be  a  fraud  upon  the  creditor.     But 

139 


555- 


TiiK  Tkst.  Pt.  2,  Ch.  I. 


the  proprietors  would  not  be  charged  because  they  took 
it,  or  any  part  of  it,  as  profits.  No  profit  could  issue 
out  of  it  until  the  creditor  was  paid,  and  after  he  was 
paid  the  withdrawal  would  not  be  a  fraud  upon  him. 
The  withdrawal  does  not  create  an  original  liability, 
but  confli(5ls  with  the  liability  previously  created. 

1.  /iihrfst,  though  usurious  and  payable  out  of  profits,  does  not  make 
lender  a  partner.  B  bought  out  his  partner,  C,  who  left  ;^4,ooo  of  his 
capital  with  B,  upon  his  agreement  to  pay  5  p.  c.  interest  and  an 
annuity  of  /300  for  7  years.  A  sued  C  as  a  partner. — Not  liable. 
The  extra  7  p.  c,  though  usurious  unless  payable  out  of  profits,  was 
not  contingent  upon  them,  but  a  round  sum  due  by  B.  If  C  received 
profits,  his  interest  limited  to  a  definite  amount,  and  could  not  charge 
him  indefinitely.  But  C  had  no  specific  lien  on  the  profits,  nor  any 
interest  in  them,  except  through  B,  who  relied  upon  them  as  his 
means  of  payment.  "If  anyone  takes  part  of  the  profit,  he  takes 
"part  of  the  fund  on  which  the  creditor  of  the  trader  relies  for  his 
••payment."    Grace  v.  Smith,  2  \Vm.  Bl.  997  (1775). 

2.  "  Mucius  scribet  nou  posse  societatem  coiri,  ut  aliam  damni,  aliam 
"  lucri  partem  socius  ferat.  Servius  in  notatis  Mucii  ait,  nee  posse 
"societatem  ita  contrahi :  neque  enim  lucrum  intelligitur,  nisi  omni 
"  damno  deduclo  ;  neque  damnum,  nisi  omni  lucro  dedudlo. "  D.  17, 

"  Suppose  B,  going  into  the  retail  flour  trade  with  no  capital,  hires 
"  A  as  clerk  for  one-ninth  of  the  profit,  buys  1,000  bbls.  of  flour  of  C 
"atfio-  a  bbl.,  sells  it  all  at  $11.  a  bbl.  in  one  month,  in  a  store  hired 
"  of  D  at  |ioo.  a  month,  and  the  business  is  then  closed.  A,  C  &  D 
"having  received  nothing,  and  B  having  the  |ii,ooo,  |io,ooo  of  that 
"sum  is  to  be  paid  to  C  for  the  flour.  The  remaining  $1,000  is  the 
"primary,  gross,  or  sale  profit.  Deducfl  from  that  gross  profit  the 
";?!(«  due  I)  for  rent,  and  we  have  I900,  the  profit  out  of  which  the 
"deferred  creditor  A  is  to  be  paid  for  his  services  as  clerk.  Dedudl 
"  from  that  deferred  creditor  fund  one-ninth  of  it  due  A,  and  we  have 
"fSoo,  the  final  or  net  profit  of  B  the  principal.  I'ntil  they  are  paid, 
"A,  C  &  I)  are  creditors.  C  and  D  stand  on  an  equal  footing  as 
"ordinary  creditors;  the  facfl  that,  in  book-keeping,  the  debt  to  D 
"  for  rent  may  lie  recorded  in  the  expense  account  does  not  affecfl  its 
"  existence  as  a  debt:  the  debt  to  A  for  services  niav  be  recorded  in  the 
"same  account.  C  and  D  are  general,  absolute  creditors,  relying  for 
"payinent  on  everything  until  they  are  paid:  then,  ceasing  to  be 
"creditors,  tliey  rely  for  payment  on  nothing.  A  is  a  deferred  and 
I'contmgent  creditor,  entitled  to  nothing  until  C  and  D  are  paid, 
II and  then  entitled  to  nothing,  unless  some  of  the  gross  profit  is 
"left.  C  and  D,  until  they  are  paid,  rely  for  payment  on  the 
I'  wliolc  of  B's  property,— upon  the  |i,ooo  gross  profit,  as  well  as  the 
^  rest  of  the  proceeds  of  the  flour.  They  do  not  rely  on  the  I900 
_  (deferred  creditor  fund)  left  after  they  are  paid,  nor  on  the  ISoo 

(net  profit)  left  after  payment  of  all  creditors  general  and  deferred. 
_^  "  If  C  IS  first  paid,  he  takes  part  of  the  fund  on  which  D  relies  for 

payment:  ifD  is  first  paid,  he  takes  part  of  the  fund  on  which  C 
^_  rehes  for  payment :   but  the  one  first  paid  does  not,  by  the  aA  of 

recei  vmg  payment,  become  liable  to  the  other  for  taking  part  of  the 

T40 


Pt.  2,  Ch.  I.  The  Test.  §.55. 

"  fund  ou  which  they  both  rely.  That  is  not  the  fund  of  which  A  is 
"to  have  oue-uinth  ;  and  he  is  not  liable  to  C  and  D  for  not  taking 
"  a  share  of  the  fund  on  which  they  rely.  The  fund  of  which  A  is  to 
"have  one-ninth  is  the  ^fgoo  left  after  C  and  D  are  paid  :  on  that  fund 
"  C  and  D  do  not  rely  ;  and  A  is  not  liable  to  them  for  taking  a  part 
"  of  the  fund  ou  which  they  do  not  rely.  He  is  a  creditor,  though  a 
"  deferred  one ;  aud,  as  creditors,  C  and  D  do  not  become  liable  to 
"each  other  or  to  A  by  properly  receiving  payment  out  of  the  fund 
"on  which  they  properly  rely  for  payment,  so  A  does  not  become 
"liable  to  them  by  receiving  payment  out  of  the  fund  on  which  he 
"  relies. 

"  But  if  A,  as  a  joint  principal  and  co-partner,  and  not  as  a  creditor, 
"is  entitled  to  one-ninth  of  the  profit,  it  is  net  profit  that  is  meant; 
"and  if  he  is  entitled  to  a  part  of  the  net  profit,  he  is  liable  to  C  and 
"  D,  not  because  he  is  entitled  to  a  part  of  the  fund  on  which  they 
"rely, — for  they  do  not  rely  on  the  net  profit;  he  is  liable  to  them 
"  because  he  is  a  principal.  If  he  is  a  principal,  'the  profit' of  which 
"  he  is  to  have  a  part  means  the  balance  of  gross  profit  left  after  pay- 
"ing  all  creditors:  if  he  is  a  creditor,  'the  profit'  means  the  balance 
"  of  gross  profit  left  after  paying  all  creditors  but  himself     *     * 

"In  the  supposed  case,  where  A  is  a  creditor  and  not  a  partner, 
"there  are  three  different  profit  funds,  or  one  profit  fund  of  three  dif- 
"  ferent  amounts  and  with  the  three  different  names, —  i,  |;i, coo  gross 
"profit,  out  of  which,  as  well  as  out  of  the  other  |;io,coo,  proceeds 
"of  the  flour,  the  general  creditors  are  to  be  paid:  2,  flgco  deferred 
"  creditor  fund  left  after  payment  of  the  general  creditors  C  and  D  ; 
"3,  |;8oo  net  profit,  left  after  payment  of  the  general  creditors  C  and 
"  D,  and  the  deferred  creditor  A.  An  agreement  of  A  and  B  that  A 
"is  to  have  one-ninth  of  the  profit,  means  either  that  A  is  to  be  a 
"deferred  creditor  entitled  to  one  ninth  of  the  gross  profit  left  after 
"  payment  of  the  general  creditors  as  compensation  for  his  services, 
"  or  that  he  is  to  be  a  joint  principal  and  co-partner  with  B,  entitled 
"to  one  ninth  of  the  net  profit.  In  the  former  case,  'the  profit' 
"means  neither  the  gross  profit  nor  the  net  profit,  but  the  f  900,  of 
"  which  the  |8oo  left  after  payment  of  A  is  the  net  profit  of  the  busi- 
"  ness  in  which  B  is  sole  principal:  in  the  latter  case,  'the  profit' 
"  means  the  $900  net  profit  of  the  business  in  which  A  and  B  are  joint 
"principals.  The  difference  is,  not  in  the  amount  which  A  is  to  re- 
"  ceive,  but  in  the  capacity  in  which  he  is  to  receive  it.  In  the  one 
"case,  as  a  clerk  hired  by  B,  and  as  a  creditor  of  B,  he  is  to  receive 
"from  B,  in  paj-ment  of  his  deferred  debt,  one-ninth  of  the  amount 
"of  B's  gross  profits  left  after  payment  of  other  creditors  :  his  right 
"is  a  chose  in  acStion,  not  a  thing  actually  or  constru(flively  in  his 
"possession:  the  title  of  the  ninth  is  in  B,  aud  not  in  A  until  he  is 
"paid; — in  the  other  case,  as  a  joint  principal,  before  he  receives  his 
"share,  he  owns,  in  common  with  B,  the  net  profit  left  alter  pay- 
"  ment  of  all  partnership  creditors  of  A  and  B :  the  title  is  in  A  and 
"B:  A  owns  one-ninth,  and  B  owns  eight-ninths.  In  the  one  case, 
"the  net  profit  is|;8oo:  A  is  a  creditor  of  B,  and  not  a  principal: 
"B  owes  him  fioo  for  wages  which  he  can  recover  in  assumpsit  at 
"common  law; — in  the  other,  the  net  profit  is  ^900:  A  isa  jointprin- 
'"cipal  and  not  a  creditor:  Bowes  him  no  wages:  their  net  profit 
"  cannot  be  ascertained  and  divided  in  a  common  law  aAion  :  for  the 
"debts  contracted  by  B,  within  the  scope  of  his  authority  as  agent  in 
"  earning  that  net  profit,  A  would  be  liable,  did  not  the  existence  of 
"  net  profit  show  that  those  debts  have  been  paid. 

"  If  A  is  a  clerk  and  creditor,  he  receives  l^ioo,  not  as  his  share  of 
"  the  profit  of  a  business  in  which  he  is  a  joint  principal,  but  as  com- 

141 


5^6.  The  Test.  Pt.  2,  Ch.  i. 

-pensution  for  his  services  in  a  l.usiness  in  which  B  is  sole  princi- 
••K^  lu-  receives  one-ninth  of  the  profit,  not  as  profit,  but  as  pay- 
••  mint  ..I  i  .Icl.l  If  A  is  a  principal,  he  owns  one-nmth  of  the  profit 
•  as  j.n.fit.  an.l  does  not  receive  it  as  payment  of  a  debt."  Eastman  v. 
Clurk.  5;,  N.  n.  295  (1S72). 


^56 


Z\]t  Roman  stan^ar^  \]Ci3  smv'wtif  in  tl)c  (Common  £aru  as 
tl)c  tnpe  of  partucrsljtp. 

The  type  of  partnership  handed  down  by  tradition 
stands  as  the  model  of  perfedl  fairness,  and  serves  as 
the  stru(5lure  of  partnership  when  the  law  is  called 
upon  to  infer  the  terms  of  the  contradl.  The  infer- 
ence is  drawn  from  sharing  tlie  profits,  that  tlie  sliare- 
takcr  has  put  a  contribution  into  the  firm  eqnal  in 
proportion  to  the  quota  whicli  he  takes  out  of  the 
profits  (§31,  n.  i).  The  inference  is  merely  a  state- 
ment or  expression  of  the  natural  terms  of  tbe  adjust- 
ment whicli  the  parties  would  make  if  they  dealt  fairly 
by  each  other  in  the  business.  The  right  to  demand 
a  share  in  the  produ(5l  of  the  partnership  relates  to  the 
interest  of  the  share-taker  in  the  capital  of  the  firm. 
The  claim  to  profits  is  founded  upon  the  claimant's 
standing  in  the  firm  as  a  partner.'  The  legal  in- 
ference is  based  upon  the  conne(?tioii  between  profits 
■nd  a  contribution.  If  the  profits  are  shared,  the 
stoci,  employed  to  make  the  profits  is  shared  like 
^*^*"^-  •■  It  is  with  reference  to  the  type  of  partnership 
lat  thdj  contracT:  of  the  parties  is  interpreted  (§36). 

le  relict.  Jqu  ^g  maintained  by  the  self-interest  of  the  mem- 
"-!'>•      Tli^.Q^^g]^  ^  partner,  the  individual  has  no  interest 
rom^  l^ijjjsglf  a     Apijg  ^^j^  supplies  no  new  impulse, 
'^  142 


PT.2,  Ch.  I.  The  Test.  ^5b. 

and  is  merely  a  graft  on  the  individual  stock.  The  partner 
looks  through  the  partnership  to  his  ultimate  self-interest, 
in  the  vista  beyond.  The  Romans,  seeing  that  the  relation 
had  no  support  but  the  self-interest  of  the  members,  made 
sure  of  their  self-interest  by  a  measurement  of  each  part- 
ner's quota,  and  regulated  his  share  of  the  profits  according 
to  the  amount  of  his  contribution.  The  partner  could  not 
deny  his  membership  if  he  would,  for  his  position  in  the 
firm  was  established  at  the  outset,  by  investing  him  with  a 
correlative  proportion  of  the  stock  and  profits  as  a  member. 
The  right  to  share  the  profits  related  back  to  the  contribu- 
tion, and  was  contingent  upon  it.  The  claim  to  share  in 
the  profits  admitted  the  partnership,  and,  as  the  claim  im- 
plied a  contribution  by  the  claimant,  woiild  prove  that 
money  which  had  been  put  into  the  firm  was  intended  to 
be  a  contribution. 

I.  One  who  takes  profits  carries  the  insignia  of  proprie- 
torship. He  asserts  the  title  of  a  proprietor,  and  he  is 
taken  at  his  word.  The  title  and  the  profession  are 
accepted  as  a  fa6l.  But  it  is  argued  by  those  who  ignore 
the  property  element  involved  in  partnership  that  the 
fa(5l  should  be  disregarded,  as  if  it  had  no  existence. 
There  would,  in  this  aspedl,  be  no  legal  clue  to  deter- 
mine the  question  of  partnership.  It  would  be  left  un- 
decided, except  when  the  parties  had  seen  fit  to  disclose 
the  intention  which  they  entertained  in  transadling  the 
business.  The  illustration  given  by  C.  J.  DoE  shows 
how  hopeless  would  be  the  task,  when  partnership  is 
treated  as  nothing  but  a  case  of  principal  and  agent.'' 

a.  3Son  ^l^ering,  the  genius  of  legal  inspiration,  has  undertaken  to 
prove  that  the  selfish  instinA  can  be  sublimated  in  partnership  and 
other  combinations,  and  utilized  as  a  disinterested  motive ;  but  he 
has  relegated  his  proof  to  a  subsequent  volume,  and  until  he  pro- 
duces it  the  hard  headed  sense  of  the  Romans  will  be  accepted  as  the 
standard.. 
Scr  3wecf  im  9lec^t,  Don  Diubc^)^  Son  S^^ertng,  tool.  1,  1877. 

d.     ?55,  n-  2. 


143 


j^.  The  Test.  Pt.  2,  Ch.  i. 

§57. 

dljc  propcrtn-link,  or  founcction,  bdmm  contribution  anb 
profits  1)113  not  lu-rn  scrcrcii,  but  stands,  at  tl)e  present  ban,  as 
the  tnpc  ol  partnership. 

The  law  does  not  require,  as  it  did  in  the  early  days 
of  Rome,  that  a  share  in  the  profits  should  correspond 
to  the  contribution.  But  the  law  does  assume  such  a 
correspondence  between  the  profits  and  the  contribu- 
tions, if  the  contra(5l  has  not  made  a  different  adjust- 
ment.' The  later  Roman  view,  that  the  parties  must 
have  capitalized  the  services  to  make  them  equal  to 
the  contribution,^  is  the  accepted  basis  of  the  partner- 
ship as  to  third  persons.  The  contributing  partner 
has  agreed  to  accept  the  services  of  his  co-partner  as 
an  equivalent  for  his  contribution,  and  thus  converted 
the  ser\'ices  into  firm  capital.  The  effe(5l  is  to  invest 
tlie  partner  contributing  his  services  with  title  to  the 
firm  property.  Although  the  partners,  according  to 
the  better  opinion  which  has  been  set  forth  (§33),  do 
not  contribute  property,  but  contribute  merely  the  use 
of  i)roperty  to  the  firm,  yet,  for  strangers,  the  title  is 
vested  in  the  firm.  If  the  services  of  the  partner 
were  capitalized  and  accepted  as  a  contribution,  al- 
though they  would,  at  best,  entitle  him  only  to  a  joint 
use  of  his  partner's  property,  yet,  for  the  purposes  of 
tlie  business,  they  would  make  him  a  co-owner  of  it, 
and,  on  that  ground,  a  co-proprietor  of  the  profits, 
whicli  are  the  product  of  his  own  labor,  and  of  the 
property  employed  in  the  business. 

The  mutual  agency  of  the  partners  results  from 
trade,  or  buying  and  selling  property  (§5).  If  the 
property  employed  in  trade  did  not  create  an  agency 

144 


Pt.  2,  Ch.  I.  The  Test.  §57. 

in  the  co-trader,  there  would  be  no  property  clue  to 
establish  the  agency.  The  delegation  would  be  ascer- 
tained, like  an}'  question  of  authority,  only  b}-  the  in- 
tention of  the  principal. ■■  Property  owned  in  common 
does  not  give  a  part  owner  authorit}^  over  his  co-own- 
er's purpart  (§5) .  The  fa.<Si  might  be  disputed  whether 
the  property  was  owned  jointl}-  or  onl}'  in  common. 
Trading  with  it  would  settle  the  controvers}'  at  the 
Common  law,  because  sharing  the  profits  would  iden- 
tify the  proprietors  in  the  contribution  through  their 
shares  in  the  produ6l.^  At  the  Civil  law,  the  co-pro- 
prietorship is  not  decisive,  even  in  trade,  for  the  pro- 
prietors ma}'  join  in  business,  and  share  its  profits 
and  losses  without  becoming  partners  (§51  n.  c).''  It 
is  not  the  identity  of  interest  which  charges  them  as 
partners,  but  the  private  contrail  of  the  partners. 
The  Civil  law  knows  nothing  of  an  undisclosed  prin- 
cipal, and  yet  his  liability  is  the  key  to  partnership  at 
the  Common  law. 

The  abandonment  of  the  property  element  would 
take  away  the  creditors'  hold  upon  the  partnership,  and 
relegate  them  to  a  mental  investigation.  The  exter- 
nal fa6l  that  the  party  is  a  co-proprietor,  or  dealt  as 
such,  is  now  sufficient  to  hold  him  as  a  partner.  Tak- 
ing the  profits  is  dealing  with  the  property  as  a  pro- 
prietor, for  they  are  the  produ6l  of  the  property  con- 
tributed to  the  business.  The  embodiment  of  the  a(5l, 
dealing  as  a  proprietor,  in  matter  and  substance,  is  the 
tangible  fa(5l  which  singles  out  the  partner,  and  identi- 
fies him  with  the  business. 

The  effedl  of  reverting  to  the  intention  of  the  par- 
ties as  the  exclusive  test  of  a  partnership  would  be 
undoing  the  work  which  has  been  accomplished  dur- 

145 


^c-7.  The  Test.  Pt.  2,  Ch.  i. 

iug  the  devclopement  of  modern  partnership  in  Eng- 
land and  America,  and  going  back  to  the  primitive 
status  of  partnership  at  the  Civil  law."  The  Common 
law  made  a  great  stride  in  advance,  when  it  converted 
part!iership  into  an  institute  of  credit,  and  enlarged  its 
scope  fnjm  a  private  bargain,  which  concerns  no  one 
but  the  partners,  to  a  business  establishment,  which 
invites  and  commands  the  trust  and  confidence  of  third 
persons.  The  Common  law,  with  its  pradlical  sagac- 
ity, adapted  partnership  to  its  modern  function,  and 
gave  it  a  career  which  was  not  dreamt  of  at  the  Ro- 
man law. 

It  is  upon  the  foundation  of  property  that  the  mod- 
ern structure  of  partnership  is  built.  The  co-proprie- 
torship in  business  identifies  the  parties  in  interest, 
and  justifies  the  reliance  upon  the  proprietors  as  prin- 
cipals. A(5ling  as  a  proprietor,  or  taking  the  profits 
of  a  proprietor,  is  equivalent  to  being  a  proprietor, 
and  entitles  creditors  to  treat  him  as  such. 

1.  Syers  V.  Syers,  ^31,  n.  i. 

2.  15  0  liicf  Glcuterun;}  b:r  "iNanbcctcn,  420-4. 

3.  Co-owners  sharing  profits  and  losses  of  business  transaRions,  not 
partners.  B,  in  N.  Y.,  a<iree(l  to  advance  inoiie}-,  C  to  buy  molas- 
ses in  his,  C's,  name,  warehouse  and  ship  it  in  the  name  of  D,  who, 
Vi\>o\\  delivery  of  warehouse  receipts,  or  bills  of  lading,  was  to  pay  the 
price  and  expenses,  aid  draw  for  the  amount  on  B,  who  sold  the  mer- 
chandise. Profits  and  losses  divided  :  B  1-2,  C  and  D  each  1-4,  butB 
and  D  not  disclosed  in  the  transactions.  C  failed  to  pay  over  monev 
receive  1  from  I)  for  the  purchase  of  molasses  to  A,  who  sued  U  for 
Uie  i>rice.— Judgment  for  I).  Parties  did  not  intend  a  partnership. 
I),  if  an  unknown  principal,  or  a  purchaser,  of  C,  not  liable  for  his 
luisapplication  of  purchase-money. — Dissent.  Shared  the  losses,  and 
were  co-owners.  Chaffaix  v.  Lafitte,  30  La.  An.    631  (1878). 

4.  Sharing  profits  indefinitely,  without  any  control  ormanas:ement  of 
the  business,  makes  the  share-takers  partners,  in  st>ite  of  their  inten- 
tion. B,  at  Plymouth,  agreed  with  C,  at  Gosport,  to  remove  to  Cowes. 
in  order  lo  co-operate  as  ship  agents,  for  7  rears,  with  option  bv  C  to 
renew.  Each  retained  i  -5  commission  for  expenses.  Then  C  received 
1-2  B's  commissions  and  trade  discounts,  for  recommending  him.  B 
Teceived  1-4  C's  commissions  and  1-2  p.  c.  of  his  trade  discounts,  and 
for  ships  which  he  induced  to  proceed  to  C,  3-5  commissions  and  i  1-2 

14.6 


_e 


Pt.  2,  Ch.  1.  The  Test.  §57. 

p  c.  trade  discounts,  with  1-4  storage  fees.  C  stipulated  for  ware- 
house at  Cowes,  without  li's  interference,  and  gave  him  1-6  storage 
fees.  Neither  could  form  other  business  connections  for  ship  agency 
at  either  port  during  the  term,  nor  B  after  the  term,  at  I'ortsmouth  or 
Gosport.  Provision  for  annual  settlements,  when  accounts  were 
stated  aud  balance  distributed.  Each  assumed  risk  of  all  losses  in 
his  own  business,  and  stipulated  uot  to  incur  liability  for  losses  in 
the  other's  business.  A  sued  C  on  a  contract  made  by  B  in  his  busi- 
ness, carried  on  in  his  name  as  ship  agent. — Liable,  because  he  shared 
in  the  profits  of  B's  agency  indefinitely,  aud  in  spite  of  the  intention 
of  both  parties  uot  to  be  partners,  but  of  each  to  carry  on  his  own 
business  separately.  The  partial  control  exerted  b}'  C  over  B's  busi- 
ness was  insufiicientto  overcome  the  intention  that  he  should  remain 
master  of  his  own  business.   Waugh  v.  Carver,  2  H.  Bl.  235  (1793). 

S/iaiiiig  coiniiiissioiis  a  partnership  in  consigntnents.  A,  mer- 
chants in  London,  and  B,  at  Rio,  shared,  without  any  dedu(?tior,  for 
expenses,  the  commissions  on  consignments  secured  by  either  for  thii 
other.  A  paid  over  remittances  for  sales  made  bj-  B.  A,  upou  clve 
report  of  a  sale  by  B  of  the  goods  consigned  to  him  by  C  through  A's 
influence,  advanced  the  price  to  C,  in  expe(?tatiou  of  a  remittance 
from  B.  He  became  bankrupt,  and  A's  assignees  in  bankruptcy  sued 
C,  to  recover  the  advances. — No  recovery,  as  A  &  B  were  partners  in 
the  consignment.    Cheap  v.  Cramond,  4  B,  &  Al.  663  (1821). 

S/iaring  profits,  with  renewal  of  business.  B  &  C,  Americans, 
were  partners  in  France,  trading  with  U.  S.  They  dissolved,  on  ac- 
count of  war  between  France  and  England.  B  returned  to  N.  Y.,  C 
remained,  each  agreeing  to  make  and  procure  consignments  to  the 
other,  and  to  share  the  profits  and  coiiimissions.  Each  retained  2-3 
of  earnings  of  his  own  establishment,  and  gave  1-3  to  the  otlier.- — C 
liable,  as  partner  in  B's  establishment,  to  A  for  merchandise.  Walden 
v.  vSherburue,  15  Johns.  409,  N.  Y.  (1818). 

Sharing  pwfits  makes  partner.  B  sold  out  to  C  &  D.  two  of  his  co- 
partners, who  continued  the  business,  and  agreed  to  pay  him  an 
annuity  varying  with  the  profits.  Joint  commission  in  bankruptcy 
issued  against  the  five.  A,  their  assignee,  prayed  for  stay  of  proceed- 
ings under  other  commissions  until  B's  position  was  determined. 
— Stayed,  because  he  reserved  a  share  of  profits  in  the  business,  and 
decree  that  B  was  still  a  partner.  In  Colbeck  &  Co. ,  ex  parte  Wheeler, 
Buck  48  (1817). 

Royalty  or  profits.  A  gave  B  use  of  fadlory  aud  supplied  cash 
capital.  A  to  receive  i  p.  c.  a  yard  profit  on  produdliou  of  cloth,  not 
exceeding  6,000  yards  a  week.  B  received,  for  services,  remaining  99 
p.  c,  and  the  entire  profit  on  number  of  yards  above  6,coo.  Business 
conducted  in  B's  name.  Creditor  sued  A  on  order  gi\ien  by  B  for 
labor. — A  liable  as  partner,  because  he  received,  not  a  royalty,  but  a 
share  in  the  net  profits.   Everett  v.  Coe,  5  Denio  180,  N.  Y.  (1848). 

The  rights  of  third  persons  are  independent  of  a  partnership  con- 
trail, and  may  exist  though  the  contrail  should  fail.  Usujy,  -which 
would  deprive  a  lender  of  his  bargai^i,  doesn't  relieve  hint  from  lia- 
bility to  third  persons  on  the  iinla-wful  contrafl.  B  stocked  a  store, 
and  C  carried  on  the  business.  The  contracft  was  to  pay  B  6  p.  c.  lor 
his  loan,  and,  if  the  business  successful,  25  p.  c.  out  of  profits.  C  con- 
fessed judgment  to  B,  for  the  loan,  and  he  took  the  stock  in  execu- 
tion. A  obtained  judgment  against  C,  and  enjoined  sheriff  from  pay- 
ing over  the  proceeds  of  sale  to  B,  on  the  ground  that  he  was  C's 
partner. — The  contraCl  to  share  profits  made  B  liable,  as  a  partner, 
though  the  contracSl  was  usurious  and  void  between  the  partners. 
Sheridan  v.  Medera,  2  Stock.  469  E.  &  A.,  N.  J.  (1855). 

M7 


$57- 


The  Test.  Pt.  2,  Ch.  i. 


I 


iJiHiHCtr/ora  huildiiis:  operation  payable  out  of  proceeds  in  addi- 
tion to  a  \hare  of  the  profits  and  losses  is  not  a  usurious  loan,  but  a 
nmlrihution  to  a  partnership.  A  furnished  fo.ooo,  to  buy  a  lot  which  B 
improvi-il  l.v  a  l.uildinj,'  operation.  H  gave  his  bond  to  repay  the  sum, 
with  interest,  out  of  tlie  i)roceeds.  A  &  B  shared  the  profit,  in  pro- 
iK>rli..n  of  I  to  2.  A  suecl  for  his  share.— Recovered.  A  partnership, 
iiot  a  usurious  loan.  Plunkett  v.  Dillon,  4  Houston  338,  Del.  (1875). 
Sharins^  profits,  icithout  vieutiouing  losses,  makes  partnership.  A 
&  H,  who  were  doiui,'  business  as  the  " Tub  Co.,"  furnished  fac- 
tory! slock  and  cainlal,  and  C  nianaijced  the  business.     The  sign  and 

imlited  designation  of  the  firm  were:  Tub  Co.,  A  B  &  Co.,  A 

li  C^  ( '.  They  shared  the  profits  etjually,  but  said  nothing  about 
losses.  Business  failed,  and  A  &  B  demanded  an  account.  Defence  : 
No  jiartnership,  because  no  agreement  to  share  losses. — Partnership. 
Agreement  to  share  losses  implied  from  agreement  to  share  profits. 
Munro  v.  Whitman,  8  Hun.  553,  N.  Y.  (1876). 

Agreement  for  half  the  profits,  made  in  answer  to  advertisement 
for  a  partner,  sufficient  for  jury  to  find  a  partnership.  Partner  in 
"possession  a  lien  on  firm  stock  against  a  chattel  mortgage  executed 
eforc  the  partnership.  The  "A"  Lumbering  Co.  executed  a  chattel 
mortgage  to  A.  The  Co.  advertised  for  a  partner,  and  agreed  to  give 
B,  who  answered  the  advertisement,  1-2  the  profits  for  carrying  on  the 
business.  A,  under  his  mortgage,  replevied  stock  in  B's  possession. " 
Charge  :  Agreement  gave  B  a  lien,  whether  a  partner  cr  not. — Error. 
No  lien  unless  a  partner.  Agreement,  coupled  with  advertisement, 
miglit  have  been  sufficient  for  jury  to  find  a  partnership.  Wilcox  v. 
Mathews,  44  Mich.  192  (18S0). 

Tlie  principle  i.s  not  confined  to  partnership,  but  pre- 
vails throughout  the  law.  The  profits  represent  the 
projicrty,  and  are  the  sum  of  its  usefulness  to  man. 
The  property  and  its  resources  of  enjoyment  are  con- 
vertible terms,  because  they  are  one  and  the  same  thing, 
though  looked  at  in  different  aspedls.  From  the  time 
of  Lord  Coke  and  his  'boillourie  of  salt,'  a  gift  of  the 
profits  has  been  a  sufficient  designation  to  pass  title  to  the 
l^roperty.  An  instance  may  be  taken  from  a  branch  of 
the  law  entirely  foreign  to  partnership.  The  principle 
.serves  to  distinguish  vested  from  contingent  legacies  : 

A  bequeathed  to  B  the  interest  of  Pa.  state  loan,  and  the  principal 
when  it  should  be  paid  by  law.  B  died  before  pavment  of  the  prin- 
cipal. His  administrator  sold  thestock,  with  aguarantee  of  the  title. 
The  buyer  sued  the  administrator  on  his  guarantee,  in  order  to  test 
the  title.  The  court  explained  the  identity  of  the  interest,  and 
principal :  The  nature  of  the  fund  is  single,  but  its  enjoymeut  varies 
on  accr)unt  f)f  tlie  investment.  They  are  different  forms  of  enjoying 
the  fun<l.  the  interest,  while  it  was  invested,  and  the  principal  when 
It  w.i.s  ])aid  off.  The  legatee  had  a  certainty  in  either  aspedl,  unaf- 
fected J)y  the  change  in  form  of  the  fund.  The  legacy  vested  the 
fund  in  B  at  A's  death.  Schriver  v.  Cobeau,  4  Watts  130,  Pa.  (1835). 
^  "Deux  marchands  vont  ensemble  k  une  foire,  et  pour  ne  pas  se 
"nurc  par  une  concurrence  que  les  ferait  peutetre  suracheter,  ils 
■^  conviennent  de  faire  tons  leurs  achats  en  commun  pour  les  partager 

ensuite.     De  fait,  chacun  d'eux  achete  separament  ce  qu'il  trouve 

148 


Pt.  2,  Ch.  I.  The  Test.  §58. 

"  d'avantageux  ;  puis,  tout  est  rapporte  en  une  masse,  et  Ton  fait  les 
"lots  suivant  la  convention."  Troplong,  Des  Societes,  (<487. 
5  &  6.     n.  3,  supva. 


§58. 


^  misronfcption  af  tl]e  principle  inak  a  rompcnsation  out  of 
profits  tl)c  proof  of  a  partncrsljip. 

The  word  sharer,'  like  partner,  means  one  who 
shares  or  divides,  and  the  sequence  is  that  he  shares, 
or  divides,  what  he  owns  in  conjun(5lion  with  his  co- 
proprietors.  He  shares  in  the  capacity  of  an  owner. 
The  legal  efFe(ft  did,  at  one  time,  correspond  with  the 
import  of  the  word,  and  charged  the  share-taker  with 
liabilit}^,  as  a  partner,  against  his  intention,  and  in 
spite  of  his  will.  He  made  himself  a  principal  in  the 
business,  and  he  would  not  be  permitted  to  avoid  the 
consequences  of  his  a(5l  by  disproving  a  partnership 
inter  se. 

The  word  "sharing,"  however,  came  to  be  taken  in 
a  loose  sense.^  It  was  held  that'a  partner  is  one  who, 
without  reference  to  property  or  proprietorship,  re- 
ceives part  of  the  profits.  By  this  constru6lion,  Tom, 
Dick  and  Harry  were  turned  into  partners,  for  no 
«)ther  reason  than  that  they  lent  money  to  a  firm,  sold 
it  merchandise,  or  rendered  it  services,  and  were  paid 
out  of  the  profits.  For  a  wonder,  the  extravagance  of 
the  conclusion  did  not  lead  to  a  detection  of  the  blun- 
der, w^hicli  consisted  in  confounding  the  distinction 
between  the  two  meanings  covered  by  the  term  '  shar- 
ing.'    The  word  palters  in  a  double  sense.    It  means: 

I ,  The  part  of  profits  which  belongs  to  its  owner;  2,  A 

149 


r 


|,8  TiiK  Test.  Pt.  2,  Ch.  i. 

sum  paid  by  the  owner  out  of  profits.  In  its  primary 
sense,  'sharing'  profits  is  an  incident  of  ownership,  and 
is  therefore  proof  of  a  partnership.  In  its  secondary 
sc-nse,  the  profits  shared  are  the  price  paid  for  some- 
thing. So  fill-  from  being  evidence  of  partnership,  the 
share  establishes  the  opposite  relation  of  debtor  and 
creditor.  The  cause  of  the  confusion  not  being  de- 
tccled,  all  reasoning  on  the  subjed  was  corrupted  by 
the  original  sin.  It  recurs  in  the  argument  which 
makes  intention  the  guide:  The  wish  for  gain  is  the 
original  motive  which  calls  the  partnership  forth  to 
make  profits,  and  the  motive  is  the  index  of  the  par- 
ties' intention.  The  profits  are  the  cause,  and  part- 
nership follows  as  the  effed.  From  the  cardinal 
proposition,  that  nothing  but  profits  could  make  a 
partnership,  was  deduced  the  corollar}'  that  no  profits 
could  be  shared  except  by  partners.  Hence,  a  shar- 
ing in  the  profits  became  conclusive  evidence  of  part- 
nership. In  this  argument,  apart  from  a  missing 
link,  which  is  needed  to  complete  the  chain  of  reason- 
ing, the  word  sharing,  in  its  secondary  sense,  is  given 
the  effe(5t  of  its  primary  meaning.  The  sharing  per- 
mitted to  a  creditor  is  confounded  with  the  sharing  by 
virtue  of  a  proprietor's  title. ^  The  misuse  of  the  word 
vitiates  the  test  of  partnership. 

The  link  left  out  is  the  means  of  accomplishment, 
which  must  precede  the  result.  The  incentive,  which 
operates  upon  proprietors,  and  induces  them  to  join 
in  business  to  make  profits,  may  be  felt  by  others, 
but  it  does  not  stimulate  them  to  contribute  the  prop- 
erty, which  is  the  means  employed  to  make  the  profits. 
The  end  must  not  only  be  desired;  it  must  be  willed, 
and  the  objed  of  the  will  is  the  joinder  of  proprietors 

i50 


Pt.  2,  Ch.  I.  The  Test.  ^58. 

in  business.     They  will  the  joinder,  which  is  partner- 
ship, as  the  means  to  share  the  profits. 

I.  A  percentage  is  the  usual  measure  of  a  quota,"  but 
the  ascertainment  need  not  be  made  by  a  rate  or  propor- 
tion ;  nor  need  the  share  be  an  aliquot  part  of  the  profits. '' 
A  round  sum  in  instalments,  taken  in  turn,^'  an  annuity,'' 
a  royalty,^  rent,^  or  any  other  way,^  is  sufficient,  if  the 
amount,  however  computed,  is  payable  out  of  the  profits. 

2.  "  The  distiucftion  between  taking  profit  as  profit,  and  taking  it  not 
as  profit  but  as  payment  of  a  debt,  is  a  familiar  one,  firmly  estab- 
lished by  the  aiithorities,  but  not  always  explained  as  clearl}'  as  it 
might  be.  It  is  the  distindlion  between  a  partner  and  a  creditor 
obscurely  expressed.  Taking  a  share  of  the  profit  as  profit,  is  tak- 
ing it  as  his  profit — as  profit  of  his  flour  business- — as  the  profit  of  a 
principal, — taking  it  in  the  capacity  of  a  principal  trader — an  owner 
of  the  profit — a  partner:  taking  a  part  of  the  profit  as  payment  of  a 
debt,  is  taking  it  in  the  capacity  of  a  hired  man  or  other  creditor. 
If  A  is  clerk  and  creditor,  we  mean  by  his  share  of  the  profit  what 
is  his  when  it  is  paid  to  him  by  his  employer,  but,  until  then,  is  his 
in  a  figurative  sense  only.  If  he  is  a  clerk  and  creditor,  what  is 
called  his  share  of  the  profit  belongs,  as  a  matter  of  absolute  legal 
title,  exclusively  to  B  until  he  pays  it  to  A,  and  then  belongs  ex- 
clusively to  A :  it  does  not,  at  any  time,  belong  to  A  and  B  in  com- 
mon, or  in  any  manner  indicated  by  the  ordinar}'  signification  of 
the  terms  'share  of  a  partner.'  But,  if  A  is  a  joint  principal,  'his 
share'  is  'the  share  of  a  partner'  in  the  next  profit.  The  indis- 
criminate use  of  the  word  'share,'  signifying  the  amount  of  his 
wages  and  debt  if  he  is  a  clerk  and  creditor  of  B,  and  signifying  his 
ownership  of  a  part  of  the  profit  in  common  with  B,  if  he  is  a  prin- 
cipal is  a  cause  of  confusion.  The  distindtion  between  the  two  sig- 
nifications of  'share,'  is  the  distindlion  between  a  creditor  and  a 
partner."  DoE,  C.  J.,  Eastman  v.  Clark,  53  N.  H.  297  (1872). 

3.  The  appointee  of  the  proprietor  takes  through  him, 
and  by  virtue  of  his  dominion  (S54).  The  delegation  of 
power,  if  proclaimed,  excludes  the  idea  of  proprietorship 
in  the  recipient.  He  takes  en  autre  droit.  A  contrail 
to  pay  over  the  profits  a  fortiori  exchides  a  title  to  them 
as  proprietor,  and  establishes  a  claim  for  them  against 
the  proprietor.  The  ideal  case  of  the  merchant  prince 
of  New  Hampshire  and  the  poor  missionary  could  arise 
only  under  the  loose  sense  given  to  the  word  sharing. 

"  vSuppose  a  New  Hampshire  merchant,  having  gained  a  sufficient 
"  estate  in  trade,  and  desiring  to  continue  his  business  for  the  indus- 
"  trial  and  charitable  purpose  of  supporting  a  missionary  in  Ceylon, 
"gives  him  a  bond  to  pay  him  all  the  future  profits  of  his  business; 
"and  suppose  the  jDrofits  are  called  'net  profits'  in  the  bond:  was 
"there  ever  a  court  that  would  hold  the  missionary  liable  as  a  part- 
"  ner  for  the  goods  bought  by  the  merchant  in  carrying  on  his  busi- 
"  ness  ?  It  would  be  evident  that  they  both  understood  the  missionary 
' '  to  be  a  creditor  and  not  a  partner ;  that,  by  '  net  profits '  they  meant 

151 


>5^^ 


Thk  Tkst.  Tt.  2,  Ch.  I. 

"  the  sun)lus  of  LToss  i-rofits  left  after  paying'  all  other  creditors  of  the 
••  busim-ss  •  and  that,  in  the  literal  sens«-,  there  would  l)e  no  net  profits 
••of "the  husiiK-ss.  Whv  should  the  missionary  he  luil;le,  especially 
••scciiiir  he  was  not  to  defraud  the  other  creditors,  but  only  to  receive 
"the  hahmcc  of  profits  left  after  they  were  all  ])aid?"  Kastman  v. 
Clark,  53  N-  »•  34»  (i«72)- 
a  ropnntiuion  to  parhn-r  on  business  for  services  referred  to  profts. 
'  \  vS:  15  partners.  a;,'recd  to  give  C  "  lo  p.  c.  on  the  business"  for  his 
services  as  financial  manager.  Each  might  furnish  capital  at  7  p.  c. 
I'rofU  and  loss  (Uvided:  1-3  to  C,  2-3  Ijetween  A  &  B,  according  to 
lime  Ihcy  respedivelv  worked.  A  &  B  brought  bill  against  C,  who 
look  no  exception  lo  master's  finding  that  he  was  a  partner.— C's  10 
p.  c.  liniitc'l  to  profits,  because  if  business  done  at  a  lo.ss  C  would  pay 
biick  1-3  of  commission  on  the  gross  amount.  Funk  v.  Plaskell,  132 
Mass.  58o(i.SS2). 

b.  Kx  parte  Chuck,  S  Bing.  469  (1832),  ^52,  n.  1. 

c.  Tak in ix profits  in  alternate  layers,  partnership.  B  sold  a  newspaper, 
with  the"  plant,  to  C,  for  /150,  payable,  with  interest,  in  instalments 
«luring  7  years.  B  guaranteed  iri5o  a  year  to  C,  beyond  annual  in- 
stalments, and  C  accounted  for  profits  exceecUng  such  ^'150,  and  up 
to  /5fXJ.  lo  B,  with  right  to  take  surplus  over  and  above  ^^'500,  if  he 
lussumed  /'250  of  fxisting  liabilities  of  the  newspaper.  A  sued  B  for 
jiajier  supplied  to  C. — Liable.  Because  B  &  C  intended  to  share  the 
profits.   Barry  v.  Nesham,  3  C.  B.  641  (1841), 

d.  In  Colbeck  cS:  Co.,  ex  parte  Wheeler,  Buck,  48  (1817),   ^.57  n.  4. 

e.  Everett  v.  Coe,  5  Denio  180  (1848),   {(57  n.  4. 

f.  Kent  or  profits.  Corijoration  leased  its  mills  to  A,  and  received,  in 
lieu  of  rent.  1-4  annual  profits,  half  of  which  remained  in  business,  at 
compouiKl  interest,  until  close  of  term.  Corporation  was  sued  as 
n.irtner  on  bill  of  exchange  given  by  A. — Liable  as  to  third  persons, 
m  a  partnership  for  a  purpose  not  ultra  vires.  Catskill  Bank  v.  Gray, 
14  Barb.  471  (1851). 

A  lent  B  Jr,ooc3,  leased  him  store  for  a  year,  with  son,  C's,  services 
gratis.  B  agreed  to  invest  f3,ooo  in  business,  and  manage  it  for  a 
year,  rendering  account  to  C,  who  should  have  1-3  profits,  and  might 
demand  re-i)ayincnt  of  loan  and  possession  of  store  at  close  of  year. — 
A  liable  as  partner,  in  suit  bv  creditor.  Cushman  v.  Bailev,  i  Hill  526 
X.  Y.  (i84.y 

g.  Surety  who  shares  profits  of  working:  eontrafl,  a  partner  luith  con- 
IraRors.  H  was  surety  for  C  &  D,  contradlors  for  construdlion  of  a 
railroarl.  They  agreed  to  give  him,  for  going  security,  1-4  clear 
profits,  also  10  p.  c.  on  advances,  and  to  secure  him,  by  orders  on  the 
company,  for  money  due  them.  A,  a  mason,  sued  B,  as  a  partner  of 
C  iS:  1),  for  work  and  labor  done.  Obtained  verdi6l.— Sustained.  B's 
sharing  in  ])rofits  of  working  contradl  made  him  a  partner.  Heyboe 
v.  Hurge.  9  C.  B.  431  (1850). 

J/nldintr  out  ehari^es  the  party  who  permits  it,  although  creditor  did 
not  know  oftt,  as  does  bargain  for  rate  varyine;  with  sales.  B  stipu- 
lated to  transfer  her  customers  in  the  coal  business  to  C,  and  to  rec- 
ommend others  to  him;  and  C  agreed,  in  return,  to  pay  her  an  an- 
nuity and  two  shillings  a  chaldron  for  coal  sold  to  customers  whom 
she  should  induce  to  buy  of  him.  A  suedB&Cfor  the  price  of  coal. 
Evidence  showe<l  that  bills  to  her  customers  were  made  out  in  the 
joint  names  of  B  &  C,  though  A  did  not  know  it,  and  did  not  sell  on 

152 


Pt.  2,  Ch.  I.  The  Test.  is9- 

her  credit. — Liable,  because  she  suffered  her  name  to  Le  heUl  out, 
though  A  did  not  know  it  when  he  made  the  sale.  The  contrail  for 
a  rate  which  varied  with  the  sales  would  also  make  her  a  partner. 
Young  V.  Axtell,  2  H.  Bl.  242,  arq-iiciido  (17^4). 

Husband  entitled  to  wife's  profits,  liable  as  partner,  though  not 
bound  by  contracl.  B,  married  woman,  and  C  entered  into  partner- 
ship, B  contributing  her  separate  estate.  A  brought  a6lion  against 
B  C  &  D,  B's  husband,  for  firm  debt. — Recovered.  B  under  disability, 
but  D,  who  shared  his  wife's  profits,  liable  as  a  partner.  Miller  v. 
Marx,  65  Texas  131  (18S5). 


§59. 


^3  tl)e  nlension  of  tlje  niorii  '  sljariug '  tuoulii  make  aurg- 
bo^n  a  partner  mljo  fiartook  of  tl)e  profits,  tl)c  law  mas  prc- 
scrnciJ  bn  ^el^nncl  tl)e  effect  of  a  partnersljip,  miless  tl)c  sljarinoi 
mas  in  tl)e  mpacitn  of  a  principal  or  proprietor. 

On  account  of  the  ambiguity  created  by  letting  non- 
proprietors,  as  well  as  proprietors,  '  share '  the  profits, 
it  became  necessary  to  re-establish  the  distin6lion  be- 
tween the  two  kinds  of  share-takers.  The  adherence 
to  precedent,  which  made  the  Bar  and  the  Bench  cling 
to  the  original  e£fe(5l  of  sharing  profits,  unless  an 
exception  was  forced  upon  them,  served  the  turn,  and 
enabled  them  to  tide  over,  by  tradition,  the  period  of 
uncertainty.  Thus  the  original  meaning  of  the  word 
'  sharing,'  though  broken  down  as  its  exclusive  import, 
has  nevertheless  been  preserved.  The  word  retains 
its  primary  signification,  until  it  is  overcome  b}^  proof 
of  its  use  in  the  secondary  sense.  The  primary  mean- 
ing prevails,  and  controls  the  construction  of  the  term. 
The  context  must  destroy  this  implication  of  owner- 
ship, and  substitute  a  different  relation,  i.  e.,  of  debtor 
and  creditor,  or  master  and  servant,  in  order  to  over- 
throw the  original  import  of  the  word.' 


^59.  TiiK  Test.    -  Pt.  2,  Ch.  i. 

The  original  meaning  of  the  word  has  been  restored 
in  the  modern  definition  of  a  partner:  One  who  shares 
the  profits  'as  profits,'  in  other  words,  as  a  proprietor. 
The  exceptions  established  the  secondary  sense  of  the 
word,  or  sharing  a^  a  non-proprietor.  But  they  were 
not  permitted  in  derogation  of  the  rule,  which  em- 
bodied the  primary  meaning,  until  they  were  justified 
by  proof  of  sharing  as  a  non-proprietor."  The  result 
is  expressed  in  the  statement  that  sharing  the  profits 
makes  out  2.  prima  facie  case  of  partnership,  that  is  to 
sav,  the  law  interprets  the  phrase  sharing  the  profits 
in  the  priniar}^  sense,  unless  the  presumption  is  re- 
butted b}'  proof  of  its  use  in  the  secondary  sense. '^ 

If  the  sharing  did  not  indicate  a  proprietor,  there 
would  be  no  reason  even  for  the  prima  fades.  The 
sharing  would  not  be  evidence  of  any  relation,  until 
that  relation  was  proved,  when  the  evidence  w^ould  be 
superfluous.  The  sharing  being  consistent  with  the 
relation  of  debtor  and  creditor,  or  master  and  servant, 
as  well  as  with  that  of  partners,  would  not  tend  to 
prove  one  relation  more  than  another   (§54,  §55  n.  4). 

i  Profits  presumed  to  be  shared  by  title  of  proprietor,  unless  a  different 
rii^/it  IS  proved.  A  sued  B  &  Co.  on  promissory  note  for  ^2,700,  eu- 
•lorscd  to  him  by  B  cS:  Co.  Court  charj^^ed  :  i,  that  demand  at  place 
of  husiness,  or  residence,  of  a  partner  was  sufficient ;  2,  that  if  C  was 
interested  in  the  profits  of  the  Inisiness,  or  represented  himself  to  be 
a  partner  he  was  liable.— Judgment  for  A.  Sharim?  profits /r/w^? 
facie  evidence  of  partnership,  and  unless  proof  of  sharing  was  in  a 
difTerent  capacity,  conclusive.  Fourth  National  Bank  of  vSt.  Louis  v. 
Altheiiner,  3  S.  W.  Rep'r  858,  Mo.  (1887). 

2.  Tlie  exceptions  to  the  rule,  that  a  share  in  the  profits 
made  the  sliare-taker  a  partner,  were  based  upon  the  fa6l 
tliat  the  partaker  was  not  a  proprietor  of  the  business. 
The  assent  did  not  share  the  rank  and  dominion  of  the 
principal.  No  one  could  be  a  partner  who  was  not  a 
principal  in  the  business.  =' 

First.   The  wa^es  or  salaries  paid  to  employees  are 
notliing  but  stipends  for  ser\'ices  rendered  bv  them.     The 


154 


I 


Pt.  2,  Ch.  I.  The  Test.  §59. 

payment  out  of  profits  does  not  subvert  the  relation  of 
master  and  servant.  ^  The  change  is  only  in  the  mode 
of  payment ;  a  variable  and  contingent  amount  is  sub- 
stituted for  a  fixed  sum,  for  the  mutual  benefit  of  both 
parties.  By  making  the  wages  dependent  upon  success 
in  the  business,  the  servant  has  an  inducement  for  his 
exertions,  and  the  master  reduces  his  outlay.^ 

A  share  of  the  profits  in  addition  to  the  salary  does 
not  change  the  relation." 

a.  Unless  a  principal  in  the  business,  not  a  partner.  A  offered  to 
prove  against  an  insurance  company  for  an  annuity.  She  belonged 
to  the  class  which  participated  in  the  profits,  and  they,  with  the  bo- 
nusses,  were  distributed  annually.  The  company  amalgamated  with 
another  company,  and  was  ordered  to  be  wound  up,  but  A  never 
assented  to  the  transfer.  Defence:  A  was  a  partner. — Proof  allowed. 
Company  was  not  her  agent.  She  had  no  voice  in  the  management 
or  division  of  the  profits,  nor  could  she  maintain  a  bill  for  an  account 
of  them.  In  re  Engl.  &  Ir.  Ch.  &  University  Ass'ce  Societv,  i  Hem. 
&M.  85(1863). 

Paiia/cer  of  profits,  unless  a  principal  in  the  business,  is  not  a  part- 
ner. B  had  a  government  coutracft  for  grave-stones,  and  employed 
A  to  superintend  work,  at  ^3  a  day  and  1-2  the  profits.  A  brought 
account,  as  partner,  against  B. — Account  allowed,  but  no  partnership, 
because  A  was  not  a  principal  in  the  business.  Hargrave  v.  Conroy,  4 
C.  E.  Gr.  281,  N.J.  (1868). 

Burckle  v.  Eckhart,  I53  n.  i. 

b.  Half  profits  for  services  no  partnership.  A  rented  and  stocked  a 
country  grocery,  and  paid  for  liquor  license  issued  to  B.  B  managed 
the  business  for  1-2  the  profits.  His  separate  creditors  levied  on  the 
goods.  A  replevied. — No  partnership.  Title  exclusively  in  A.  Lamb 
V.  Grover,  47  Barb.  317,  N.  Y.  (1866). 

B  furnished  capital  to  start  C  in  business,  and  gave  him  1-2  profits. 
A  attached  stock  as  propert}'  of  C. — Dissolved.  Cnot  a  partner,  and 
property  belonged  to  B.   Pond  v.  Cummins,  50  Conn.  372  (1882). 

B  employed  C,  as  agent,  to  sell  or  let  land,  giving  him  1-2  profits. 
B's  devisee,  A,  brought  ejectment  against  C,  who  claimed  title  as 
partner. — Recovered.  C  simplv  agent.  Blight  v.  Ewing,  i  Pittsburg 
275,  Pa.  (1856). 

c.  Profits  as  part  of  salary  no  partnership.  A  received  1-3  profits  in 
addition  to  salarj'.  In  suit  by  firm,  defendant  objected  to  non-joinder 
of  A  as  plaintiff. — Should  not  join,  because  not  partner.  Vanderburgh 
V.  Hull,  20  Wend  70,  N.  Y.  (1838). 

Insurance  in  B's  name,  carried  on  by  A,  as  agent,  subje<ft  to  B's 
control.  A  received  salar}^  of  ^150  a  ^-ear  and  1-5  profits,  B  4-5  profits 
and  all  losses.  If  unexpeAed  loss  occurred  after  annual  division,  A 
to  contribute  to  pay  it,  but  not  beyond  his  1-5  profit.  A  l)rought  ac- 
count.— Did  not  lie,  because  no  partnership.  Ross  v.  Parkins,  L.  R. 
20  Eq.  331  (1^75)- 

Second.  The  principle  of  hiring  is  not  limited  to 
menial  servants,  but  extends  to  any  employment,  in 
which  the  employee  is  subject  to  the  diredlion  and  con- 
trol of  the  principal.''     The  captain  who  took  command 

155 


559.  '^^"''  Test.  Pt.  2,  Ch.  i. 

of  a  ship  diirinf^  a  whaling  cruise  for  a  share  in  the 
profits,  instead  of  a  salary,  is  an  employee,  and  not  a 
partner  of  the  owner.''  The  cashier  and  bookkeeper  of 
an  establishment,  who  received  a  share  of  the  profits  for 
his  salary,  did  not  become  a  partner,  because  the  money 
payable  for  his  services  was  the  earnings  of  the  busi- 
ness.' A  clerk  employed  by  a  firm  to  drum  up  custom- 
ers is  not  one  of  the  heads  of  the  firm,  because  he  shares 
the  profits  of  his  sales,  less  his  proportion  of  the  general 
expenses  of  the  business.  He  is  limited  to  the  faculty 
of  .selling,  and  has  no  other  capacity  in  the  business. 
The  profits  do  not  change  his  status.*''  The  surgeon  and 
apothecary,  who  sold  out  his  shop  and  good-will,  stipu- 
lating for  1-2  the  profits  during  the  year  while  he  intro- 
duced his  customers  and  patients  to  the  buyer,  is  not  a 
partner.''  He  remained  in  his  drug  store  during  the 
year,  in  order  to  transfer  his  business  to  the  purchaser. 
He  did  not  become  a  partner  by  sharing  the  profits.  He 
reversed  his  position  as  principal,  in  order  to  substitute 
the  vendee  as  his  successor.  The  interval  was  not  a 
joint  reign,  but  simply  the  beginning  of  a  new  dynasty. 
An  attorney,  who  took  half  the  profits  for  his  fee,  is  not 
a  partner  with  his  client.'  The  attorney  a6ls  by  the  di- 
rection and  under  the  control  of  his  client. 

The  amount  of  profits  the  employee  bargains  for  does 
not  afifecl  the  relation,  except  as  evidence  that  the  form 
of  payment  is  meant  to  disguise  a  partnership.  A  man- 
ager, who  received  40  p.  c.  of  the  profits,  would  be  an 
employee,  unless  other  attributes  showed  him  to  be  a 
proprietor  of  the  establishment.^  He  had  no  badge  of  a 
partner,  except  a  share  of  the  profits.  He  had  no  au- 
thority nor  liability,  but  was  subje6l  to  the  diredlion 
and  control  of  tlie  principal. 

d.  Salary.  A  B  &  C  had  a  contrail  to  build  turnpike.  D  agreed  with 
them  to  construct  a  portion,  dividing  profits  with  them,  in  propor- 
tion to  work  and  expenditure.  D  brought  assumpsit  for  his  share  of 
profits.  Defence:  vShould  have  brought  account. — No  partnership. 
Muzzy  V.  Whitne}',  lo  Johns.  226,  N.  Y.  (1813). 

e.  Sharing  profit  and  loss  0/  cruise  no  partnership.  B,  the  captain, 
had  1-5  the  profit  and  loss  of  the  ship  and  cargo  on  a  voyage.  C,  the 
owner,  sold  the  ship  and  cargo  while  at  sea,  to  D,  to  secure  his  ad- 
vances. B  reported  his  arrival  at  Cowes  to  I),  who  did  not  take  pos- 
session, and  alleged,  as  excuse,  that  B  was  a  partner. — Bound  to  take 
possession,  in  order  to  complete  title,  and  B's  share  was  in  payment 
of  wages.  Mair  v.  Olennie,  4  M.  &  vS.  240  (1815). 

A  was  captain  for  3  years  whaling  cruise,  at  15  p.  c.  profits.     B, 
owner,  recalled  ship  before  expiration    of  period,    and  A  sued  for 

156 


I 


Ft.  2,  Ch.  I.  The  Test.  §59. 

breach.     Defence :    Partner. — Recovered.    Brown  v.   Hicks,   24  Fed. 
Rep'r  Si  I  (1885). 

/,  Pro})iisc  for  share  0/ patent,  for  assistance  in  perfecting  it,  no  sub- 
stitute for  salary  as  clerk.  B  had  salt  works,  and  A  adted  as  his 
cashier  and  bookkeeper  lor  4  years,  without  any  agreement  fixing  a 
salary.  Then,  according  to  A's  testimony,  ^.250  a  year  was  fixed  as 
his  compensation.  During  the  4  years,  A  also  assisted  in  perfedling 
a  patent  for  manufacfturing  salt,  and  B  promised  him  a  small  share  in 
it  for  his  assistance.  A  offered  to  prove  for  4  years  arrears  of  salary. 
— Reje6led  below,  because  A  looked  to  his  share  in  the  patent  for 
remuneration ;  above,  because,  though  he  was  a  clerk,  the  evidence 
was  insufficient  to  fix  the  amount  of  his  salary.  Ex  parte  Hickin,  3 
DeG.  &  S.  662  (1852). 

g.  Salesman  not  a  partner.  A,  who  had  previously  employed  B  to 
secure  custom,  and  had  given  him  a  commission  of  15  p.  c.  on  the 
profits  of  orders  secured  by  him,  agreed  to  share  with  B  the  profits  of 
his  orders  after  dedudling  the  expenses  of  procuring  and  filling  them, 
and  a  rateable  part  of  the  rent  and  maintenance  of  A  "s  shop,  in  which 
the  business  was  transadled.  A  sought  to  prevent  B  from  colledling 
draft  received  in  payment  of  a  debt  from  customers  secured  by  him. 
—Defence:  Partnership. — B  not  a  partner.  Though  engaged  in  the 
business,  he  had  no  control  over  it;  no  right  to  receive  payment  for 
sales  which  he  secured  or  negotiated ;  he  was  salaried  by  A.  Sharing 
profits  is  only  one  of  the  consequences  of  partnership.  Andrews  v. 
Pugh,  24  L.  J.  Ch.  58(1855). 

h.  Profits  may  be  shared  as  a  salary.  B,  a  surgeon  and  apothecar}-, 
sold  his  pra(5lice  and  drug  store  to  A,  for  ^900,  part  cash  and  balance 
at  end  of  the  year.  B,  who  continued  to  attend  to  the  business,  and 
introduced  A  to  his  patients  and  customers,  received  1-2  the  clear 
profits  of  the  business  for  the  year.  A  sued  B  for  moneys  received 
by  him, — Recovered.  No  intention  to  be  partners,  but  B  received 
the  profits  as  a  salary.     Rawlinson  v.  Clarke,  15  M.  &  W.  292  (1846). 

i.  Purchase  of  claims  by  attorneys  for  half  profits  in  lieu  of  fees  neither 
a  partnership  nor  a  trust.  B  &  C,  attorneys  for  A,  bought  prize- 
claims  for  half  profits.  A  demanded  account,  judgment  for  balance 
due,  and  assignment  of  claims  producing  less  than  cost.  He  arrested 
B  on  execution,  as  a  defaulting  trustee.  Defence  :  Partnership  which 
excludes  a  breach  of  trust. — Adlion,  in  substance,  for  money  had  and 
received  sustained.  No  partnership  and  no  trust.  Prouty  v.  vSwift, 
51  N.  Y.  594  (1873). 

j.  Salary,  equal  to  a  share  of  the  prof  Is,  don't  convert  manager  into  a 
partner.  B  &  C  agreed  to  give  A,  as  manager,  a  salary  equal  to  40 
p.  c.  of  their  profits,  and  reserved  the  right,  upon  a  breach  of  the 
agreement  by  A,  to  discharge  him  after  21  days  notice.  They  ex- 
erted the  right,  and  excluded  A,  who  brought  bill  for  injundlion  and 
specific  performance. — Bill  dismissed,  because  sum  equal  to  profits  is 
not  profits.  vStocker  v.  Brockelbank,  15  Jur.  591 ;  ^  Mac.  &  Gord.  250 
(1S51). 

Third.  The  exception  presents  itself  in  another  as- 
pect, and  verifies  the  principle  by  a  different  applica- 
tion. The  servant  or  employee  could  be  indi6led  for 
larceny,  although  entitled  to  a  share  of  the  profits.  ^  If 
a  partner,  his  right  to  deal  with  the  stock  would  be  a  de- 

157 


§59-  '^lii"^  Test.  Pt.  2,  Ch.  i. 

fence  to  the  charge.  The  exception  admits  that  a  part- 
ner must  be  a  proprietor,  and  that  sharing-  the  profits 
per  se  does  not  make  him  a  proprietor. 

k.  Si'n'ant  may  be  paid  by  a  s/iair  of  the  profits.  A  owned  a  colliery, 
aud  employed  B,  as  a  captain,  to  carry  coal  to  market  and  sell  it, 
giving  him  2-3  of  the  diftereuce  between  the  cost  price  at  the  mines 
aud  tUe  market  price,  for  his  services.  B  sold  coal  and  embezzled  the 
price.  A  indicled  him  for  larceny  as  a  servant.  Defence  :  H  joint 
owner  of  the  money. — Convicted.  B  employed  by  A  to  take  coal  to 
market  and  bring  back  money  to  him.  Sharing  profits  the  mode  cf 
pavmeut,  which  did  not  convert  B  from  a  servant  into  a  jjartner. 
Hartley's  case,  Rus.  &  R.  139  (1807). 

Sharins; profit  doesn't  involve  sharing  loss,  inter  se.  \\  agreed  to 
taVe  charge  of  glebe  land  for  A,  at  15  sh.  a  week,  until  the  following 
Michclmas,  and  afterwards  at  a  salary  of  £2^  a  year,  and  1-3  clear 
annual  profits,  after  deducfling  all  expenses,  rent,  labor  and  interest 
on  capital.  B  was  indicled  as  a  servant,  for  embezzling  A's  property. 
Defence:  A's  partner. — Convi6led.  No  sharing  of  loss  z;;/'rr.yr.  Reg. 
V.  Wortley,  15  Jurist  1 137  (185 1). 

Clerk  cuith  share  of  profits  liable  on  capias  as  trustee.  A  furnished 
capital  and  B  his  services  for  1-2  the  profits.  A  took  B  on  capias  in 
suit  for  money  received  in  the  business.  Defence:  Partnership. — 
Capias  proper.  Profits  for  services.  B  held  as  trustee  for  A.  Mer- 
win  v.  Playford,  3  Rob.  702,  N.  Y,  (1865). 

Fourth.  The  agent  for  the  management  of  the  pro- 
prietor's business  is  but  an  employee,  though  he  ap- 
proaches in  dignity  a  proprietor.  As  long  as  he  does 
not  a(5l  on  his  own  behalf  in  condu6ling  the  business,  or 
deal  with  others  as  a  principal,  he  is  not  a  proprietor. ' 
The  moment  he  a(5ls  for  himself,  or  as  if  he  were  the 
principal,  he  becomes,  oris  liable  as,  a  proprietor. "'  The 
decision  which  established  the  exception  did  not  make 
a  revolution  in  the  law  of  partnership,  although  it  is 
generally  so  regarded.  The  case  did  not  even  create 
an  innovation  or  mark  a  new  departure  in  partnership 
law."  The  exception  falls  within  the  recognized  class 
of  subordinates,  and  hardh'  deserves  a  separate  classifi- 
cation. 

A  creditor,  at  one  period,  was  not  compelled  to  exe- 
cute a  deed  and  release  the  debtor  who  made  an  assign- 
ment, because  by  taking  the  debtor's  business,  and 
working  it  up,  he  ran  the  risk  of  becoming  a  partner." 
This  position  was  not  maintained.  The  taking  charge 
of  the  debtor's  business  was  limited  to  the  purpose  of 
liquidation,  and  was  simply  w^orking  out  the  debtor's 
debt.  There  was  no  profit  in  the  business  for  the  cred- 
itor, who  worked  to  relieve  the  debtor,  and  secure  his 
own  claim. P     It  was  different  if  the  creditors  took  the 

i.ss 


f 


Pt.  2,  Ch.  I.  The  Test.  §59; 

debtor's  business  and  carried  it  on  for  their  own  profit, 
without  a  resulting  interest  to  the  debtor,  after  his  debts 
were  satisfied.  The  going  into  business  made  them  part- 
ners, and  the  debtor's  failure  served  as  the  occasion. 
The  objec?t  was  to  engage  in  the  business,  and  not  merely 
to  obtain  payment  of  their  debts.'' 

3.  Profits  prima  facie  evidence  of  partncrsliip.  By  specialty,  B  lent  C 
&  Co.  f  10,000  for  one  year,  stipulating  for  interest  and  if  amount  of 
profits  of  business  exceeded  |;io,ooo  for  lo  p.  c,  of  such  excess.  Bond 
renewed  four  years  in  succession.  B  received  profits  under  arrange- 
ment, and  upon  his  death  C  &  Co.  became  insolvent.  A  sued  B's 
administrator  on  notes  made  by  C  &  Co. — Non-suit.  I'roilts,  as 
prima  facie  evidence  of  partnership,  rebutted  by  evidence  more 
consistent  with  a  loan.  Meehan  v.  Valentine,  29  F.  Rep'r  276,  U.  b. 
C.  C,  E.  D.  Pa.  (1886). 

Profit  called  consideration  for  loan,  a  partnership,  unless  excluded 
by  proof  of  a  different  relation.  B  lent  money  to  C,  to  buy  and  sell 
cotton,  wool  and  hides,  for  part  profits  of  business.  A  sued  B  for 
merchandise. — Recovered.  Partnership  not  negatived  by  proof  of  a 
different  relation.    Cothran  v.  Marmaduke,  60  Texas  370  (1883). 

Sharing  profits  prima  facie  partnership.  A  furnislied  capital,  B 
his  services,  and  divided  the  profits.  Both  sued  C  for  price  of  goods 
sold  in  name  of  A  &  Co.  Defence:  C  not  a  partner. — Recovered. 
Greenwood  v.  Brink,  i  Hun  227,  N.  Y.  (1874). 

Share  in  profits  prima  facie  partnership,  and  amount  not  dependent 
on  contribution  to  stock.  A  sued  B  for  account  and  his  quota  of  loss. 
B  contributed  his  services  and  I64  out  of  f  9,000.  He  was  entitled  to 
1-2  the  profits. — Liable.  A  share  in  profits  prima  facie  partnership, 
and  need  not  correspond  to  contribution  to  capital.  Hodgman  v. 
Smith,  13  Barb.  302,  N.  Y.  (1852). 

/.  Creditor  receiving  payment  from  profits  of  business  continued  under 
his  management  by  debtor,  is  not  a  partner.  B  manufadlured  ma- 
chinery, which  was  sold  on  commission  by  C.  Being  largely  in- 
debted to  C  for  advances,  B,  in  order  to  secure  him,  surrendei-ed  the 
control  and  management  of  his  business  to  C,  until  his  claim  should 
be  reduced  to  |io,ooo,  and  also  agreed  to  contra<5l  no  debt  without 
C's  consent.  C  appointed  a  superintendent  to  take  charge,  and  B 
continued  the  business  imder  his  diredliou.  B  gave  notes,  for  ma- 
terials, to  A,  who  sued  C  as  a  partner.  Court  charged  that  carrying 
on  the  business  under  the  arrangement  made  C  a  partner. — Reversed, 
because  there  could  be  no  profits  while  C's  claim  was  unpaid,  or  if  C 
did  take  profits  he  received  a  fixed  sum,  and  not  a  variable  amount 
of  profits,  as  such.      Brundredv.  Muzzey,  i  Dutch.  268,  N.J.  (1855). 

Carrying  on  debtor's  business  for  creditors'  payment  does  not  make 
them  partners  ivith  the  managers.  B  failed,  and  assigned  his  busi- 
ness to  C  and  4  others,  trustees,  who  carried  it  on,  subject;  to  the  con- 
trol of  B's  creditors.  The  profits  went  as  B's  property,  to  pay  the 
creditors,  who  accepted  them  in  satisfaction,  and  as  soon  as  they 
equaled  his  debts  the  business  reverted  to  B.  D  &  E  were  appointed 
trustees,  but  D  never  adted,  and  E  resigned,  after  acSling  for  6  weeks. 
Subsequently  C  accepted  draft  drawn  by  A  for  the  price  of  materials 
used  in  the  business.  A  sued  D  &  E,  as  acceptors. — Not  partners. 
The  sharing  profits  was  a  mode  of  payment,  and  the  trustees  were 
agents  of  the  debtor,  and  not  of  his  creditors.  Cox  v.  Hickman  S  H 
L.  268  (i860). 

159 


§59 


The  Trst.  Pt.  2,  Ch.  i. 


m.  Contributions  (>y  creditors  to  debtor's  business,  and  sharing  the 
profit  and  toss,  inaA-e  thon  partners.  R,  who  bad  an  oil  mill  in  Bos- 
ton, failed,  owing  A  &  C,  in  Boston,  and  I),  in  London.  By  an 
aoreenitMit,  for  one  year,  subsecjuently  extended  for  two,  A  imported 
seed  from  Calcutta  for  the  mill,  receiving,  in  payment,  B's  draft  on 
D  for  1-3,  and  on  C  for  1-3,  and  B's  note  for  the  final  1-3.  A  insured 
the  seed  on  the  voyage,  and  on  a  loss  accounted  for  any  surplus  to 
the  other  three,  and  claimed  any  deficit  out  of  the  proceeds  of  the 
mill.  D  sold  the  cake,  and  accounted  for  the  proceeds.  Any  loss 
on  the  contribution  of  A,  C  or  D  was  to  be  made  good  out  of  the  pro- 
ceeds of  the  business.  B  received  a  salary,  and  the  four  divided 
profits  equally.  The  three  agreed  not  to  sue  B  while  this  arrange- 
ment lasted,  and  took  a  conveyance  of  his  real  estate  as  security. 
A  imported  seed,  which  fell  in  price  during  the  voyage.  D  refused, 
in  advance,  to  pay  draft  for  his  share  of  price.  B,  therefore,  was 
unable  to  take  the  seed.  A  sold  it  at  a  loss,  and  sued  D  on  the  con- 
tradl  for  damages.  Defence:  Partnership,  and  A  should  have  de- 
manded an  account. — A  partnership,  but  contraA  to  contribute  ante- 
cedent to  the  relation.  Wills  v.  Simmonds,  8  Hun  189;  51  How.  Pr. 
48,  N.  Y.  (1876). 

n.  Creditors,  who  let  insolvent  trade  under  their  inspeHion  and  con- 
trol, and  take  his  receipts,  air  not  his  partners.  B,  a  horse  dealer, 
assigned,  for  creditors,  to  A,  trustees.  The  deed  allowed  B  to  carry 
on  the  business,  at  a  weekly  salary,  under  the  orders  of  A,  who  might, 
if  B  disobeyed  them,  take  possession,  and  the  receipts  went  to  A's 
account.  B  continued  the  business  in  hjs  own  name,  and  contra(5led 
new  debts.  He  disobeyed  A,  who  took  possession  of  his  stock  and 
trade.  Two  days  later  B  committed  an  acfl  of  bankruptcy.  A  claimed 
horses  in  hands  of  third  persons,  and  B's  assignee  in  bankruptcy  in- 
terpleaded, on  ground  that  A  was  B's  partner,  and  liable  for  debts 
contra6led  by  B  under  A's  direction. — A  recovered.  He  was  not  a 
partner  with  B,  as  he  had  no  interest  in  the  profits  while  B  carried 
on  the  business.  B  was  solely  interested  in  them,  as  a  fund  for  the 
payment  of  his  debts.  Though  A  had  control  of  business  through  B, 
who  contradled  debts  in  its  management,  A's  exertion  of  his  power 
reserved  by  the  deed  to  take  possession  of  the  stock,  was  not  a  fraud 
upon  B's  creditors,  who  knew  nothing  of  the  secret  arrangement. 
Price  V.  Groom,  2  Exch.  542  (1848). 

Creditor  bound  by  assiqntnent,  which  continues  debtor's  business, 
if  only  for  liquidation.  Assignment  by  C,  a  debtor,  to  A,  a  trustee 
for  creditors,  to  wind  up  C's  business,  pay  expenses,  and  apply  the 
proceeds  in  payment  of  his  creditors.  A,  in  his  discretion,  might 
carry  on  the  trade  and  employ  C  to  condu6l  it.  B,  creditors  of  C, 
obtained  judgment  against  him,  and  seized  the  goods,  on  the  ground 
that,  as  the  assignment  might  charge  them  as  partners,  it  was  void. 
A  claimed  the  goods  in  a  feigned  issue. — Assignment  valid.  The 
business  coiild  not  be  carried  on  except  for  liquidation,  and  the  credit- 
ors incurred  no  risk  of  l:)eing  held  as  partners.  Janes  v.  Whitbread, 
II  C.  B.  406  (1851). 

a.  Creditor  not  bound  to  join  in  deed  of  assignment  to  carry  on  debt- 
or's business  for  their  benefit.  Assignment  by  C,  a  debtor,  to  A, 
trustee  for  creditors,  who  should  execute  deed.  The  trustee  was  to 
carry  on  the  business,  pay  costs,  reimburse  himself,  and  divide  the 
profits  among  the  signers  in  payment  of  their  claims,  and  turn  over 
the  surplus  to  C.  B,  a  creditor,  who  did  not  sign  deed,  obtained 
judgment  and  seized  goods  which  A  claimed  in  a  feigned  issue. — 

160 


Pt.  2,  Ch.  I.  The  Test.  §6o. 

Deed  invalid  as  to  B,  who  was  not  bound  to  join  and  incur  risk  of 
being  held  a  partner.   Owen  v.  Body,  5  A.  &  E.  28  (1836). 

p.     Cox  V.  Hickman  ;  Brundred  v.  Muzzey,  supra. 

q.     Wills  V.  Simmonds,  supra. 


§60. 

(J()e  Mstinctton  bettumi  profits  auti  a  sitm  equal  to  profits  is 
bascii  upon  sl)aring  tl)e  protits  as  a  proprietor  auti  sl)ariiun  tljem 
as  a  non-proprietor. 

The  reasoning  to  support  the  distindlion  admits  this 
foundation.  The  sharing  was  called  a  commission, 
which  might  correspond  to  a  rate  of  profits,  but  could 
not  give  a  right  to  them.  The  commission,  so  the 
argument  ran,  is  a  debt  due  hy  the  partners,  not  a 
joint  right  with  them.  The  difference  between  a 
commission  on  the  profits  and  a  share  in  the  profits 
is  measured  by  the  opposition  which  exists  between 
a  right  and  an  obligation.  The  sharing  is  an  a(?t 
which  recognizes  a  title  of  ownership,  vested  in  differ- 
ent claimants,  and  gives  e£fe6l  to  the  right,  by  dividing 
the  fund  between  them.  The  a(5l  is  neither  a  gift 
nor  a  bargain  and  sale,  and  would  be  designated  a 
theft,  unless  the  taker  could  establish  a  proprietary 
right  to  the  fund.  No  stranger  can  take  a  share  of 
the  profits  any  more  than  he  can  take  control  of  the 
business.  The  sharing  cannot  be  made,  except  among 
co-proprietors.  In  short,  the  sharing  is  restricted  to  a 
proprietor,  and  the  non-proprietor  has  only  a  claim 
against  the  proprietor.' 

Now,  add  that  the  charaCler  of  the  a6l  is  a  fixed  faCl, 

which  cannot  be  altered  by  phrases,  and  the  result  is  the 

161 


§6o.  The  Test.  Pt.  2,  Ch.  i. 

distindlion  stated.  The  efFe6l  of  the  contra6l  is  a  con- 
clusion of  law,  which  is  paramount  to  the  intention  of 
the  parties.  No  arrangement  can  be  devised  which 
will  enable  a  stranger  to  secure  the  benefits  of  a  part- 
nership without  incurring  the  liabilities  of  a  partner. 
The  law  would  not  suffer  itself  to  be  circumvented  by 
a  subterfuge.  The  test  of  sharing  the  profits,  which 
established  partnership  as  a  conclusion  of  law,  could 
not  be  vitiated  by  making  it  a  play  of  words.  Calling 
a  share  in  the  profits  a  debt,  would  not  make  it  so, 
unless  it  was  a  debt  in  reality.  The  parties,  it  must 
be  borne  in  mind,  do  not  regulate  the  matter,  but  it  is 
determined  by  the  real  chara6ler  of  the  transa6lion. 
To  permit  them  to  settle  the  question,  and  that,  too, 
by  a  phrase,  would  be  to  put  a  creditor's  right  in  the 
hands  of  his  debtors,  and  let  them  juggle  with  it  at 
their  caprice.  The  partners  cannot  change  a  princi- 
pal's position  by  calling  him  a  creditor.  The  fa(?t  lies 
back  of  language,  and  the  relation  is  fixed  by  the  fa(5l." 

1.  A  commission  on  profits  is  opposed  to  a  share  in  them.  B,  manu- 
fadlurer,  let  C,  merchant,  a  store  and  lumber  yard,  agreed  to  pro- 
vide labor  and  material,  for  shovel  handles  and  other  implements,  to 
be  paid  for  by  goods,  at  retail  prices,  out  of  store,  which  C  should 
stock  and  carry  on.  and,  for  additional  compensation  for  store  and 
supplies,  a  commission  of  50  p.  c.  on  the  profits  of  the  business.  B 
bought  lumber,  for  working  up  implements,  from  A,  who  sued  C  for 
price. — Judgment  for  C.    Dunham  v.  Rogers,  i  Barr.  255,  Pa.  (1S45). 

Stocker  v.  Brockelbank,  15  Jur.  591;    3  Mac.  &  Gord.,  ^59,  n.  j. 

Share  in  a  sum  equal  to  profits.  A  employed  B  as  superintendent 
in  brush  fadlory,  giving  him,  in  lieu  of  salary,  "sum  equal  to  1-2 
profits."  B  withheld  certain  brushes,  notes  and  cash  proceeds  of 
sales.  A  brought  detinue.  Defence:  Should  have  brought  bill  of 
account. — No  partnership.  Brockway  v.  Burnap,  16  Barb.  309,  N.  Y. 
(1853)- 

Employee,  at  salary  measured  by  profits,  not  a  partner.  A,  em- 
ployed by  B  &  Bro.,  at  a  salary  to  be  measured  by  profits,  brought  in- 
junction to  restrain  them  from  mortgaging  and  selling  land  bought 
with  firm  funds. — A  had  no  standing  to  maintain  bill,  as  he  was  but 
an  employee.    McMahon  v.  O'Donnell,  5  C.  E.  Gr.  306,  N.  J.  (1869).  . 

2.  Title  to  profits  not  disguised  by  calling  it  a  claim.  B  &  C,  about 
to  put  |io,ooo  in  D's  business,  and  take  1-3  profits,  changed  the  plan, 
and  lent  D  |io,ooo,  each  taking  his  note  for  fo.ooo,  payable  in  3  years, 

I  62 


I 


Pt.  2,  Ch.  I.  The  Test.  §6i. 

and  stipulating  for  a  sum  equal  to  i-6  profits,  as  compensation  for  pro- 
curing loan.  They  also  aided  D  in  obtaining  further  funds  for  the 
business,  but  took  no  part  in  the  management.  A  lent  D  fi  2,000, 
and  sued  B  &  C  as  partners. — Liable.  Parker  v.  Canfield,  37  Conn. 
251  (1S70). 


§6L 


6l)arinoi  botl)  profit  anii  loss  iboes  not  make  partners  oftlje 
recipients,  roljo  lio  not  take  as  proprietors. 

A  division  of  both  profit  and  loss  was  the  conclusive 
test  of  a  partnership  between  the  recipients.'  The 
sharing  of  profits  implied  a  corresponding  burden  of 
loss,  but  when  the  loss  was  expressly  assumed,  the 
partnership  could  not  be  explained  away,  and  the  lia- 
bility being  admitted,  there  was  no  obje6t  in  denying 
the  relation. 

The  error  of  arguing  a  partnership,  however,  from 
the  word  sharing,  in  its  indiscriminate  sense,  extends 
to  sharing  losses.  The  agreement  to  share  losses  has 
no  effe6l,  unless  the  contractor  is  a  proprietor."  Then 
it  identifies  him  with  the  business.^ 

If  the  property  element  is  disregarded,  the  identity 
of  interest  ceases  to  be  a  clue  to  explain  the  transac- 
tions of  the  parties,  and  their  agreement  to  divide  the 
losses  would  also  cease  to  prove  a  partnership.  The 
division  might  be  an  independent  agreement,  and  not 
indicate  that  the  parties  meant  to  be  co-principals  and 
co-agents  in  the  transadlion.^  The  proof  of  partner- 
ship would  be  limited  to  the  intention  of  the  parties, 
and  that  would  be  a  secret  which  they  might  have 
every  interest  to  deny. 

163 


§62.  The  Test.  Pt.  2,  Ch.  i. 

I.  "An  agreement  to  share  profits  and  losses  may  be  said  to  be  the 
"type  of  a  partnership  contra(5t.  "Whatever  differences  of  opinion 
"there  may  be  as  to  other  matters,  it  admits  of  no  doubt  whatever 
"  that  persons  engaged  in  any  trade,  business,  or  adventure,  upon  the 
"terms  of  sharing  profits  and  losses  arising  therefrom,  are  partners 
"in  that  trade,  business  or  adventure."  i  L,indley,  Law  of  Partner- 
ship 19. 

2.  If  not  a  principal,  he  is  not  a  proprietor  or  partner. 
§57- 

3.  If  the  losses  were  not  shared,  the  indicia  of  title  to  the 
property  would  not  be  complete,  and  the  profit-sharer 
would  not  take  by  virtue  of  a  property-right. 

Shariui!;  profits,  and  not  tosses,- not  partnership  inter  se.  A  owned 
patent.  B  advanced  money  to  build  machine,  and  stipulated  for  re- 
imbursement and  1-4  receipts  from  working  or  sale  of  machine.  He 
also  bought  1-4  of  patent  right.  On  sale,  each  had  refusal  of  the  oth- 
er's interest  in  patent.  Neither  could  bind  the  other  by  contract.  A 
sold  machine,  and  kept  the  money.  B  sued  him  for  advances  and 
conversion.  Defence :  Partner  could  not  sue  co-partner  for  fraudu- 
lent removal  of  firm  property. — No  partnership  ijiter  se,  because  they 
shared  nothing  but  the  profits ;  B  bore  all  the  expenses.  Cummings 
V.  Mills,  I  Daly  520,  N.  Y.  (1866). 

4.     Chafifaix  v,  Lafitte,  ^57,  n.  3. 


§62. 


0l)artng  tl)e  gross  proftts  ^ocs  not  make  tl^e  recipient  a 
partner. 

A  division  of  gross  profits  may  occur  between  co- 
owners  who  join  in  a  sale,  or  between  two  persons 
who  unite  in  a  purchase  and  re-sale,  where  each  car- 
ries independently  the  burden  of  his  own  purpart,  or 
between  the  owner  of  the  thing  sold  and  one  who  con- 
tributes only  services.  A  joint  purchase  at  the  Com- 
mon law  does  not  make  a  partnership,  nor  does  a  sub- 
sequent sale  have  that  effe(fl.  On  the  re-sale,  a  division 
of  the  gross  produ6l  is  treated  like  a  division  of  the 

article  purchased.       Each   part}^  to   the   transaAion 

164 


Pt.  2,  Ch.  I.  The  Test.  §62. 

bears  his  own  expenses,  and  has  no  claim  for  contri- 
bution. The  proceeds  of  the  sale  are  substituted  for 
the  thing  sold.  The  process,  by  itself,  does  not  con- 
stitute a  partnership,  no  matter  how  often  it  is  repeated. 
In  a  partnership,  on  the  other  hand,  each  party  is  en- 
titled to  credit,  in  the  settlement,  for  his  contribution 
and  expenses.     Only  the  net  result  is  divided. 

If  sharing  the  gross  receipts  did  make  the  recipients 
partners,  it  would  be  on  general  principles,  because  the 
sharing  identifies  them  as  principals  in  the  business. 
An  analysis  shows  that  they  are  not  identified  in  in- 
terest. Gross  profits,  in  the  idiom  of  lawyers,  are 
gross  returns.  Net  profits  are  the  excess  of  returns 
over  advances;  the  expenses  are  deducfted,  and  the 
produ6l  is  divided.  Sharing  the  gross  returns  is  tak- 
ing the  benefit  of  the  contribution;  it  may  be  capital 
stock,  or  it  may  be  capitalized  skill,  without  account- 
ing for  any  part  of  it  to  reimburse  the  co-partner  for 
losses  or  expenses.  The  share  is  independent  of 
profits,  and  may  be  taken  when  there  is  a  loss.^  The 
sharing  is  not  measured  by  the  success  of  the  busi- 
ness and  the  sharer's  interest  in  it,  but  is  a  sum  fixed 
by  a  standard  apart  from  the  business.  Though  the 
sum  may  come  out  of  profits,  if  they  are  sufficient, 
it  will,  nevertheless,  come  out  of  somebody,  though 
there  be  no  profits.  The  fixed  amount,  which  is  in- 
dependent of  the  success  or  failure  of  the  business, 
betrays  a  stranger's  interest,  and  not  a  principal's. 
A  proprietor's  share  springs  out  of  the  business,  and 
varies  according  to  its  vicissitudes.  A  principal  who 
made  no  conribution  himself,  could  never  take  his  co- 
partner's, and  make  gain  out  of  his  co-partner's  loss 
and  the  failure  of  the  business. 

165 


§62.  The  Test.  Pt.  2,  Cii.  i. 

The  exceptiou  under  discussion  affords  a  verifica- 
tion of  the  proposition,  that  sharing  the  profits  makes 
a  partnership  between  none  but  co-proprietors.  The 
gross  returns  include  profits,  and  should,  unless  the 
profit-sharing,  which  makes  a  partnership,  was  limited 
to  proprietors,  convert  the  taker  into  a  partner,  be- 
cause he-hopes  to  get  the  profits.  This  being  so,  he 
should  be  none  the  less  a  partner,  because  he  bargains 
for  an  equivalent  out  of  capital,  although  there  should 
be  no  profits.  On  the  other  hand,  however,  the  gross 
returns  are  inconsistent  with  a  co-proprietor's  interest 
in  the  business,  because  his  share  varies  with  its  suc- 
cess or  failure. 

I.  The  captain  of  a  barge,  who  received  2-3  of  the  advance  in  price  at 
the  market  over  the  price  at  the  mines,  would  not  be  a  partner  with 
the  owner  of  collier)-  and  boat  (f^sg  n.  /:).  The  freight  is  put  against 
the  home  price,  and  the  captain's  services  against  the  owner's  outlay. 
The  owner  pays  his  own  expenses,  and  the  captain  includes  his  in 
the  2-3  enhancement.  The  cost  of  transportation  might  exceed  the 
increase  in  price,  or  there  might  be  no  increase.  Then  the  captain 
would  not  share  profits.  If  the  cost  of  transportation  just  equalled 
2-3  of  the  enhancement,  the  captain  would  get  no  profits,  while  the 
owner  would  get  his  share  in  full.  There  is  no  sharing  of  the  profits 
which  are  aclually  made  in  all  and  every  event. 

Quarryiiig  for  half  proceeds  of  sale,  not  joint  bejiefit.  B,  owner, 
agreed  to  quarry  marble,  deliver  it  on  cars,  and  pay  half  cost  of  trans- 
portation to  A's  mill ;  A  to  build  mill,  manufadture  and  sell  marble, 
and  divide  proceeds.  B's  credit  failing,  A  paid  claims  against  him, 
with  his  knowledge,  and  sued  for  reimbursement. — Recovered.  Pay- 
ments at  request;  no  joint  benefit  or  partnership,  for  B  might  gain 
while  A  lost.   Flint  v.  Eureka  Mfg.  Co.,  55  Vt.  669  (1S81). 

Sharer  of  gross  1  ct  urns  vot  a  partner.  B  C  &  D  consolidated  rival 
lines,  and  joined  in  runninga  single-stage  line  in  the  White  mountains. 
B  &  C  furnished  a  coach  and  two  six-horse  teams,  with  drivers  and 
other  appointments,  and  D  furnished  an  equal  amount  of  stock.  A 
sued  for  the  price  of  corn  sold  to  B  &  C.  D's  defence  :  Not  a  partner. 
They  shared  not  the  profits,  but  the  gross  receipts.  Court  charged  that 
they  were  jointly  liable  for  supplies.— Verdict  for  plaintiff  set  aside. 
I)  not  a  ])rmcipal  in  the  business  of  B  &  C.  Eastman  v.  Clark,  53  N. 
H.  276  (1S72). 

The  owner  of  a  lighter  and  a  lighterman  were  partners  if 
the)'  shared  the  profits,  but  master  and  servant  if  they  shared 
the  gross  returns. '^  The  lease  of  a  ferry  for  1-2  the  gross  re- 
ceipts did  not  make  the  proprietor  and  lessee  partners  in 

166 


Ft.  2,  Ch.  I.  The  Test.  §62. 

carrying  on  the  ferry.''  The  expense  of  keeping  up  the 
lighter  and  running  it  might  exceed  the  profits.  Then  it 
would  be  run  at  a  loss,  but  the  hirer  would  get  his  quota, 
which  would  come  out  of  the  owner,  who  had  to  pa>-  for 
the  expenses.  The  same  would  be  true  of  the  ferry  rented 
to  the  ferryman.  The  gross  receipts  divided  by  the  theatre- 
owner  and  the  stage  manager*^  are  thus  explained.  The 
owner  would  get  his  rent,  although  the  manager  made  no 
profits  out  of  his  management,  and  the  manager  would  take 
his  moiet)',  although  the  rent  would  not  pay  the  expenses  of 
the  building.  In  either  event,  the  one  would  make  out  of 
the  other's  loss. 

a.  Dry  v.  Boswell,  ^44,  n.  3. 

b.  Gross  receipts.  A  leased  ferry  to  B  for  1-2  gross  receipts.  C's  horses 
were  drowned  through  negligence  of  B's  employee.  C  sued  A  as  part- 
ner.— No  partnership.  Heimstreet  v.  Rowland,  5  Denio  68,  N.  Y. 
(1847)- 

c.  Gross  profits  as  rejit  not  partnership.  B,  owner  of  theatre,  arranged 
with  C  that  he  should  use  the  theatre,  provide  a  troupe,  seledl  plays, 
and  have  exclusive  control  of  the  management:  that  B  should  pay 
for  printing,  advertising  and  lighting,  and  should  supply  door-keep- 
ers, scene  shifters,  supernumeraries  and  a  band.  B  retained  1-2  the 
receipts  taken  at  the  door,  as  payment  for  the  theatre,  and  C  took  the 
other  half  B  was  sued  as  C's  partner,  by  A's  assignee,  for  infringing 
his  stage  right. — ^Not  liable;  he  shared  gross  profits,  which  he  took 
in  lieu  of  rent.   Lyon  v.  Knowles,  3  B.  &  S.  556  (1863). 

The  sailors  who  ship  for  a  cruise  on  the  lay  plan,  do  not 
become  partners  in  the  undertaking.'^  They  secure  the  bulk 
of  the  proceeds,  but  sharing  the  gross  receipts  does  not  asso- 
ciate them  as  a  co-operative  partnership. 

d.  A  lay  voyage  does  not  convert  the  sailors  into  partners.  A  shipped 
as  a  sailor  for  a  whaling  voyage,  and  B,  the  captain,  agreed  to  give 
him,  for  his  services,  1-190  of  the  oil.  A  sued  for  his  lay.  B  applied 
for  non-suit. — Overruled.  A  received  the  proceeds  as  wages,  and  not 
as  a  partner.  Wilkinson  v.  Frasier,  4  Esp.  182  (1805). 

A  carrier  who  provides  the  equipment  and  supplies  for 
his  section  of  a  through  line,  is  not  a  partner  with  connect- 
ing carrier,  if  he  simply  shares  the  gross  receipts  of  the 
business.**  But  if  there  is  any  joint  expense,  as,  for  exam- 
ple, the  payment  of  tolls  out  of  the  aggregate  fares  colle(5led, 
then  there  is  a  sharing  of  net  profits,  and  the  carriers  become 


167 


;;62.  The  Test.  Pt.  2,  Ch.  i. 

partners.      The  expenditures  of  each,  in  maintaining  his 

seclion,  is  treated  as  a  continuing  contribution.^ 

e.  S/aot'  proprietors  not  liable  for  keep  of  a  separate  proprietor' s  horses 
usecthy  them  in  running  their  stage-coach  line.  B,  C  &  D,  who  owned 
a  staj^e-coach,  agreed  to  run  it  on  a  route  and  share  the  profits.  Each 
supplied  horses  for  a  part  of  the  course.  A  sued  C  &  D  for  the  price 
of  hay  ordered  by  B  for  his  horses.  Judge  charged  jury  to  find  for 
plaintiff,  because  C  &  D  were  benefitted  by  keeping  up  B's  stock  for 
the  joint  service.  Barton  v.  Hanson,  2  Camp.  97.  But  the  instrudliou 
was  overruled  and  a  new  trial  ordered.  2  Taunt.  49  (1809). 

ConneiHing  lines;  forwarding  no  partnership.  A  &  B  owned  con- 
necling  lines.  A  agreed  to  forward  freight  and  divide  receipts  accord- 
ing to  schedule  of  rates.  La'it  carrier  to  advance  accrued  charges, 
upon  transfer  to  him,  and  collect  whole  bill  on  delivery.  C  made 
through  shipment.  B,  as  last  carrier,  sued  him  for  total  freight.  C 
alleged  partnership,  and  set  up  non-joinder  of  A,  in  order  to  plead 
set-off. — Recovered,  No  set-off  against  A.  He  was  not  a  partner, 
because  only  part  of  earnings  or  through  freights  were  pooled,  and 
parties  remained  independent  as  to  their  separate  lines.  C  was  liable 
to  B,  because  he  had  accepted  goods  from  B  under  till  of  lading  which 
made  total  charges  payable  to  B.   Merrick  v.  Gordon,  20  N.  Y.  93  (1859). 

Connecting  lines.  Connedling  lines.  A,  B  and  C,  from  N.  Y.  to 
San  Francisco,  via  Panama.  N.  Y.  agent  sold  separate  tickets  for 
each  line,  and  accounted  to  each  line  separately  ;  although  advertise- 
ment of  trip  was  joint,  and  announced  merely  through  fare.  Each 
line  bore  its  own  expenses  and  took  its  own  profits.  Line  C  was  pre- 
vented, by  wreck  of  steamer,  from  transporting  plaintiff  from  Isthnms 
to  Sau  Francisco.  He  sued  C  for  return  of  whole  fare. — Because  no 
partnership,  recovered  only  fare  from  Isthmus  to  San  Francisco. 
Briggs  V.  Vanderbilt,  19  Barb.  222,  N.  Y.  (1855). 

N.  Y.  agent  of  connecfling  lines  sold  through  coupon  tickets  to 
Montreal.  Traveller  kept  valise  with  him  in  passing  over  line  A,  and 
checked  it  on  line  B  to  destination.  He  sued  line  A  for  loss  of  valise. 
— No  partnership,  because  lines  independent,  though  connedling. 
Straiton  v.  N.  Y.  &  N.  H.  R.  R.,  2  E.  D.  Smith  184  (1853). 

Agreement  between  railroad  company  and  proprietor  of  canal  to 
forward  goods  and  passengers.  Fares  and  freights  to  be  shared,  in 
proportion  to  lengths  of  respedlive  lines.  Offices  maintained,  at 
joint  expense,  at  termini.  Plea  of  partnership  to  acSlion  of  assumpsit 
for  share  of  receipts  in  hands  of  defendant. — No  partnership.  Mohawk 
&  Hudson  R.  R.  v.  Niles,  3  Hill  162,  N.  Y.  (1842). 

Connecting  railroads  which  share  through  freight  and  iintraced 
losses,  are  not  partners.  A  shipped  horses  by  railroad  B,  which  gave 
him  receipt  for  through  freight.  He  sued  connedling  railroad  C  for 
injury.  B  &  C,  by  contract,  each  in  the  joint  business  bore  his  own 
losses,  unless  they  could  not  be  traced,  and  then  in  proportion  to  his 
share  of  the  through  freight.  Contract  excluded.— Verdi6l  for  C. 
Law  made  each  liable  for  its  own  negligence,  in  spite  of  B's  contract 
for  tlirougji  transportation.  Contra(5tdid  not  change  law,  or  enure  to 
A's  benefit,  but  merely  adjusted  the  losses  between  B  &  C.  Aigen  v. 
Boston  &  Me.  R.  R.,  132  Mass.  423  (1882). 

Graf?  returns.  A  &  B  worked  connecSting  coach-lines.  Each 
worked  hi.s  own  line,  and  sold  tickets  over  total  route.  Fares  divided 
in  proportion  to  length  of  respeftive  lines.  A  sued  B  in  assumpsit 
tor  balance  due.     Defence  :    Partner  must  bring  account.— No  part- 

168 


Pt.  2,  Ch.  I.  The  Test.  §62. 

nership,  because  no  sharing  of  profits  and  loss ;    merely  division  of 
gross  returns.  Pattison  v.  Blan chard,  5  N.  Y.  186  (1851). 

f.  Conneiling  lines.  A,  B  &  C  ran  connedling  coach  lines,  each  re- 
taining all  the  profits  and  bearing  all  the  losses  of  his  own  se(ft;ion. 
When  necessary,  an  extra  coach  was  run  through  on  joint  account. 
A  statement  of  account,  made  by  a  common  agent  of  A  and  B,  showed 
that  B  had  received  more  than  his  proportion  of  fares  colle<5led.  A 
brought  assumpsit  against  him  for  excess. — Suit  maintained,  because 
no  partnership,  except  for  extra  coach.  Wetmore  v.  Baker,  9  Johns. 
307,  N.  Y.  (1812).    Approved  in  Champion  V.  Bostwick,  18  Wend.  182, 

{1837). 

ConneBing  lines:  and  eaimings pooled.  A  &  B  owned  connecting 
stage-coach  lines.  They  pooled  all  fares  from  through  and  way  pas- 
sengers, paid  all  tolls  out  of  this  fund,  and  divided  the  residue  between 
them,  in  proportion  to  lengths  of  respeAive  lines.  B's  coach  ran  into 
C's  carriage,  and  threw  C  out.  He  sued  A  &  B,  as  partners.  A  denied 
partnership. — A  liable  as  partner.  The  use  of  each  partner's  stock  is 
a  sufficient  capital.  By  the  agreement,  the  tolls  were  the  only  joint 
expense.  Sharing  aggregate  fares,  less  tolls,  is  sharing  net  profits. 
Champion  v.  Bostwick,   11  Wend.  571,  s.  c.  in  error;     18  Wend.  175 

(1837). 

Co-operatton  in  running  a  line  charges  each  member  of  the  associa- 
tion for  the  entire  route.  B,  C  &  D,  teamsters,  who  had  been  part- 
ners for  the  entire  route,  divided  the  course  into  sedlions,  and  each 
hired  the  wagon,  provided  everything  necessary  to  run  it  over  his 
seAion,  and  shared  the  profits.  A  sued  B  &  C  for  damages  done  by 
a  driver  employed  by  D. — Liable.  Waland  v.  Elkins,  i  Stark.  272 ; 
s.  c.  Noland  v.  Olbins,  13  Petersdorf  106  (1816). 

Connefiing  lines  ivith  common  agent.  A  common  agent  of  con- 
nedling  lines  contra6led  to  transport  goods  frorii  point  on  line  A  to 
point  on  line  B.  Goods  lost  on  line  B.  Owner  sued  both  jointly. 
Proprietor  of  line  A  claimed  to  be  forwarders  only. — ^Jointly  liable  on 
contracft,  though  they  shared  neither  profit  nor  loss.  Slocum  v.  Fair- 
child,  7  Hill  292,  N.  Y.  (1843). 

If  the  expense  of  a  vehicle  is  divided,  and  a  rate  paid 
for  carrying  the  mail,  with  a  sharing  of  profit  and  loss  on 
other  matter,  the  sharing  takes  the  lead,  and  fixes  a  part- 
nership between  the  contractors,  although  the  rate  might 
pay  or  be  a  pure  loss.^  The  identification  in  part,  indicates 
a  co-ordination  in  all. 

g.  Profits  not  a  wage  fund.  A  agreed  to  pay  B  ^,"18  for  a  cart,  and  to 
carry  the  mail  for  ^9  a  mile  per  annum.  They  shared  the  profit  and 
loss  of  parcel  carriage  and  the  expense  of  keeping  cart  in  repair.  On 
a  separation,  A  sued  B  for  his  f()  a  mile,  and  for  his  share  of  profits. 
Defence :  A  was  a  partner. — No  recovery.  Sharing  the  profit  and 
loss  makes  a  partnership,  and  is  not  a  measure  of  wages.  Green  v. 
Beasley,  2  Bing.  108,  N.  C.  (1S35). 


169 


§63.  T^HE  Test.  Pt.  2,  Ch.  i. 

§63. 

(^l)c  conunission  on  sales  is  like  a  sl)are  of  tl)e  gross  returns. 

The  commission  is  payable  out  of  the  price,  whether 
the  sale  was  made  at  a  profit  or  at  a  loss.     Although 
paid  out  of  profits,  if  any  were  made  by  the  sale,  the 
commission  is  inconsistent  with  equality  between  the 
owner  and  salesman  in  condu(5ling  the  business  for 
themselves  as  principals.^     If  the  commission  is  given 
to  fadors  or  brokers,  they  have  no  stake  in  the  busi- 
ness, but  an  interest  which  might  be  antagonistic  to 
its  success."    If  the  owner  does  not  limit  the  price,  the 
commission  might  be  paid  by  him  out  of  his  capital. 
Ulpian  puts  the  case  of  an  owner  who  authorized  another 
to  sell  a  set  of  pearls  at  a  fixed  price,  and  gives  him  all  he 
can  make  if  he  sells  above  the  limit. ^    Is  the  seller  a  partner 
with  the  owner  ?    PoThier  finds  the  riddle  insoluble,  except 
by  a  resort  to  the  parties'  intention,  which  may  make  the 
transaction  a  partnership,  or  may  make  it  a  commission.'* 
The  intention,  which  would  constitute  the  parties  partners 
at  the  Roman  law,  must  appear  in  the  answer  to  the  ques- 
tion :  Did  the  owner  intend  to  make  the  seller  at  once  a  co- 
owner  with  himself  in  the  pearls?     If  he  did  so  intend,  a 
partnership  was  created,  because  the  societas  of  the  Roman 
law  was  nothing  but  a  co-ownership,  arising  through  con- 
tradl.     The  pivotal  point,   upon  which  the  whole  matter 
turned,  was  the  responsibility  of  the  parties  for  a  possible 
loss  of  the  pearls.     If  partners,  they  must  share  the  loss  in 
proportion  to  the  respe(5live  values  of  their  contributions, 
and  as  there  is  no  fixed  estimate  put  upon  the  contribution 
of  the  seller,  and  his  share  of  the  price  was  to  be  determined 
upon  a  sliding  scale,    the  law   would  apportion   the   loss 
equally,  and  compel  him  to  reimburse  the  original  owner 
for  one-half  the  value.     Every  partnership,  at  the  Roman 
law.  implies  a  contribution.     To  make  the  seller  a  partner, 

170 


Pt.  2,  Ch.  I.  The  Test.  §63. 

therefore,  it  was  necessary  that  he  should  have  agreed  to 
render  services,  or  defray  expenses,  which  the  owner  should 
accept  as  an  equivalent  for  an  interest  in  the  pearls.     Story, 
with   this  idea  in  mind,   adopts  Duvergier's   answer  to 
PoTHiER  :  The  seller  makes  no  contribution,  and  therefore 
is  not  a  partner.^     As,  however,  his  skill  and  services  may 
constitute  a  contribution,  the  answer  does  not  settle  the  con- 
troversy.    They  seem  to  have  supposed  that  the  seller  must 
make  some  material  contribution,  in  money  or  property. 
The  expenses,  if  any,  would  be  a  material  contrijDUtion, 
but  do  they,  if  advanced  by  the  seller  to  create  a  market  for 
the  pearls,  lead  to  the  solution  of  the  problem  ?     Not  neces- 
sarily.    If  contributed  to  the  firm,  they  must  be  dedudled 
from  the  price,  and  returned  to  the  seller  before  a  division 
of  the  profits.     Such  a  course,  however,  is  excluded  by  the 
statement.     By  the  case  stated,  if  the  seller  is  put  to  any 
charge  for  expenses,  it  must  be  at  his  own  risk,  and  be  a 
part  of  his  stake  in  the  venture.      This  stake  comprises  his 
skill,  his  services,  and  the  expenses,  and  may  be  advanced 
by  him  under  a  contradl  of  agency,  in  view  of  the  commis- 
sion which  he  expedls  to  earn.     An  agreement  to  reimburse 
the  expenses  would,  therefore,  determine  the  question  and 
establish  a  partnership.     It  is  certain  that  the  jeweller  gave 
his  services  and  skill,  but  it  does  not  appear  that  he  made 
any  material  outlay,  for  there  may  have  been  no  expenses. 
Expenses,  if  shown,  would  have  created  a  presumption  of 
partnership,  unless  it  was  proved  that  they  were  not  to  be 
reimbursed.     This  conclusion  is  negatived  by  the  statement 
of  the  case.     The  price  fixed  by  the  owner  excludes  any  lia- 
bility on  his  part  for  expenses.     The  right  to  reimbursement 
for  skill  and  services,  however,  depends  upon  the  question 
of  partnership.     They  cannot  be  reimbursed  in  form  ;   but, 
on  the  hypothesis  of  a  partnership,  if  the  seller  exhausted 
his  resources,  and  there  was  no  market  for  the  pearls,  the 
parties  would  divide  them.     On  the  theory  of  agency,  how- 
ever, the  owner  would  retake  the  pearls.     The  relation  of 
partnership  would  have  secured  to  the  jeweler  a  reimburse- 

171 


§63.  The  Test.  Pt.  2,  Ch.  i, 

ment  for  his  skill  and  services,  by  investing  liim  with  prop- 
erly in  the  pearls.  The  relation  of  agency  would  give  the 
jeweler  no  reimbursement  for  his  skill  and  services.  On  the 
other  hand,  skill  and  services  being  the  proper  subjedl-mat- 
ter  of  a  contribution,  although  immaterial,  had  there  been 
nothing  else  in  the  case,  would  have  created  a  presumption 
of  partnership,  which  could  be  rebutted  only  by  proof  of  a 
contrary  intention.  The  inference  to  be  drawn  from  the 
limit  in  price  fixed  for  a  sale  of  the  pearls  is,  that  the  owner 
did  not  intend  to  part  with  any  portion  of  his  property  in  the 
pearls,  and  thereby  reimburse  the  seller  for  his  skill  and  ser- 
vices. The  skill,  services  and  expenses,  therefore,  stand 
upon  the  same  footing. 

At  the  Common  law,  the  question  of  partnership  turns 
upon  the  rights  of  third  persons,  rather  than  upon  the  rela- 
tion of  the  partners  to  each  other.     The  ultimate  owner- 
ship of  the  pearls  would,   therefore,   not  be  a  controlling 
fadlor.     For  upon  dissolution  the  owner  is  always  entitled 
to  reclaim  his  material  capital,  or  so  much  of  it  as  the  firm 
assets  will  replace  without  reimbursing  the  skill  and  ser- 
vices of  a  co-partner  who  made  no  material  contribution. 
The  case  would  be  determined  by  the  position  which  the 
parties  assumed  towards  third  persons  in  the  disposition  of 
the  pearls.     The  liability  of  the  original  owner  to  strangers 
upon  the  contrail  of  the  seller,  is  the  important  considera- 
tion.     Such  a  liability  was,   under  all  circumstances,  ex- 
cluded at  the  Roman  law,  because  by  its  rules  no  one  was 
bound  by  any  contracT;,  except  the  nominal  parties  to  it. 
But  with  us,  the  owner  would  be  liable  in  any  event,  and 
the  question,  whether  there  is  a  technical  partnership,  or 
not,  loses  its  importance.     If  it  .appeared  that  the  parties 
intended  to  constitute  themselves  co-owners  temporarih', 
and  for  the  purposes  of  the  transadlion,  so  that  all  expenses 
would  be  charged  to  a  joint  account,  and  only  net  profits 
divided,  a  partnership  would  arise  ;  owner  and  seller  would 
be  liable,  as  co-principals.      On  the  other  hand,  if  no  such 
partnership  was  intended,  and  the  case  stated,  as  has  been 

172 


Pt.  2,  Ch.  I.  The  Test.  §63. 

remarked,  seems  to  exclude  such  an  intention  ;  neverthe- 
less, upon  the  assumption  of  an  agency,  the  same  measure 
of  liability  prevails.  The  owner  would  be  responsible,  as 
an  undisclosed  principal,  upon  the  contradt  of  sale,  which 
formed  the  purpose  and  substance  of  the  agency,  though 
he  would  not  be  bound  on  any  contrail  respecfting  the  ex- 
penses which  the  agent  had  agreed  to  defray.  The  agent, 
too,  would  be  responsible  on  the  contrail  of  sale,  as  the 
nominal  promissor.  The  stranger,  therefore,  holds  both, 
and  may  sue  them  successively,  till  satisfadlion  is  obtained. 
There  is  no  reason,  except  one  of  procedure,  why  he  might 
not  sue  both  in  a  single  adlion.  It  is  said  that  they  cannot 
be  sued  together  because  they  made  no  joint  contrail  with 
the  stranger.  They  are  two  principals,  but  not  co-princi- 
pals. This  is  an  instance  where  the  phantom  of  a  joint 
contrail  still  controls  our  practice,  although  the  courts  have 
at  times  declared  that  the  notion  has  ceased  to  be  a  part  of 
our  law.® 

1.  Commission  07i  sales  no  partnership,  B,  part  owuer  of  mine,  had 
excise  licenses  and  kept  a  store  in  his  own  name  for  miners'  supplies. 
He  got  C  to  take  the  business,  buy  goods  in  his  own  name,  and  allow 
him  5  p.  c.  of  sales  to  miners.  C  opened  an  account  with  A,  a  bank. 
A's  assignee  in  bankruptcy  sued  B  for  amount  overdrawn  by  C. 
Holding  out  and  sharing  profit  and  loss  negatived  as  fadls  by  jury. 
Verdidt  for  B. — New  trial  refused,  because  percentage  a  commission 
on  sales  eflFedted  through  B's  influence  over  his  workmen.  Pott  v. 
Eyton,  3  C.  B.  32  (1846). 

2.  Cominission  on  sale  gives  faflor  no  interest  which  disqualifies  him 
as  zaitness  to  prove  contraH.     A  sued  B  for  price  of  wheat.    C  received 

1  shilling  a  pound  for  making  sale.  B  objedted  to  C  as  witness  to 
prove  contra6t,  on  ground  of  interest. — Competent,  because  not  a 
partner,  with  an  interest  in  the  price,  but  merely  a  claim  against  B. 
Dixon  V.  Cooper,  3  Wilson  40  (1768). 

Broker's  commission,  all  above  a  given  sum,  docs  not  disqualify 
him.  A  sued  B  for  price  of  merchandise.  C  was  broker,  and  had  all 
proceeds  over  a  certain  sum  for  making  the  sale.  B  obje(5led  to  C  as 
a  witness  to  j^rove  the  coutra6l,  on  the  ground  of  interest. — Compe- 
tent, because  no  interest,  as  a  partner,  in  goods.  Benjamin  v.  Porteus, 

2  H.  Bl.  590  (1796). 

Percentage  on  gross  sales  no  partne7'ship.  A  sold  good-will  of 
business  to  firm,  for  i  p.  c.  on  gross  sales.  He  also  lent  firm  |;ioo,ooo 
at  7  p.  c.  Creditor  of  firm  sued  A  as  partner. — Not  liable,  for  percent- 
age on  sales  no  partnership.  Loan  did  not  change  the  relation.  Gib- 
son V.  Stone,  43  Barb.  285  (1865). 

3.  "Si  margarita  tibi  vendenda  dedero  ut,  si  ea  decern  vendidisses, 
"redderes  mihi   decem,   si   pluris,   quod   excedit   tu   haberes,   mihi 

17.^ 


§64.  The  Test.  Pt.  2,  Ch.  i. 

"videtur,  si  animo,  contraheudae  societatis  id  actum  sit,  pro  socio 
"esse  aclionem,  si  minus  praescriptis  verbis."  D.  17,  2,  44. 

4.  Du  contrad  de  soci^td,  cli.  I,  ?III,  13  6  Oeuvres  de  Pothier  447-8, 
Paris,  1835. 

"  Si  contrahentes  auimum  habueruut  lucri  m  commune  faciendi, 
"societas  est,  in  qua  alter  rem  (id  est,  margaritam),  alter  operam  et 
"iudustriam  in  his  circumferendis  et  vendendis  confert.  Ouod  si 
"bunc  animum  uou  habueruut,  puta  dominus  margaritae,  qui  potuis- 
"set  ipse  earn  commode  vendere  tanti  aut  etiam  pluris,  margaritam 
"  suam  (tibi  ut  benefaceret)  tibi  veudendam  dedit  ea  lege :  hoc  casu 
"societas  uou  est;  sed  contracflus  innominatus  ex  quo  nascitur  actio 
"  praescriptis  verbis. "  Pothier,  6  Pandects  448. 

5.  Story  on  Partnership,  ^51. 

6.  :Miller  v.  Reed,  3  Casey  244,  Pa.  (1856). 


§64. 


^L[]t  knber  is  not  turncLi  into  a  partner  bn  partaking  of  tl)e 
profits,  for  a  loan,  being  once  £stabiisl)CL),  is  tl)e  opposite  of  oton- 
ersljip. 

Is  the  distin6lion  between  a  lender  and  a  partner  a 
question  simply  of  degree  ?  The  lender  may  measure 
his  interest  by  a  quota  of  the  profits,  or  he  may  take 
a  share  of  profits  in  lieu  of  interest.  How  is  he  dis- 
tinguished from  a  partner?  A  lender  might  be  in- 
duced, by  solicitude  for  his  investment,  to  watch  and 
see  how  the  business  was  condu6led.  Unless  it  should 
be  successfully  managed,  no  equivalent  would  be  re- 
ceived for  the  use  of  his  money,  and  the  loan  might 
be  put  in  jeopardy.  Would  the  supervision  which 
he  gave  to  the  management  of  the  business,  in  order 
to  prote6l  his  investment,  convert  him  into  a  partner? 
The  amount  risked  in  the  business  might  be  equal  to 
a  partner's  share,  or  might  exceed  it.  The  motive  of 
self-interest  would  be  as  strong  to  make  him  control 
the  business  as  the  motive  which  impels  a  partner. 
The  difference  is  not  to  be  found  in  an  analysis  of  the 

174 


J 


Pt.  2,  Ch.  I.  The  Test.  §64. 

motives.  It  is  in  the  acftion  which,  they  call  forth, 
that  furnishes  the  test  of  the  relation,  by  disclosing 
the  partner's  obje<5l.  The  lender  surrenders  his  prop- 
erty to  the  debtor,  and  trusts  to  his  character  as  se- 
curity for  the  loan.  The  precautions  which  he  takes 
to  see  that  the  debtor  manages  his  business  with  suc- 
cess, are  taken  as  means  of  information,  to  enable  the 
creditor  to  a6l  promptly,  if  necessarj^;  they  are  not 
adls  of  control  over  the  debtor  in  his  business,  nor  an 
interference  with  his  management.  The  partner,  on 
the  contrary,  relies  upon  himself,  and  keeps  his  prop- 
erty within  his  control.  He  does  not  part,  absolutely, 
with  his  title,  or  trust  to  anybody  else  for  its  recovery. 
The  question,  therefore,  turns  upon  the  destination 
and  control  of  the  fund.  If  the  would-be  lender  stipu- 
lates that  the  sum  lent  shall  be  retained  in  the  busi- 
ness, and  can  enjoin  the  borrowers  from  withdrawing 
it,  he  is  a  partner.^  On  the  other  hand,  although  the 
lender  receives  a  portion  of  the  profits  from  a  particu- 
lar business  as  interest,  he  has  no  right  to  insist  that 
the  sum  lent  shall  remain  in  the  business,  in  order 
that  the  profits  may  be  earned." 

Statutes  have  been  passed,  affirming  this  distin6lion 
between  a  loan  and  a  partnership,  and  for  the  purpose 
of  relieving  a  lender  from  all  liability  to  third  persons, 
by  reason  of  his  sharing  the  profits.^  The  courts  have 
held  these  provisions  to  be  merely  declaratory  of  the 
Common  law,''  and  have,  notwithstanding  the  statutes, 
charged  the  would-be  lender  as  a  partner,  wherever  it 
appeared  that  he  had  reserved  a  right  to  control  the 
destination  of  the  fund.  On  the  other  hand,  these 
ena6lments  have  altered  the  lender's  position  for  the 
worse,  by  postponing  him  to  all  other  firm  creditors. 

175 


§64.  The  Test.  Pt.  2,  Ch.  i. 

1.  I'oolcy  V.  Driver,  §50,  u.  3. 

2.  S/i a >-i in:  profits  does  not  make  lender  a  partner.  Firm  B  C  &  D,  to 
keep  up  a  faAory,  which  they  eventually  meant  to  take,  advanced 
the  capital,  and  discounted  its  paper  on  orders  approved  by  them  for 
manutaAured  goods,  taking  a  chattel  mortgage  to  secure  the  advances. 
They  stipulated  for  1-4  the  profits.  A  sued  them  for  merchandise 
supplied  to  facflor v.— Judgment  for  defendants.  They  were  merely 
financial  agents.  Cassidy  v.  Hall,  97  N.  Y.  159  (1884) ;  McLewee  v. 
Hall,  103  N.  Y.  639  (1886). 

Loan  for  part  profits  7iot  partnership.  By  bond,  B  agreed  to  lend  C, 
agent  of  a  corporation,  |i5,ooo  for  one  year,  and  to  endorse  for  him  to 
the  extent  of  |2,ooo,  if  B  thought  C's  business  required  additional 
capital,  for  10  p.  c.  net  profits  and  2  p.  c.  for  each  |i,ooo  above  |5,ooo. 
C  agreed  to  condudl  business  to  the  best  advantage,  and  to  keep  ac- 
counts, which  should  be  open  to  B's  inspe(5lion.  A  supplied  mate- 
rials for  works  at  C's  corporation,  and  brought  assumpsit  for  price 
against  B  &  C. — Judgment  for  defendants.  Loan  to  C,  and  assump- 
sit would  not  lie.  Contrail  for  court.  Boston  &  Col.  Smelting  Co.  v. 
vSmitli,  13  R.  I.  27(1883). 

This  constituent  of  partnership  is  some  times  ignored. 

Half  profits  for  loan,  zuhich  is  to  be  repaid,  are  taken  as  compensa- 
tion for  the  debt.  Bond  executed  by  B  in  1870  to  A,  for  19,491.77  al- 
ready invested  in  merchandise  during  1866,  for  1-2  profits  made  by 
trading  with  it  from  1866.  B  died  in  1877.  A  recovered  judgment 
in  Probate  Court,  against  B's  administrator,  for  principal  and  1-2 
profits,  to  wit.,  119,885.60,  and  payments  were  made  on  account. 
Administrator  d.  b.  n.  subsequently  moved  to  quash  judgment,  on 
ground  that  A  was  partner,  and  Probate  Court  no  jurisdidlion. — Judg- 
ment sustained.  The  transadtion  not  necessarily  partnership.  Right 
to  the  return  of  principal  and  1-2  profits  implied  account  and  inspec- 
tion of  books,  but  not  right  to  control  or  be  consulted,  iniless  B 
changed  destination  of  fund.    Culley  v.  Edwards,  44  Ark.  423  (1884). 

3.  28  &  29  Vicl.  c.  86.    Statute  of  Pa.,  6  April,  1870,  i  P.  L.  56. 

4.  Statute  authorizing  loa^i  without  making  lender partyier  with  bor- 
rower declaratory  of  the  Common  laiu.  A  sued  B  as  C's  partner.  B's 
affidavit  of  defence :  Agreed  to  furnish  C  funds  necessary  for  his 
Ijusiness,  and  receive,  after  repayment  of  advances,  a  share  of  the 
profits ;  but  never  advanced  anything  or  received  any  profits.  Agree- 
ment rescinded.  Some  of  items  in  A's  bill  furnished  before  execution 
of  contract,  and  the  others  after  its  recission. — Affidavit  sufficient. 
Hart  V.  Kelly,  2  Norris  286  (1877). 

The  point  did  not  arise  for  decision.  The  defendant 
agreed  to  lend  and,  besides  repayment,  to  receive  a  share 
of  the  profits.  But  some  of  the  debts  sued  for  were  con- 
tracted before  the  contrail  was  executed,  and  were  never 
made  with  the  defendant,  and  some  were  incurred  after 
the  contradl  was  rescinded.  He  was  not  liable  for  the 
first,  as  he  did  not  contra6l  them,  nor  were  they  con- 
tracted for  him  ;  he  was  not  liable  for  the  last,  because 
he  had  ceased  to  be  a  partner  when  they  were  contracted, 
and  a  dormant  partner  is  not  liable  for  what  is  contradled 
after  he  withdraws. 

176 


Pt.  2,  Ch.  I.  The  Test.  §64. 

Although  a  stipulation  that  the  advance  shall  remain  in 
the  business,  makes  the  would-be  lender  a  partner,  an  agree- 
ment, on  the  other  hand,  to  look  only  to  the  firm  assets  for 
payment,  has  no  such  effe6l.  It  is  a  dogma  of  the  common 
law  that  there  is  no  such  thing  as  a  qualified  liability. 
There  must  be  a  debtor  who  shall  be  liable,  absolutely, 
upon  his  contrail.  Every  debtor  is  responsible  to  the  full 
extent  of  his  resources,  and,  though  he  might  charge  a  por- 
tion of  his  property,  by  way  of  preference,  he  could  not  limit 
his  liability  to  any  particular  part  of  his  estate.  Neverthe- 
less, this  principle  has  been  waived,  and  the  courts,  in 
anomalous  cases,  have  enforced  a  creditor's  agreement  to 
release  the  partners  from  any  personal  obligation  for  the 
debt,  except  so  far  as  it  could  be  satisfied  out  of  the  firm 
assets.*^  The  Hindu  Rajah's  case  affords  a  contrast  to  the 
foregoing.  The  creditor  held  the  debtors  in  a  vice,  and 
they  could  do  nothing  without  his  permission  ;  but  the  ex- 
tremity of  the  business  required  all  his  pressure  to  recover 
a  loan  which  had  become  desperate.  The  business  was  se- 
questrated, as  if  on  execution,  and  for  the  single  purpose  of 
making  the  debt.  He  did  not  receive  the  profits  as  a  pro- 
prietor, although  he  absorbed  them,  on  account  of  the  prin- 
cipal and  interest  of  his  debt.  The  debt  arose,  originally, 
from  an  undoubted  loan,  and  the  Rajah  assumed  control, 
not  to  secure  the  retention  of  his  advance  in  the  business, 
but  to  save  it  from  the  wreck.  ^ 

a.  Throwing  good  money  after  bad  not  partnersliip.  B,  a  creditor  of 
C  &  D,  agreed  to  go  into  a  building  operation  with  them,  to  advance 
part  of  the  money  and  materials,  and  to  look  for  payment  of  his  ex- 
isting debt  and  of  his  advances  solely  to  the  profits  of  the  operation. 
After  payment  of  B's  debt  and  advances,  all  profits  belonged  to  C  & 
D.  A  supplied  lumber,  and  sued  B  as  a  partner. — Not  liable,  because 
his  objedl  was  payment,  and  advances  but  a  means  to  colle6l  prior 
debt.  Making  payment  contingent  upon  profits  does  not  extinguish 
the  debt,  which  fastens  on  the  profits  as  a  fund  for  payment,  though 
the  debtors  are  released.  Kilshaw  v.  Jukes,  3  B.  &  S.  847  ;  32  L.  J.  Q. 
B.  217;  9  Jurist  N.  S.  1231  (1863). 

b.  Control  of  business  to  secure  a  debt  does  not  establish  part7iership. 
Hindu  Rajah  made  advances  to  B  &  Co.,  Calcutta  shipping  mer- 
chants, upon  condition  that  they  should  not  order  or  receive  con- 
signments, ship  or  sell  goods,  withdraw  mone}-,  transact  or  alter 
business,  except  by  his  consent.     Shipping  documents  were  at  his 

177 


§64.  The  Test.  Pt.  2,  Ch.  i. 

disposal,  and  could  not  be  sold  or  pledged  without  his  consent.     All 
proceeds  to  be  paid  him  on  account  of  his  debt,  and  20  p.  c.  of  profits 
as  commission,  besides  12  p.  c,  interest  on  his  advances.     A,  who 
dealt  with  15  &  Co.,  .sued  Rajah  as  a  partner. — Not  liable,  because  he 
had  no  initiative,  and  his  intention  to  secure  a  debt.  Mollwo  v.  Court 
of  Wards,  L.  R.  4  !'•  '^-  4i9  (1872). 
The  amount  of  interest,  or  profits,  does  not  necessarily 
make  the  lender  a  partner.     Should  he  stipulate  for  20  per 
cent,  interest,  or  25  per  cent,  if  profits,  the  1-5  and  a  possi- 
ble 1-4  might  show  the  desperation  of  the  borrower,  but  no 
co-operation  by  the  lender." 

c.  Interest  a  sum  equal  to  7-5  profits.  B  lent  C  |2o,ooo  for  two  years, 
who  agreed  to  pay  f4,ooo  a  year  interest,  and  if  that  sum  did  not 
equal  1-4  profits,  to  increase  it  to  that  amount.  A  having  sold  mer- 
chandise to  C,  who  absconded,  sued  B  for  the  price. — Judgment  for 
B.  Lord  v.  ProAor,  7  Phila.  630  (1870). 

If  the  profits  are  in  addition  to  interest,  they  may  be  ad- 
ditional compensation  for  the  use  of  the  money,  and  if  not 
coupled  with  control  of  the  business,  do  not  establish  a 
partnership.  ^ 

d.  Loan  for  interest  and  a  share  of  building  operation  not  a  partner- 
ship. B  lent  C,  land  owner,  $50,000,  secured  by  mortgage  on  the 
land,  for  a  building  operation,  and  stipulated  lor  interest  and  1-2 
profits.  A,  who  furnished  materials  for  building,  sued  B. — Judgment 
for  B.     Not  a  partner.  Curry  v.  Fowler,  87  N.  Y.  33  (1881). 

An  agreement  to  let  the  lender  take  possession,  sell  the 
goods,  and  share  the  profits,  after  reimbursing  the  loan, 
would  not  make  him  a  partner.  The  advance  closed  the 
transadlion,  and  left  no  room  for  implied  authority.®  The 
lender  held  the  property  as  security. 

e.  Share  in  profits,  given  for  money  advanced  for  cash  purchase,  donH 
pledge  lender's  credit  as  partner.  B  induced  C  to  lend  |2,5oo,  to  pay 
for  two  carloads  of  hogs,  and  agreed  to  let  C  take  possession,  as  se- 
curity, .ship  them  to  Pittsburgh,  and,  after  reimbursing  himself  out 
of  the  proceeds  of  a  sale,  to  take  one-half  of  the  net  profits.  After- 
wards, B  bought  of  A  17  hogs  on  his  own  credit,  to  make  up  the  two 
carloads,  without  C's  knowledge.  B,  in  pursuance  of  the  agreement, 
repaid  C  in  full,  as  the  hogs  did  not  bring  enough  to  repay  the  ad- 
vance. A  sued  B  &  C,  as  partners.  C's  defence:  No  partnership. — 
Judgment  for  C.  Advance  for  a  cash  purchase,  and  not  for  use  in  a 
continuous  business,  which  would  implv  transactions  on  credit.  Har- 
vey V.  Childs,  28  Ohio  vSt.  319  (1876). 

A  lender  may  secure  himself,  as  an  annuitant,  who  is  paid 
out  of  profits,  and  not  be  a  partner.  He  takes  no  part  in  the 
business.     He  might  receive  an  annuity,  or  profits,  in  return , 

178 


Pt.  2,  Ch.  I.  The  Test.  §65. 

for  a  guarantee  of  capital  requisite  to  meet  insurance  liabili- 
ties, and  be  a  trustee  to  impound  the  receipts  until  the  an- 
nuity and  family  expenditures  were  provided  for,  and  a  re- 
serve accumulated,  without  being  a  partner.  The  applica- 
tion of  the  receipts  (which  were  profits,  as  the  brokers  paid 
over  only  the  balance  after  the  losses  were  dedu(5led)  to 
payment  was  in  the  debtor's  interest,  and  on  his  account.^ 

f.  Annuity,  or  i-:/.  profits,  no  partnership.  B  advanced  ^5,000  to  set 
up  his  son,  C,  in  the  insurance  business.  C  agreed  to  pay  B  /,  500 
annuity,  or  1-4  the  profits,  if  it  appeared  that  average  1-4  during  3 
years  exceeded  ^500.  C  subsequently,  by  marriage  settlement,  as- 
signed the  proceeds  of  his  business  to  B  &  D,  whom  he  made  trustees 
to  pay  his  annuity,  and  to  pay  the  balance  for  trusts  declared  by  C, 
but  B  was  not  to  be  C's  partner.  A  sued  B  for  a  loss  under  a  policy 
issued  by  C. — Not  liable,  because  no  intention  to  be  partners.  BuUen 
V.  Sharp,  L.  R.  i  C.  P.  86  (iJ 


§65. 


®lic  amotint  of  intcreet,  or  profits,  iboes  not  b£t£rmin£  tl)e 
question  of  partnersl)ip. 

The  lender  may  take  a  quarter,  a  half,  or  an^  pro- 
portion, of  the  profits,  without  affe(5ting  his  status. 
Should  he  stipulate  for  a  share  of  the  profits,  equal  to 
20  or  25  per  cent,  interest,  or  for  interest  which  would 
equal  25  per  cent,  of  the  profits,  the  bargain  would 
show  the  desperation  of  the  borrower,  but  no  co-opera- 
tion by  the  lender.  The  interest,  in  either  event, 
would  not  be  usurious,  because,  although  it  might 
exceed  the  legal  rate,  if  the  business  was  successful, 
on  the  other  hand,  if  the  business  was  unsuccessful, 
no  interest  at  all  would  be  paid.  The  contingency, 
which  affe6ls  the  payment  of  interest,  excludes  the 
question  of  usury. 

If  a  share  of  the  profits  is  in  addition  to  legal  inter- 
est, the  loan  is  usurious ;  but  inasmuch  as  the  profits 

179 


§56.  The  Test.  Pt.  2,  Ch.  i. 

arc  additional  compensation  for  the  use  of  money,  they 
do  not  although  usurious,  establish  a  partnership, 
when  not  coupled  with  control  of  the  business.^ 

I.  Xo  account  for  share  of  profits  if  usurious.  A  advanced  B  |i6,50o, 
'  partly  on  mortgage  at  7  p.  c.  and  1-4  profits  of  his  bottling  establish- 
ment. A  asked  for  account  and  receiver,  as  a  partner.  Decision  be- 
low :  No  partnership,  but  a  loan,  and  A  entitled  to  an  account. — Re. 
versed.  If  not  a  partner,  loan  usurious,  and  account  will  not  lie.  B 
not  estopped  bv  failure  to  plead  usury,  or  to  objedl  to  evidence  of  ^ 
because  competent  under  the  issue,  which  was  partnership,  and  not  a 
ban.   Arnold  v.  Angell,  62  N.  Y.  508  (1875). 


lU. 


(Jlic  loan  bo£S  not  become  a  partn£rsl)ip  because  \\)t  interest 
is  usurious. 

Partnership  should  not  be  confounded  with  usury. 
In  cases  where  the  lender  stipulated  for  such  an  inter- 
est in  profits  as  made  his  loan  usurious,  for  example, 
where  the  lender  took  a  share  of  profits,  in  addition 
to  the  legal  rate  of  interest,   the   question:     What 
constitutes  a  partnership?    was  at  first  complicated 
with  usury.     Lord  Mansfield  made  partnership  an 
asjdum  of  refuge  for  a  usurer,  who  might  ele6l  it  to, 
escape  punishment  for  his  crime.     At  first,  his  lord- 
ship thought  the  risk  of  bankruptcy  would  inflicT:  a 
greater  evil  than  the  penalty  which  the  law  imposed 
for  usury,  and  he,  therefore,  permitted  the  usurer  to 
ele(5l  a  partnership  as  the  worst  punishment.^     Subse- 
quently, he  took  away  the  eledion,  and  inflided  part- 
nership absolutely  as  a  penalty  for  usury.     The  ad- 
judged partner  was  not  permitted  to  confess,  and  take 
advantage  of  his  own  crime,  by  pleading  usury,  if  its 
penalties  were  less  than  the  liabilities  of  partnership.^ 

I  So 


Pt.  2,  Ch.  I.  The  Tkst.  §66. 

Blackstone  rejected  this  view,  and  made  the  distinc- 
tion depend  upon  the  form  of  the  transaction.  He 
said  the  excess  of  interest  was  a  fixed  rate,  which  re- 
sembled a  debt  due  from  another,  and  could  not  be 
identical  with  profits,  which  were  variable  in  amount, 
and  were  the  immediate  property  of  the  partaker.^  The 
difference  was  between  owing  and  owning,  or  the  dis- 
tinction of  property.  Nevertheless,  the  form  of  a  loan 
does  not  exclude  proof  of  a  partnership,  even  between 
the  partners  (§50). 

It  has  been  held  that,  although  the  contraCl  is 
usurious  and,  on  that  account,  void  between  the  par- 
ties, yet  third  persons,  whose  rights  are  paramount, 
may  hold  the  parties  as  partners.^  But  this  decision 
is  based  on  the  assumption  that  partaking  of  the 
profits,  in  any  form,  makes  the  recipient  a  partner, 
without  reference  to  proprietorship.  Properly  con- 
sidered, third  persons  acquire  no  rights  against  an 
individual  on  the  ground  of  his  participation  in  the 
profits,  unless  he  receives  them  as  a  proprietor  or 
partner  (§57).  When,  therefore,  it  is  admitted  that, 
as  between  the  original  parties,  the  contraCl  is  in  legal 
effect  a  loan,  and,  on  that  account,  void  for  usury,  the 
basis  of  a  liability  to  third  persons  is  wanting. 

The  decision  of  Morse  v.  Wilson  is  an  application 
of  the  true  principle.'  The  lender  in  that  case  stipu- 
lated for  a  share  of  the  profits,  in  addition  to  the  legal 
rate  of  interest.  In  an  aClion  to  recover  the  debt,  he 
sought  to  meet  the  charge  of  usury,  b}^  alleging  that 
upon  the  legal  effe(5l  of  the  transaction  his  investment 
was  really  in  jeopardy,  because,  as  a  partaker  of  profits, 
he  was  liable  to  the  creditors  of  the  firm.  The  court, 
however,  declared  that  as  the  advance  was  to  be  repaid 

181 


§56.  The  Test.  Pt.  2,  Ch.  i. 

in  any  event,  the  insolvency  of  the  borrower  was  the 
only  danger  incurred,  a  risk  which  every  lender  takes. 
A  personal  liability  of  the  lender  to  third  persons 
would  in  no  way  a£fe6l  the  transa6lion,  which  remains 
a  loan,  because  the  borrower  and  his  surety  were  bound 
without  regard  to  the  success  or  failure  of  the  busi- 
ness to  return  the  advance,  which,  by  reason  of  their 
responsibility,  was  not  technically  in  jeopardy.  The 
risk  which  relieves  from  the  penalty  of  usury  affe6ls 
the  investment  itself,  and  makes  the  right  to  its  re- 
covery contingent.^ 

1.  Profits,  though  in  lieu  of  interest,  are  not  tisurious,  because  counter- 
balanced by  losses.  A  covenanted  to  lend  B  ^loo  for  4  years,  without 
interest,  if  he  would  board  A's  daughter,  C,  for  ^10  a  year,  and  take 
her  into  partnership  with  his  wife,  giving  her  an  equal  share  of  the 
profits  and  losses.  If  C  died,  B  agreed  to  repay  principal  and  interest 
to  A.  Defence  to  his  suit  on  bond  :  Covenant  usurious. — Risk  of  C's 
bankruptcy  equivalent  to  the  penalty  for  usury.  Morriset  v.  King,  2 
Bur.  891  (1759).  Note. — Lord  Mansfiei^d,  afterwards,  wouldn't  let 
lender  deny  partnership,  because  he  would  criminate  himself,  as  a 
usurer ;  but  here  he  considered  bankruptcy  worse  than  usury,  and 
a  sufficient  sandlion. 

2.  Taking  usurious  interest  in  trade  renders  the  taker  liable  as  a  part- 
ner. B  bought  out  his  partner,  C,  and  gave  him  a  bond  for  ^2,485, 
amount  of  his  contribution,  with  interest  at  5  p.  c,  and  agreed  to  pay 
him,  in  addition,  ^200  a  year  for  six  years,  in  lieu  of  profits.  C  had 
the  right  to  inspedl  B's  books.  B  became  bankrupt,  and  A  sued  C 
for  a  debt  incurred  by  B  in  the  business. — Liable,  because  cont'-aA 
usurious,  and  C  could  not  take  advantage  of  his  guilt  in  order  to 
escape  liability  as  a  partner.  Bloxam  v.  Pell,  2  \Vm.  Bl.  999  (1775). 

3.  Grace  v.  Smith,  I55,  n.  i. 

4.  Sheridan  v.  Medera,  ^57,  n.  4. 

5.  Liability  to  third  persons,  as  a  partner,  no  proteBion  against  usury. 
A  lent  B  ^2,000,  for  5  p.  c.  interest  and  part  of  the  profits  of  B's  share 
in  firm  of  B  &  Co.  Defence  to  adlion  of  debt  by  A  against  B's  surety: 
Usury.  Answer :  A,  though  not  liable  for  losses  between  himself  and 
B  &_Co.,  would  be  liable  to  third  persons;  therefore,  his  principal 
was  in  jeopardy,  and  profits  equalized  his  risk.— Notwithstanding  a 
possible  liability  to  third  persons,  contradl  is  a  loan,  and  usurious. 
Morse  v.  Wilson,  4  Term.  353  (1791). 

6.  Loan  for  interest  and  profits  out  of  proceeds  pledged,  not  partne?  - 
^"'P-  B  advanced  C  &  D,  manufa(fturers,  I50  each,  secured  on  200 
lumber  wagons,  for  interest  and  1-4  profits  out  of  sales.  A  sued 
B  for  rent  of  premises  occupied  by  C  &  D.— Not  liable.  Profits  meas- 
ure of  compensation  for  loan.  Richardson  v.  Hughitt,  76  N.  Y.  55 
(1879).  s        '  / 


Pt.  2,  Ch.  I.  The  Test.  §67. 

B  advanced  C  |;2,50o  to  start  business,  and  took  chattel  mortgage 
for  loan,  1-2  receipts  for  compensation,  but  if  not  equal  to  interest  C 
made  up  difference.  A  sued  B  for  goods  supplied  to  C. — Not  partner. 
Loan  payable  in  any  event.  Eager  v.  Crawford,  76  N.  Y.  97  (1879). 


§67. 


(iri)c  inference  toill  be  against  a  partnersl)ip  tul^ere  tl)e  facta  are 
consistent  tuitl)  ann  otl)er  relation. 

The  reason  for  this  inclination  arises  from  the 
unwillingness  of  the  courts  to  impose  the  unlimited 
liability  of  a  partner,  if  any  other  legal  relation  will 
adequately  interpret  the  fa6ls. 

(!lo-ou)nersl)ip. 

The  natural  inference  from  co-ownership,  viz.,  a 
passive  tenancy  in  common  is  not  overcome  by  using 
the  property  in  trade,  unless  it  is  made  a  part  of  the 
adlive  capital  of  the  firm.  Fixed  capital  may  remain 
the  property  of  the  partners,  as  tenants  in  common, 
and  only  the  use  be  contributed  to  the  firm.^  It  is  in 
accordance  with  this  theory  of  the  Common  law  that 
the  co-owners  of  a  ship  are  tenants  in  common.  At 
first,  the  leaning  was  against  letting  a  ship  form  part 
of  a  firm's  stock.  But  now,  the  ship,  if  fitted  out  on 
joint  account,  and  employed  in  the  business,  becomes 
partnership  stock,^  whether  equipped  for  one  or  more 
voyages''  or  for  a  continuous  business.^     A  settlement 

I  after  each  shipment  does  not  affe6l  the  question  of 

'  partnership  in  the  ship.' 

I.  Co-ownership  of  a  vessel^  and  partnership  in  a  shippittg  adventure. 
A  &  B,  merchants,  each  having  a  separate  business.  They  had,  at 
various  times,  and  in  various  vessels,  undertaken  shipping  adventures 
on  joint  account.     They  owned  the  "Phcenix"  in  common.     They 

'  183 


§6-.  The  Test.  Pt.  2,  Ch.  i. 

c(iuippcd,  freighted  and  sent  her  off  on  a  voyage.  Before  her  return 
to  i)orl,  R  failed,  and  made  an  assignment.  A  then  .sent  word  to 
master  to  sell  ship  and  cargo  in  a  foreign  port,  and,  with  the  ]Jro- 
ceeds,  to  buy  another  ship,  in  A's  name,  and  a  cargo,  to  be  shipped 
to  him  as  consignee.  This  was  done.  The  assignees  of  B  brought  a 
bill  for  an  account  for  B's  half  in  the  proceeds  of  the  Thoenix.  A 
sought  to  retain,  for  general  balance  of  account  on  previous  advent- 
ures, and  for  sums  advanced  beyond  his  share  in  the  equipment  of 
the  I'luL-nix. — Not  partners  in  the  vessel.  Evidence  showed  only  a 
I)artuership  in  the  cargo  and  equipment.  For  this  balance  A  had  a 
lien  on  the  proceeds,  but  not  for  a  general  balance.  He  must  pay 
out  to  the  assignees,  B's  share  in  the  vessel,  after  deducing  the  ad- 
vances ou  the  equipment.  Mumford  v.  Nicholl,  20  Johns.  611,  N.  Y. 
(1822). 

2.  Partnership  in  a  vessel.  A,  B,  and  several  others,  had  a  ship  built, 
and  ran  her  on  joint  account.  A  owned  1-4,  and  was  agent.  B  was 
master.  A  &  B  disagreed,  and  a  majority  displaced  A  from  the  posi- 
tion of  agent.  A  asked  for  an  account,  a  receiver,  and  an  injundlion 
against  his  associates,  to  prevent  them  from  continuing  to  run  the 
craft.  Court  below  allowed  them  to  give  security,  and  refused  every 
prayer  but  the  one  for  an  account. — It  was  sufficient,  if  defendants 
gave  security.  Had  they  been  tenants  in  common,  injunction  would 
have  been  granted.  Dunham  v.  Jar^as,  8  Barb.  88,  N.  Y.  (1854). 

3.  Co-Oivncrs  of  a  ship,  though  tenants  in  common  of  the  vessel,  are 
partners  in  the  earnings  of  a  voyage.  A,  ct  al.,  co-owners  to  the  ex- 
tent of  a  three-eighths  share  of  the  brig  "Crimea,"  sued  for  ^628.46, 
their  portion  of  the  freight  of  a  voyage.  Defence  :  i.  Set-off  of  an 
equal  amount  for  a  claim,  which,  though  invalid,  the  master  had  al- 
lowed ;  2,  Non-joinder  of  co-owners. — Judgment  for  A  et  al.  Plaint- 
iffs, as  partners,  could  maintain  suit  under  the  Code,  as  non-joinder 
of  co-partners  had  not  been  pleaded  in  abatement.  Master  not  agent 
as  to  past  transadlions,  and  might  have  consulted  his  employers. 
Merritt  v.  Walsh,  5  Tiffany  685  (1865). 

4.  Co-owners  of  ship  became  partners  by  continuous  business  compris- 
ing a  series  of  voyages.  B  owned  1-2  and  C  &  D  each  1-4  of  a  ship. 
They  agreed  to  run  her  and  divide  the  net  earnings  in  proportion  to 
the  shares.  B  assigned  his  interest  in  present  voyage  to  A,  who  sued 
C  &  D.  Defence  :  A's  profits  counterbalanced  by  losses  on  previous 
voyages.— Judgment  for  C  &  D.  Co-owners  of  ship  became  partners 
by  a  continuous  business,  comprising  a  series  of  voyages.  Williams 
v.  Lawrence,  47  N.  Y.  462  (1872). 

5.  .Settlements  after  each  shipment  not  inconsistent  tvith  partnership. 
Agreement  by  A  &  Co.,  in  Calcutta,  to  share  profit  and  loss  upon 
shipments  made  to  B  &  Co.,  in  N.  Y.  Settlement  after  each  ship- 
ment. B  &  Co.  assigned  for  creditors,  including  certain  goods 
shipped  by  A  it  Co.  A  &  Co.  claimed  account  and  the  balance. 
Uelence  :  Shipments  separate  ventures.— Settlements  did  not  break 
the  continuity  of  partnership  transadlions.  Eldridge  v.  Froost.  6  Rob. 
518,  N.  Y.  (i866).  ^ 

The  same   principles    apply  to    co-ownership  in  a 
patent.' 

6.  Co-owner  of  patent  not  partners  in  works  constructed  under  the 
patent.     B  &  c  were  interested  in  a  patent  for  pile-covering,  and  A, 

J  84 


Pt.  2,  Ch.  I.  The  Test.  §67. 

employed  by  B  on  docks  built  with  the  patent,  sued  R  &  C.  C's  de- 
fence :  Not  a  partner. — ^Joint  interest  in  patent  did  not  create  partner- 
ship without  a  share  in  profit  and  loss  of  building  the  docks.  Boeklen 
V.  Hardenburgh,  5  J,  &  Sp.  no,  N.  Y.  (1874). 

The  owners  of  a  race-horse,  who  kept  and  trained 
him,  dividing  the  expenses  and  winnings  between 
them,  were  not  partners.  Holding  in  common  an- 
swered all  the  purposes,  without  resorting  to  a  part- 
ship.^ 

7.  Co-ow7iers  of  a  horse.  A  &  B,  owners  of  a  race-horse,  agreed  that 
they  should  keep  and  train  him,  and  that  the  expenses  and  winnings 
should  be  divided  equally  between  them,  A  sued  B  for  half  the  ex- 
penses.— Recovered,  because  co-owners,  whether  partners  or  not. 
French  v.  Styring,  2  C.  B.  N.  S.  357  (1857). 

In  the  cases  discussed,  the  partnership  in  the  stock 
was  denied,  because  co-ownership  afforded  a  sufficient 
explanation  of  the  fa(5ls.     The  Pande6ls  contain  a  case 
in  which  the  partnership  in  the  stock  was  denied,  on 
the  ground  that  the  parties  were  not  co-owners.     Ul- 
PiAN  quotes  this   case  for  Celsus'  opinion:     "Cum 
"tres  equos  haberes  et  ego  unum,  societatem  coimus, 
"ut  accepto  equo  meo  quadrigam  venderes  et  ex  pretio 
"quartam  mihi  redderes.     Si  igitur  ante  venditionem 
"equus  mens  mortuus  sit,  non  .putare  se  Celsus  ait 
"societatem  manere  nee  ex  pretio  equorum  tuorum 
"partem  deberi:  non  enim  habendae  quadrigae,  sed 
"vendendae  coitam  societatem.     Ceterum  si  id  a(5lum 
"dicatur,  ut  quadriga  fieret   eaque   communicaretur 
"tuque  in  ea  tres  partes  haberes,  ego  quartam,  non 
"dubie  adhuc  socii  sumus."^     The  decision  is  a  con- 
sequence of  the  Roman  conception  of  partnership,  to 
wit.,  acquisition  of  co-ownership  by  contradl.     They 
did  not  intend  to  become  co-owners  of  the  horses,  but 
did  intend  to  be  co-owners  of  the  price.     The  partner- 
ship was,  therefore,  confined  to  the  sale. 

8.     D.  17,  2,  58. 

185 


§67.  The  Test.  Pt.  2,  Ch.  i. 

Sale. 

A  sale  may  be  the  obje(5l  which  they  desire  to  e£fe(5l. 
The  owner  of  cotton,  the  owner  of  a  ship  and  the  con- 
signee, co-operated  to  effed  a  sale  on  joint  account, 
and  shared  the  proceeds  in  quotas  only  as  a  mode  of 
repaying  the  price  advanced  on  the  cotton.^  The 
farmers  who  supplied  milk  to  a  cheese  fadlory,  and 
shared  the  profits  in  proportion  to  the  milk  which 
they  contributed,  were  not  partners.^"  They  sold  the 
raw  produ6l,  and  were  paid  out  of  the  proceeds  of  the 
manufactured  article.  The  farmers  took  no  part  in 
managing  the  fa(5lory,  which  was  condu6led  wholly  by 
the  cheese-maker.  They  were  not  principals,  or  even 
agents,  in  the  business. 

9.  Joint  owners.  A  owned  cotton,  B  a  ship,  and  C's  correspondent 
would  sell,  if  made  consignee.  C  advanced  to  A  1-2  price  of  cotton, 
at  port  of  shipment,  A  to  remain  owner  of  1-2,  B  and  C  each  to  take 
1-4.  Return  to  be  naade  to  C ;  loss  upon  advance  made  by  C,  who 
sued  A  in  assumpsit  for  contribution. — Recovered  :  No  partnership; 
transaclion  a  sale  on  joint  account,  with  peculiar  method  of  repaying 
advance  on  A's  share.  Peltier  v.  Sewall,  12  Wend.  386  (1834). 

10.  _  Sharinjor  inarutfaRured  prodtiFl  in  proportion  to  raw  i7tateria  I  fur- 
nished, not  partnership.  .  B,  and  other  farmers,  delivered  milk  to 
cheese  factory.  Each  was  credited  with  amount  of  his  milk,  and  all 
was  manufa<ftured  together,  and  the  factory  sold  the  cheese.  Each 
farmer  was  charged  with  his  share  of  expenses,  and  received  his  share 
of  proceeds,  which  was  in  proportion  to  the  milk  he  furnished.  A 
-sold  B's  interest  in  the  chee-se  under  an  execution  against  him. — Set 
Jiside.  B  not  a  partner,  and  had  no  such  interest  as  could  be  seized 
and  sold  on  aji./a.  Butterfield  v.  Lathrop,  21  Smith  225,  Pa.  (1872). 

These  cases  illustrate  the  distindion  between  the 
Common  law  and  the  Roman  law  on  the  question  of 
a  partnership  in  selling.  At  the  Roman  law,  there 
might  be  a  partnership  in  selling,  although  the  par- 
ties were  not  co-owners  of  the  stock,  as  appears  from 
the  case  put  by  Celsus,  supra,  for  the  parties  would, 
nevertheless,  be  co-owners  of  the  price,  when  obtained. 
The  Common  law,  on  the  other  hand,  permits  no  part- 

186 


Pt.  2,  Ch.  I.  The  Test.  §67. 

nership  in  selling,  without  a  previous  buying  on  joint 
account. 

Bailment. 

The  objedl  of  the  parties  may  be  a  bailment.  The 
mode  of  compensation,  by  a  share  of  the  profits,  does 
not  alter  the  bailee's  position,  or  give  him  any  title  to 
the  merchandise  held  by  him,  but  it  remains  the  prop- 
erty of  the  bailor,  and  is  subjedl  to  execution  by  his 
creditors," 

11.  A  sharingin  the  profits  a  substitute/or  bailee' s  lien.  By  agreement, 
A  bought  hides  and  delivered  them  to  B  for  tanning.  B  returned 
them  to  A  for  sale.  The  proceeds,  after  paying  freight,  6  1-2  cents  a 
pound  to  B  for  tanning,  7  1-4  p.  c.  to  A  for  buying  hides  and  selling 
leather,  were  equally  divided.  Losses  were  to  be  borne  equally.  A 
replevied  tanned  leather  in  B's  hands.  Defence :  B  entitled  to  pos- 
session, as  partner  and  co-tenant  in  common. — ^Judgment  for  A. 
Hides  and  leather  his  separate  property,  though  a  partner  in  the 
business.  B's  share  in  the  profits  was  in  lieu  of  his  lien  as  bailee. 
Moore  v.  Huntington,  7  Hun  425  (1876). 

Buyitig  wheat  for  majiiifaBure,  ivith  payment  and  commission  out 
of  sales  of  the  flour,  don't  make  buyer  partner  with  manufaRurer, 
Under  agreement,  A  furnished  wheat,  B  &  Co.  milled  it,  sold  the 
flour,  and  delivered  proceeds  to  A.  He  retained  cost  of  wheat,  2  1-2 
p.  c.  commission  on  price  of  flour  sold,  and  returned  residue  to  B  & 
Co.  They,  as  members  of  a  dissolved  firm,  owed  C,  who  levied  on  the 
wheat.  A  brought  replevin  against  sheriff. — Judgment  for  plaintiff". 
Wheat  belonged  to  A,  and  B  &  Co.  were  his  bailees.  Johnson  v.  Mil- 
ler, 16  Ohio  431  (1847). 

Jactorsl^ip. 

The  business  may  be  localized,  and  come  nearer  a 
del  credere  factorship  than  a  partnership.  Sharing 
the  profits  and  losses  of  consignments  was  adjudged 
to  be  a  local  fa6lorship,  which  met  all  the  require- 
ments, without  introducing  the  difficulties  arising 
from  a  partnership.^'^ 

12.  Local  faHorship.  B,  C  &  D,  grocers,  traded,  at  Titusville,  as  B  C 
&  Co.  E  &  F,  in  N.  Y. .  supplied  the  store  fixtures,  paid  half  the  rent, 
and  consigned  the  stock,  taking  a  sum  equal  to  half  the  profits,  and 
bearing  1-2  the  losses.  A  sold  goods  to  B  C  &  Co.,  and  joined  E  & 
F  as  defendants  in  his  suit  for  the  price. — ^Judgment  for  E  &  F.     A 

187 


§68. 


Sub- Partnership. 


Pt.  2,  Ch.  2. 


del  a-edcrc  fatflorship  meets  all  the  requirements,  without  resorting 
to  a  partnership.   Edwards  v.  Tracy,  12  Sm.  374,  Pa.  (1869). 

CC^ift. 

The  transadlion  may  be  a  gift.  The  party  might 
control  the  business,  but  not  for  himself.  The  ab- 
normal position  is  conceivable.  The  motive,  though 
unbusinesslike,  might  operate,  and  make  the  party 
acft  from  disinterestedness,  for  the  benefit  of  the  inex- 
perienced partners.  Ordinarily,  the  law  would  not 
consider  the  motive,  but  judge  by  the  fa(ft.  It  is  only 
the  exceptional  cases,  when  the  person  dealing  with 
him  knew  that  he  was  not  a6ling  for  himself,  that 
would  induce  the  law  to  enter  into  the  motive.^* 

13.     Tracy  v.  McManus,  ^48,  n.  c. 


-O- 


CHAPTER  11. 

SUB-PARTNERSHIP. 

§68. 

The  Roman  law  has  furnished  a  maxim,  Socii  mei 
socius  mens  socius  7ion  est^  My  partner's  partner  is 
not  my  partner.  The  maxim  expresses  a  principle 
of  partnership,  important  for  the  determination  of  the 
relation  of  the  partners  to  each  other.  The  principle, 
m  its  affirmative  statement,  is  called  deleHiis personae, 
or  choice  of  a  partner.  The  maxim  may  be  admitted  as 
a  dodlrine  of  the  Common  law,  provided  it  is  under- 
stood to  imply  no  more  than  the  proposition  that  the 

188 


Pt.  2,  Ch.  2.  Sub- Partnership.  §68. 

typical  partnership  results  from  the  free  seledlion  of 
the  partners  who  choose  each  other.     The  application 
of  the  maxim  and  principle  to  the  societas  of  the  Ro- 
man law  was    absolute,   because  partnership   meant 
nothing   but  joint    ownership    of    property    arising 
through  contrail.     The  relation  comprised  only  the 
reciprocal  rights  and  duties  of  the  partners  between 
themselves.     Their  liability  to  third  persons  was  de- 
termined, not  by  the  law  of  partnership,  but  by  the 
general  rules  which  define  the  responsibility  of  co- 
principals  and  co-obligors.     The  maxim  first  stated 
had,  therefore,  no  application  to  the   question  of  a 
partner's  liability  to  third  persons.     The  disposition 
to  so  apply  it  at  the  present  day  results  from  a  mis- 
conception of  its  original  import.^    What  the  common 
lawyers  call  the  doArine  of  partnership  is  largely  made 
up  of  the  principles  which  govern  the  responsibility 
of  co-principals  and  co-obligors.     As  to  that  portion 
of  our  partnership  law,  the  maxim  can  have  no  appli- 
cation.    A  man's  liability  as  a  partner  to  third  per- 
sons cannot  be  dependent  upon  the  deleBus  pei^sonae. 
A  partner,  for  example,  may  assign  a  part  of  his 
interest  in  the  firm  to  a  third  person,  and  share  his 
profits  and  losses  with  him.     This  constitutes  a  sub- 
partnership,  but  does  not  make  the  assignee  a  partner 
in  the  firm.     The  assignment  here  referred  to  pre- 
supposes the  perpetuation  of  the  firm,  and  the  con- 
tinuance of  the  assignor  as  a  member,  and  is,  there- 
fore, to  be  distinguished  from  the  absolute  assignment 
by  a  partner  of  his  interest  to  a  stranger,  which  works 
a  dissolution  of  the  firm.     The  knowledge  of  his  co- 
partners, and  their  assent  to  the  assignment,  is  noth- 
ing but  an  acknowledgement  of  his  right  to  use,  or 

189 


§68. 


Sub-Partnership. 


Ft.  2,  Ch.  2. 


dispose  of,  his  share  as  he  pleases,  and  does  not  neces- 
sarily involve  the  reception  of  the  assignee  into  the 
firm.     There  is  no  dele^us  personae  or  agreement  by 
the  co-partners  to  accept  the  assignee  as  a  partner,  or 
by  him  to  assume  towards  them  the  responsibility  of 
the  relation.      On  the  other  hand,  a  partnership  is 
created  between  the  assignor  and  the  assignee  in  re- 
spect of  the  assignor's  share  in  the  firm.     It  is  evident 
that  this  partnership  is  not  a  relation  independent  of 
the  original  firm,  as  is  the  case  where  one  man  is  the 
common  member  of  two  firms,  engaged  in  difterent 
branches  of  business,  but  is  interlocked  with  the  busi- 
ness of  the  principal  firm.     No  profits  or  losses  accrue 
to  the  sub-partnership,  except  through  the  business 
of  the  main  firm,  and  the  assignee  obtains  a  modified 
control  over  the  firm  stock  by  reason  of  his  co-owner- 
ship with  the  assignor  of  his  share.     By  reason  of  this 
co-ownership,  he  -would  be  entitled  to  prevent  his  as- 
signor and  the  other  partners  from  diverting  the  firm 
stock  from  its  original  destination.     This  privilege  is 
not  to  be  denied  the  assignee,  on  the  ground  that  the 
assignmeut  of  a  partner's  share  conveys  no  title  to 
any  portion  of  the  firm  assets.     It  is  true  that  the 
assignment  of  a  partner's  share  conveys  no  unincum- 
bered title  to  a  purpart  of  the  firm  stock,  but  an  as- 
signee does,  nevertheless,  become  a  co-owner  of  the 
firm  stock  with  the  original  partners,  subjedt  to  their 
rights,  and  to  the  requirements  of  the  firm.     The  sub- 
partner,  however,  would  have  no  right  to  participate 
in  the  management  of  the  business.     His  contrails 
would  not  bind  the  firm.     But  he  would  be  liable  as  a 
co-partner  to  the  creditors  of  the  firm,  because  he  is  a 
co-proprietor  of  the  firm  stock,  and  interested  in  the 


190 


Pt.  2,  Ch.  2.  Sub-Partnership.  §68. 

profits  and  losses  of  the  business.  In  case  of  loss,  and 
of  the  insolvency  of  the  assignor,  the  assignee  has  no 
claim  for  contribution  against  the  other  co-partners, 
nor  have  they  any  recourse  against  the  assignee. 
But  the  liability  of  the  assignee  to  third  persons  is 
not  dependent  upon  his  right  to  contribution.  It  fol- 
lows from  his  status  as  a  co-proprietor  in  the  business. 
By  virtue  of  the  assignment,  he  has  become,  to  the 
extent  of  his  portion,  as  much  a  co-proprietor  and  co- 
principal  as  his  assignor,  from  whom  he  differs  only 
in  respe6l  to  the  privilege  of  taking  part  in  the  man- 
agement of  the  business,  and  of  the  right  to  enforce 
contributions  against  the  other  partners.  His  right 
to  contribution  against  his  assignors  is,  of  course,  un- 
doubted. 

When  the  form  of  a  sub-partnership  is  used  to  in- 
troduce a  partner  into  the  firm,  he  becomes,  in  all  re- 
spells,  a  partner.  If,  therefore,  he  did  bargain  with 
the  partners  for  a  dire6l  share  of  the  profits,  and  agreed 
to  bear  a  corresponding  portion  of  the  losses,  the  right 
to  control  the  firm  business,  with  which  a  sub-partner 
has  nothing  to  do,  would  decide  the  question.'^ 

1.  D.  50,  17,  47;  D.  17,  2,  20. 

2.  Co-owjter  of  partner's  share  not  a  partner.  C,  D  &  E  proposed  that 
B  should  enter  into  partnership  with  them  in  wool-brokerage,  but, 
being  a  purchasing  agent  of  different  manufacturers,  he  refused. 
Then  they  agreed  that  B  should  be  jointly  interested  with  E  in  the 
firm,  and  share  his  profits  and  losses.  The  firm  had  no  capital. 
When  A  heard  of  the  agreement,  he  sued  B  for  salary. — Not  a  part- 
ner. Did  not  share  firm  profits,  or  take  part  in  management  of  busi- 
ness. Burnett  v.  Snyder,  8i  N.  Y  550  (1880). 

C  assigned  to  B  1-3  of  his  1-2  interest  in  the  firm  of  D  &  Co.,  agree- 
ing to  colledl  and  hand  over  1-3  of  his  profits,  and  B  agreed  to  reim- 
burse 1-3  of  C's  losses.  A  joined  B  in  a  suit  against  D  &  Co.  on  the 
endorsement  of  an  accommodation  note. — Not  a  partner.  No  delec- 
tus personae,  or  share  of  firm  profits.   Bank  v.  Norris,  43  L.  I.  56  (1886). 

Should  this  do6lrine  be  maintained,  the  assignor  might 
be  a  dummy,  and  the  assignee  would  obtain  all  the  ad- 

191 


§^g.  Holding  Out.  Pt.  2,  Ch.  3. 

vantages  ot"  being  a  partner  withont  incurring  his  liabili- 
ties. 

•?.  .lssic;nee  oj  partner's  share  i/iay  become  a  partner  by  consent  oj  the 
co-partners.  C,  one  of  three  partners,  assigned,  out  of  his  own  interest, 
to  H  1-8  ot  all  profits  and  losses  of  the  firm,  to  date  back  from  its  com- 
mencement, in  order  to  make  him  a  partner.  B  accepted  the  assign- 
ment, and  the  other  partners  received  him.  The  business  was  car- 
ried on  without  changing  the  firm  name  or  opening  new  accounts. 
A  sued  on  the  renewal  of  a  note  given  for  services  rendered  the  firm 
before  the  assignment. — B  liable  as  a  partner  by  relation.  Earon  v. 
Mackey,  lo  Out.  452,  Pa.  {1884). 


-O 


CHAPTER  III. 

HOLDING    OUT. 

§69. 

j^olliing  out  tutails  a  pavtiurBliip  liability. 

Holding  out  may  occur  in  tliree  ways.  A  man  may 
hold  himself  out  as  a  partner  in  a  firm  by  his  diredl  adl 
or  declaration.  He  may  be  held  out  as  a  partner  of  the 
a(5lual  members,  with  his  consent,  or  with  his  knowl- 
edge and  without  his  prohibition.  That  is,  a  man  may 
be  held  out  by  his  consent  or  by  his  negligence.  In 
each  of  the  three  cases  the  measure  of  responsibility 
is  the  same  towards  all  persons  who  deal  with  the  firm 
on  the  credit  of  his  name.  The  distin(5lion,  therefore, 
which  has  been  taken  between  a  holding  out  by  dired 
authority  and  a  holding  out  by  negligence  is  un- 
founded. It  has  been  said  that  where  the  holding  out 
was  by  the  person's  authority,  consent  or  connivance, 
the  presumption  is  absolute  that  he  was  so  held  out  to 

192 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

every  customer  of  the  firm ;'  if  by  his  own  neg^ligence, 
then  only  to  such  creditors  as  were  misled  thereby. 
But  by  no  principle  of  law  can  a  man  who  is  not  a 
partner  be  made  liable  to  persons  who  have  in  no  way 
been  misled  by  his  aAs,  and,  on  the  other  hand,  there 
can  be  no  difference  between  a(5ls  which  a;"e  the  result 
of  negligence  and  adfs  which  are  the  result  of  inten- 
tion as  a  source  of  civil  liability. 

Where  a  man  takes  part  in  the  management  of  the 
business,  and  a6ls  as  a  partner,  he  charges  himself 
with  the  liability  of  a  partner  by  his  condu(5l.  This 
is  not  a  typical  holding  out,  for  in  that  case  the  party 
takes  no  part,  and  has  no  interest,  in  the  business.  If 
he  does  take  part,  he  is  liable  as  a  principal,  upon  the 
contradts  to  which  he  is  an  aAual  party,  without  refer- 
ence to  his  status  as  a  partner  inter  se?"  If  an  attempt 
is  made  to  charge  him  with  liability  as  a  partner,  on  the 
ground  that  while  he  was  not  a  party  to  the  contra6t 
upon  which  suit  was  brought,  nevertheless  his  general 
condu(?t  as  a  manager  of  the  firm  business,  although 
unknown  to  the  plaintiff,  estopped  him  from  denying 
the  partnership,  no  liability  would  be  incurred  under 
the  head  of  holding  out,  because  the  defendant  made 
no  representations  to  the  plaintiff.^  A  course  of  con- 
duct: might  be  evidence  tending  to  show  a  partnership,^ 
but  it  does  not  amount  to  a  case  of  holding  out,  unless 
the  condu6l  was  known  to  the  plaintiff.  An  attempt 
to  establish  a  case  of  holding  out  involves  the  admis- 
sion that  there  was  no  partnership.^ 

Where  a  man  has  allowed  his  name  to  be  put,  01'  to 
remain,  in  the  firm  designation,  he  must  be  liable  to 
all  persons  who  deal  with  the  firm  under  that  designa- 
tion."    They  necessarily  give  him  credit  when  they 

193 


§60.  HoLDiNCi  Out.  Pt.  2,  Ch.  3. 

deal  witli  liis  name,  whether  they  knew  and  relied 
upon  him  personally  or  not.  If  the  individual's  name 
is  not  a  part  of  the  firm  designation,  but  his  connec- 
tion with  the  firm  has  been  indicated  by  some  formula, 
as,  for  instance,  by  the  term  'Co.,'  he  would  be  liable 
after  retirement  to  every  one  w^ho  dealt  with  the  firm 
under  the  old  designation,  with  knowledge  of  his  con- 
nedlion,  and  without  legalnotice  of  the  change,  whether 
he  authorized  the  remaining  partners  to  use  the  old 
firm  name  or  negle6led  to  have  it  altered.^  If  the  in- 
dividual's name  is  not  a  part  of  the  firm's  designation, 
either  literally  or  by  a  formula,  but  he  is  held  out  as 
a  partner,  either  by  himself  or  by  the  a6lual  partners, 
without  contradiction  from  him,  he  is  liable  only  to 
those  persons  who  gave  the  firm  credit  on  the  faith  of 
his  supposed  connecftion  with  it;  that  is  to  say,  those 
persons  who  knew  of  the  holding  out,  and  were  igno- 
rant of  his  true  relation  to  the  partners. 

When  it  is  said,  that  in  order  to  charge  a  nominal 
partner  it  is  necessary  that  the  customers  should  have 
dealt  with  the  firm  on  the  nominal  partner's  credit,  it 
is  not  meant  that  the  customer  should  have  considered 
the  financial  standing  of  the  nominal  partner,  but  only 
that  he  should  have  had  him  in  mind  as  a  member  of 
the  firm,  and  a  party  to  the  contrad.  If  the  individ- 
ual has  allowed  his  name  to  be  used  in  the  firm  desig- 
nation, the  creditor  has  a  right  to  conclude  that  there 
is  some  person  in  fa6l  answering  to  that  name,  who 
guarantees  the  performance  of  the  contrad.  The  in- 
dividual answering  to  that  name,  if  responsible  for  its 
presence  there,  is  the  one  who  is  bound  for  the  per- 
formance, whether  he  was  personally  known  to  the 
creditor,  or  not,  at  the  time  of  the  contrad.^ 

194 


I 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

The  do(ftrine  of  holding  out  implies  that  the  person 
whose  liability  is  established  in  this  manner,  not  only 
has  no  interest  in  the  firm,  but  takes  no  a6lual  part  in 
the  business.  There  can  not  be  a  case  of  holding  out, 
unless  there  be  a  person  to  whom  the  nominal  partner 
was  held  out.  Holding  out  means  "representations," 
and  they  must  be  made  to  some  one,  viz.,  the  plaintiff. 
A  nominal  partner,  to  differentiate  his  case,  must  have 
no  interest  in  the  firm,  or  he  would  be  liable  on  the 
general  rule,  whether  known  or  unknown.  He  must 
not  be  a  party  to  the  contradl  by  adlual  personal  inter- 
vention in  the  transadlion,  or  through  an  agent,  for 
then  he  would  be  liable  as  principal  or  co-contractor, 
on  the  general  principles  of  the  law  of  contrail.  ^ 
Holding  out,  by  its  very  terms,  means  that  the  de- 
fendant is  neither  partner  in  fa6l  nor  co-promissor  in 
form. 

Where  parties  do  business  under  a  common  desig- 
nation, without  any  agreement  of  partnership  between 
themselves,  they  incur  the  liability  of  partners.^"  The 
case  is  strengthened  where  the  business  is  managed 
by  a  common  agent.  The  public  is  entitled  to  infer 
from  the  single  name  a  solidarity  of  interest  between 
them.  Their  liability  is  founded  not  upon  a  repre- 
sentation of  partnership,  but  upon  the  faA  that  they 
have  authorized  a  business  to  be  condudled  on  their 
behalf  in  a  manner  which  implies  a  partnership." 

Where  a  man's  name  is  used  without  his  consent, 
notice  to  the  person  making  use  of  the  name,  not  to 
use  it,  or  extorting  a  promise  from  him  to  that  effe6l, 
would  not  relieve  the  party  held  out.  The  notice 
should  be  given  to  the  customers,  not  to  the  party. 
Accepting  his  promise  would  confirm  the  impression 

195 


§69.  Holding  Out.  Pt.  2,  Ch.  3. 

that  the  alleged  partner  relied  upon  the  promise  for 
his  proteclion,  and  indire6lly  authorized  the  continued 
use  of  his  name,  by  trusting  it  to  the  discretion  of  the 
promissor,  and  by  looking  to  him  for  indemnity/^ 

Holding  out  is  not  established  by  proof  of  public 
notoriety,  unless  the  fa(5l  is  known  to  the  party  sought 
to  be  charged  as  a  partner/^  The  reputation  could  not 
make  out  a  partnership,  or  enlarge  the  scope  of  a 
partnership  already  established."  If  general  reputa- 
tion were  introduced  as  evidence  to  charge  the  de- 
fendant as  a  partner,  he  could  rebut  it  by  general 
reputation  of  a  dissolution.''  The  evidence  would  be 
equally  competent  for  both  purposes.  Thus,  a  new 
customer,  who  relied  on  general  notoriety  of  the  de- 
fendant's being  a  partner,  might  be  met  by  a  dissolution 
not  properly  notified,  but  equally  known  to  the  public. 
The  reputation  must  be  brought  home  to  the  party 
sought  to  be  charged  by  it  as  a  partner,  before  he  can 
be  called  upon  to  refute  it.'*^ 

But  the  express  authority,  or  dire6lion,  given  by  a 
person  to  use  his  name,  is  an  announcement  of  mem- 
bership. Admissions  and  a6ls  are  equivalent  to  such 
a  formal  declaration,  and  commit  the  person  as  a  part- 
ner.'' He  has  identified  himself  with  the  firm,  and 
cannot  extricate  himself  from  it,  except  by  a  dissolu- 
tion. The  transa6lions  of  the  firm  will  not  be  invali- 
dated, in  order  to  relieve  him  from  the  liability  v/hich 
he  has  assumed.  When  the  a6lual  partners  hold  out 
a  third  person  as  their  partner,  they  invest  him  with 
the  powers  of  a  partner.  A  firm  note  made  by  him 
would  bind  the  firm,  himself  included,  in  the  hands 
of  a  holder,  who  did  not  know  who  made  the  note,  but 
took  it  on  the  general  credit  of  the  firm.'' 

196 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

When  a  man  is  held  out  as  a  partner  by  the  real 
partners,  so  as  to  make  him  liable  in  person  and  in 
estate,  he  is  entitled  to  control  the  firm  assets  for  his 
relief.  As  he  does  not  exert  his  control  by  virtue  of 
any  right  of  ownership,  there  is  no  occasion  to  attribute 
to  him  any  share  in  the  property  of  the  iirm.^^ 

It  is  an  anomaly  that  one  who  is  not  sin  juris  could 
be  bound  as  a  partner.  But  if  he  does  not  disaffirm 
the  partnership  when  he  becomes  sui  jiiris^  he  will  be 
a  partner,  and,  by  relation,  from  the  beginning."" 

A  defendant  may  be  entitled  to  objec^t,  if  a  partner 
by  estoppel  is  not  joined  as  co-plaintiff.  The  defend- 
ant might  have  a  set-off,  or  counter-claim,  which  would 
be  available  only  against  all  the  partners."^  If  the  ser- 
vices had  been  rendered  upon  the  credit  of  the  part- 
ner held  out,  the  employee  might  insist  that  the  part- 
ner by  estoppel,  although  without  any  interest  in  the 
firm,  should  be  joined  as  a  plaintiff,  in  order  to  set  off 
his  salary  against  the  firm  claim. 

A  partner  by  estoppel,  it  has  been  decided,  cannot 
be  put  into  bankruptcy,  because  he  would  be  charged 
indiscriminately  for  all  the  firm  debts,  when  he  is  lia- 
ble only  for  those  incurred  upon  his  credit."  It  is  diffi- 
cult to  comprehend  this  decision.  Bankruptcy  is  a 
branch  of  equity,  and  it  is  the  function  of  a  court  of 
equity  to  marshal  the  assets  among  the  claimants,  ac- 
cording to  the  character  and  extent  of  the  claims. 

I.  A  man's  name  in  the  firm  designation  charges  hint  as  partner  to 
all  'cvho  deal  with  the  firm.  Secor,  Swan  &  Co.  was  dissolved,  by  the 
retirement  of  Wm.  H.  Secor,  the  senior  partner.  The  business  was 
continued  by  the  remaining  partners,  who  bought  the  use  of  Charles 
F.  Secor's  name,  for  faoo,  and  kept  up  the  trade  style  of  Secor,  Swan 
&  Co.  A  soldthem  goods,  but  without  knowledge  of  the  arrangement, 
orof  Secor's  connexion  with  the  firm.  They  failed,  and  A  sued  Secor, 
as  defendant. — Recovered.  The  objedl  of  the  arrangement  was  to 
lend  credit  to  the  firm,  and  effecfl  could  be  given  to  the  agreement 
only  by  holding  him  liable  as  a  partner.     If  not  liable  to  all  creditors 

197 


§69.  Holding  Out.  Ft.  2,  Ch.  3. 

of  the  firm,  he  would  be  liable  only  to  customers  who  knew  of  his 
connedlion  with  the  firm,  but  did  not  know  the  arrangement  by  which 
he  sold  his  name.  Otherwise,  if  the  customers  knew  the  terms  of  the 
arrauijemeut,  or  if  they  did  not  know  of  his  connedlion  with  the  firm, 
they  could  not  hold  him.  He  was  treated  as  if  an  acSlual  partner. 
PoUiou  V.  Secor,  6i  N.  Y.  456  (1875). 

2.  Manager  aEling  as  a  partner  does  not  hold  himself  otit  as  a  partner. 
B,  sr,  general  manager  of  B  &  Co.,  had  sole  power  to  contra(5l  for 
firm.  B,  sr.,  negotiated  with  C,  signed  contract  with  firm  name,  and 
gave  C  firm  note  for  price.  B,  jr.,  could  not  adl  in  the  negotiation, 
without  B,  sr.  C  dealt  with  B,  sr.,  as  partner.  Evidence  admitted 
that  B,  sr.  "s,  name  published  in  DireAory,  1880-1,  and  1881-2,  as 
partner  in  B  &  Co.  He  testified  that  he  did  not  know  the  fa6l  until 
after  i^ublication  of  Dire(ftory  for  1880-1,  and  then  refused  to  take 
copy,  unless  corredlion  made.  No  further  effort.  A,  holder,  sued  B, 
sr.,  as  partner.  Court  charged  thatB,  sr.,  adling  as  a  principal,  and 
C's  believing  him  to  be  a  partner,  would  justify  verdidl  for  A. — Re- 
versed. Ihmsen  V.  Lathrop,  8  Out.  365,  Pa.  (1883). 

The  reason  given  by  the  court  for  the  decision  is  un- 
tenable. The  manager,  it  is  true,  did  only  what  he  was 
employed  to  do ;  but  he  was  employed  to  a(5l  as  a  part- 
ner, and  exert  the  fun6lions  of  a  partner.  He  held  him- 
self out  as  a  partner,  and  must  look  to  his  employers  for 
indemnity,  if  he  did  it  at  their  request.  He  identified 
himself  as  a  partner,  not  only  by  transadling  the  firm 
business,  as  if  he  were  a  principal,  but  by  using  the  firm 
name  as  if  it  were  his  own,  without  any  sign  of  agency. 
He  was  enabled  to  assume  the  firm  designation  with 
effe(ft,  because  his  son's  name  formed  part  of  it.  The 
plaintiff,  who  knew  nothing  but  what  the  defendant 
assumed  to  do,  and  actually  did,  and  was  not  called 
upon  to  pry  into  the  secret  arrangement  existing  be- 
tween him  and  his  associates,  dealt  with  the  defendant 
as  a  partner.  The  plaintiff  had  nothing  to  do  with  the 
a6lual  relation  between  the  defendant  and  his  associates, 
because  he  was  not  a  party  to  their  contrail,  and  his 
right  to  recover  cannot  be  abridged  by  its  terms.  His 
claim  is  independent  of  the  contract,  and  paramount 
to  it. 

Manager  affirm  business  a  partner  as  to  customers,  unless  he  tells 
them  he  afls  only  as  agent.  A  sued  B,  C  &  D,  C's  wife,  for  goods 
sold  B  &  Co.,  and  also  declared,  on  note  given  in  liquidation  by  C  in 
B  &  Co.'s  name,  which  he  habitually  signed  in  the  course  of  his  gen- 
eral management  of  the  business.  C's  defence :  Adled  as  agent  for 
his  wife  in  the  management.— Judgment  for  A.  C  liable,  because  he 
adled  as  manager,  i/tter  alia,  signing  firm  name,  without  telling  A  he 
^vas  not  a  partner.  Dodd  v.  Bishop,  '50  La.  An.  1 178  (1878). 

Acting  as  partner  siifiicicnt  to  sustain  verdiR,  without  proof  of  part- 
nership. B  got  A  to  manufadlure  fanning  mills,  and  told  him  C,  etal., 
were  co-owners  of  the  patent-right.  A's  evidence :  C  present  wben 
mills  ordered  and  B's  statement  made.     A  applied  for  payment  to  C, 

198 


Pt.  2,  Ch.  3,  Holding  Out.  §69. 

who  put  him  off  until  sales  could  be  made.  C  stated:  "we  have  them 
(the  mills)  to  sell." — Verdidt  for  A,  and  judgment  affirmed.  Shafer 
V.  Randolph,  3  Out.  250,  Pa.  (1881). 

Afling  as  partner  sufficient  to  justify  verdiH.  A  sued  C,  as  B's 
partner.  Court  charged  that  unless  an  adlual  partnership  between 
B  &  C,  verdi<5l  should  be  for  C. — As  evidence  was  not  sufficient  to 
show  the  interest  of  a  partner,  or  ailing  as  such — ^Judgment  affirmed. 
Harris  v.  Sessler,  3  S.  \V.  Rep'r  316,  Tex.  (1887). 

3.  Signing  partnership  contraB  by  viistake  not  equivalent  to  holding 
out.  A  sued  Bi  &  B2  as  partners.  Court  admitted  evidence  of  their 
contraA,  as  B  Bros.,  with  D,  for  the  construcflion  of  a  reservoir,  fol- 
lowed by  proof  that  A  had  furnished  them  materials  for,  and  used  by, 
them  in  eredling  the  structure. — Error,  because  no  offer  to  show  A 
knew  of  the  representation,  and  a<5led  on  the  faith  of  it  in  selling  de- 
fendants the  materials.   Denithornev.  Hook,  2  Am.  240,  Pa.  (1886). 

The  defendant  executed  the  contradl  for  the  construc- 
tion of  the  reservoir  by  mistake,  and  no  business  was 
ever  done  under  it.  The  contrail  did  not  amount,  there- 
fore, to  a  partnership  zVz/^rj-^.  But,  as  signing  the  paper 
was  a  transa6lion  indicative  of  partnership  intention,  the 
defendant  would  have  been  liable,  had  the  plaintiff 
known  and  relied  upon  the  a6l. 

4.  Course  of  conduH.  evidence  of  partnership.  A  &  B  were  sued,  as 
partners.  A  firm-bond  had  been  given  by  A,  and  ratified  by  B.  This 
a6l,  coupled  with  B's  indefinite  language  and  frequent  presence  at 
the  place  of  business,  was  relied  on  to  prove  partnership. — Sufficient. 
Conklin  v.  Barton,  43  Barb.  435,  N.  Y.  (1S64). 

5.  The  plaintiff's  effort  to  charge  one  as  a  partner  on  the 
ground  of  holding  out,  results,  ordinarily,  from  a  de- 
fault of  evidence  to  prove  actual  partnership.  He  vir- 
tually concedes  that  there  is  no  partnership,  and  tries 
the  issue  of  holding  out.  To  make  the  plaintiff  prove  de- 
fendant's  secret  of  a  partnership,  and,  upon  a  failure, 
to  let  the  defendant  use  the  evidence  upon  that  issue  to 
rebut  his  liability  for  representations  of  partnership, 
would  make  holding  out  a  species  of  a6lual  partnership. 
On  the  contrary,  it  is  the  opposite  of  a  partnership  inter 
se^  and  exists  only  quoad  alios. 

ContraB  inter  se  and  firm' s  financial  standing  irrelevant  on  the 
issue  of  holding  out.  A  sued  B,  C  &  D  in  assumpsit.  D's  defence  to 
A's  evidence  of  admissions,  made  to  him  by  D  before  the  cause  of 
adlion  arose,  that  he  was  a  partner:  Offer  to  prove  :  i,  Contradl  be- 
tween B,  C  and  himself,  for  management  of  firm  business  ;  2,  the  in- 
solvent condition  of  firm  at  the  date  of  alleged  admission. — Rejedlion 
of  evidence  sustained,  and  judgment  affirmed.  Reed  v.  Kremer,  i  Am. 
482,  Pa.  (18S6). 

The  evidence  was  irrelevant.  The  issue  was  not  an 
acSlual  contradl,  but  admissions,  which  raised  a  contradl 
by  constru6lion  of  law.     The  adlual  contrail  between 

199 


|6o.  Holding  Out.  Pt.  2,  Ch.  3. 

the  defendant  and  his  associaces  would  be  competent,  if 
not  the  best,  evidence,  upon  the  issue  of  partnership 
inter  sc ;  but  it  would  not  negative  an  implied  liability 
arising  from  D's  representations  without  any  partnership 
between  them.  The  insolvent  condition  of  the  firm  was 
also  foreign  to  the  issue.  The  admission  was,  it  is  true, 
ao-ainst  interest,  but  that  feature  does  not  discredit  the 
testimony. 

The  public  knows  nothing  of  a  partner,  except  by  his 
acls  and  declarations.  The  contradl  of  partnership  is 
private,  and  its  terms  ne^d  not  be  divulged.  The  part- 
nership contracT;  does  not  affedl  the  question  of  holding 
out.  The  contfadl  is  between  the  partners.  Holding 
out  is  between  partners  and  strangers.  Evidence  of  the 
relation  subsisting  between  the  parties  is  incompetent, 
because  it  does  not  concern  creditors,  unless  it  is  an  ad- 
mission of  partnership.  The  domestic  secret  cannot 
prejudice  outsiders.  They  judge  by  appearances,  and 
take  a  man  at  his  word.  The  a(5ls  of  a  principal  are 
abundantly  sufficient  to  make  out  a  partner,  although 
he  has  no  interest  in  the  stock,  or  profits,  of  the  busi- 
ness. The  inference,  drawn  from  his  a6ls,  after  they 
have  been  established,  is  a  construdlion  of  law. 

Parbiership  contracl  no  bearing  upon  the  issue  of  holding  out.  B, 
in  pursuance  of  agreement,  sold  his  stock  in  trade  to  C  &  D,  taking 
notes,  signed  by  C  in  C  &  D's  name.  A  sign,  C  &  D,  was  put  up,  and 
business  carried  on  for  two  years.  D  was  seen,  occasionally,  in  the 
store,  and  told  E,  and  others,  he  was  a  partner.  E,  in  consequence, 
recommended  the  firm  to  A,  who  sold  them  goods,  and,  to  balance 
account,  took  note  of  C  &  D.  A  sued  them  in  assumpsit  as  partners. 
Defence  :  Two  agreements  prior  to  notes  given  B,  the  first  between  D 
and  his  brother,  substituting  him  in  agreement  with  B ;  the  second, 
agreement  of  partnership  between  C  and  the  brother. — Recovered. 
" Otherwise  two  persons,"  said  the  Court,  "might  hold  themselves 
"  out  to  the  world  as  partners,  say  to  every  one  that  they  were  part- 
"ners,  and  years  afterwards  a  secret  article  of  partnership  between 
"the  irresponsible  partner  and  another  irresponsible  person  of  the 
"same  surname  as  the  only  responsible  party,  may  be  produced  to 
"relieve  hitn,  and  defraud  all  the  creditors  of  the  firm  who  have 
"given  credit  to  it  solely  on  the  faith  of  his  name."  Drenneu  v. 
House,  5  Wr.  30,  Ta.   (1861). 

B  &  C,  brewers,  who  were  sued  by  A,  as  partners  of  D,  the  lessee  of 
a  restaurant,  offered  their  books  in  evidence  to  disprove  testimony 
that  work  done  in  fitting  up  the  restaurant  was  paid  for  with  beer 
from  their  brewery.  There  was  also  e\ddence  on  the  part  of  the 
plaintiff  that  B  was  present  while  work  on  the  restaurant  was  in  pro- 
gress.— Books  rejected.  "However  competent,  this  evidence  would 
'^1  have  been  between  the  parties  themselves  (B,  C  &  D),  certainly  it 
"was  not  as  against  the  plaintiff  (A),  who  was  a  stranger  to  their  a6ls." 
Ganzer  v.  Fricke,  7  Sm.  316,  Pa.  (1S6S). 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

6.  The  decision  in  Pollion  v.  Secor,  supra,  n.  i,  can  be  explained  upon 
this  ground. 

7.  Judgment  by  default  against  two  in  a  similar  case  relevant  to 
charge  either  as  an  admission  of  liability,  though  it  does  not  prove  a 
partnership.  B  &  C  dissolved,  without  advertising  dissolution.  B 
made  firm  note  to  D,  which  A,  who  did  not  know  of  the  dissolution, 
discounted  for  D.  A  sued  B  &  C,  and  offered  in  evidence  the  record, 
and  payment  of  a  judgment  by  default  against  B  &  C  on  another  note 
made  by  B  under  the  same  circumstances.  Defence :  B  offered  to 
testify  that  he  made  the  note  in  suit  without  C's  knowledge. — ^Judg- 
ment for  A.  Record  relevant,  although  superfluous ;  default  an  ad- 
mission of  liability  by  C  to  pay  similar  notes,  though  it  does  not 
establish  a  partnership.  B's  testimony  irrelevant.  The  want  of 
notice  supplied  the  defedl  of  authority.  City  Bank  of  Brooklyn  v. 
Dearborn,   20  N.  Y.  244  (1859). 

8.  Supra  n.  i. 

9.  A  fling  as  a  partner  charges  one  zaho  is  not  a  partner.  A  sued  B  & 
C  for  goods  sold  B  &  Co.  C  ordered  some,  and  said  he  would  pay  for 
them.  A  relied  on  his  representation.  C's  defence:  Not  averred  to 
be  a  partner,  and  not  one  in  fa(5l. — Judgment  for  A.  Averment,  like 
partnership  inter  se,  unnecessary.  Entry  of  charge  against  firm 
sufficient  to  hold  C.  Hancock  v.  Hintrager,  60  Iowa  374  (1882). 

Promise  estops  partner  from  denying  partnership.  B,  C  &  D  bought 
goods  of  A,  to  be  delivered  after  the  first  of  the  month,  on  representa- 
tion that  D  would  contribute  capital,  and  become  a  partner  on  that 
date.  A  sued  D,  as  partner,  for  price. — Liable  on  his  representation. 
Stiles  V.  Meyer,  7  Lans.  190,  N.  Y.  (1872). 

Holding  out  applies  to  agents  as  well  as  to  part- 
ners. The  agent  once  held  out  will  be  liable  in 
transacftions  of  the  same  generic  kind.  The  limit 
in  a  partner's  dealings  is  defined  by  the  firm  busi- 
ness. 

Holding  out  agent,  and  sharing  profits  with  him  in  one  operation, 
makes  him  an  agent  in  similar  transaBiotis.  A,  Loudon  merchants, 
at  B's  suggestion,  speculated  in  currants,  and,  in  order  to  induce  B 
to  exert  himself,  and  to  compensate  him  for  his  services,  A  agreed  to 
give  him  1-2  the  profits.  A  opened  a  separate  account,  which  he 
headed  joint  transadlions  with  B,  for  money  which  he  had  received 
from  C,  a  broker,  who  filed  a  cross-bill,  to  charge  A  for  B's  specula- 
tions in  other  commodities. — A  was  liable  for  B's  operations,  because 
he  held  B  out  as  his  agent,  and  gave  him  half  the  profits.  Pole  v. 
Leask,  9  Jurist  N.  S.  829  (1863). 

10.  Joint  name  creates  partnership  liability.  B  owned  a  vessel,  and 
was  a  common  carrier.  C,  his  son,  was  engaged  with  him,  and  they 
did  business  and  gave  receipts  as  B  &  C.  A  shipped  goods  by  them, 
believing  that  B  &  C  were  partners,  and  sued  them  in  assumpsit  for  a 
loss  caused  by  a  collision.  C's  defence  :  Not  a  partner. — Liable,  be- 
cause held  out  as  a  partner.  Mershon  v.  Hobensack,  2  Zab.  372,  N.J. 
(1850). 

Co-operative  meat  market  a  partnership.  B  et  al.  formed  co-opera- 
tive association,  to  buy  meat  at  wholesale  and  sell  it  at  retail  to  mem- 
bers and  others.  Subscriptions  voluntary,  ranging  from  fifty  cents 
to  five  dollars.     The  only  objedl  was  to  dispense  with  middlemen,  and 


§69.  Holding  Out.  Pt.  2,  Ch.  3. 

sell  meat  directly  to  customers  who  paid  as  usual  at  the  association 
market.  Officers  of  association  eledted,  who  appointed  agents  for 
purchase  and  sale,  accountable  to  them.  A  sold  association  meat, 
and  sued  B  ct  al.,  pres-ident  and  treasurer.  No  evidence  of  any  sub- 
scripliou  by  B  ct  al.,  cr  of  A's  knowledge  of  their  membership. — Re- 
covered, because  partners  by  using  firm  designation,  though  not  held 
out,  and  no  reliance  upon  undisclosed  principals.  Davidson  v.  Hol- 
den,  10  A.  Rep'rsis,  Conn.  (1887). 

II.  Delegation  of  business  to  common  agent  makes  proprietors  partners. 
B,  C,  d"&  E,  each  owning  a  steamboat,  employed  in  carrying  freight 
and  passengers  on  the  Mississippi,  appointed  F  their  common  agent, 
who  had  managed  the  transportation  business,  by  the  designation  of 
the  F  line,  for  8  years,  when  A  shipped  the  merchandise  for  the  loss 
of  which  he  sued  the  four.  They  transadled  no  business  separately, 
had  no  property  in  common,  and  each  received  the  net  profits  of  his 
own  boat. — ^Judgment  for  defendants  reversed.  Joint  transa<5lion  of 
business  by  common  agent  charged  proprietors,  without  proof  of 
plaintiff's  reliance  upon  the  fa6l  of  a  partnership  between  them.  Sun 
Ids.  Co.  v.  Kountz  Line,  122  U.  S.  S.  C.  R.  583  (1886). 

The  decision  was  corredl ;  but  the  circumstances  of 
the  case  amounted  to  a  virtual  representation  of  partner- 
ship to  the  shipper.  The  agent  undoubtedly  described 
his  enterprise  as  a  unit,  and  included  all  the  boats  under 
one  name,  his  own.  This  representation  each  subsidiary 
corporation  authorized  the  agent  to  make.  It  was  made 
by  the  agent  in  the  case  in  which  suit  was  brought.  The 
shipper  did  not  ship  by  any  particular  boat ;  heshipped  by 
the  Kountz  line,  and  his  bill  of  lading  was  so  signed  and 
attested  by  A  B,  agent  of  said  line.  It  is  a  question 
of  fact  who  were  the  "Kountz  line."  Investigation 
showed  that  the  four  or  five  boats  were  doing  business 
under  that  joint  title,  and  they  authorized  the  bills  of 
lading  to  be  so  made  out.  The  statement  is  that  they  were 
"actually  doing  bu.siness."  This,  therefore,  is  not  a 
typical  case  of  holding  out.  It  is,  rather,  analogous  to 
those  cases  which  refuse  to  sustain  the  private  agree- 
ments of  partners  respedling  their  shares  of  profit  and 
responsibility  against  the  demands  of  creditors.  All 
the  different  companies,  by  the  manner  of  conducting 
their  business,  became  parties  to  every  contradl.  The 
contracts  were  in  the  name  of  the  Kountz  line,  and  that 
title  covered  every'  one  of  them.  They  together  formed 
the  Kountz  line.  They  did  their  business  as  a  unit,  so 
far  as  the  public  and  this  particular  defendant  were  con- 
cerned. _  The  principle  of  the  case  seems  to  be,  that 
where  different  persons  do  business  under  a  common 
designation,  that  is  to  say,  under  a  firm  name,  if  you 
please,  they  become  liable  in  solido  upon  every  contract 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

taken  or  entered  into  under  that  name,  just  as  they 
would  be  were  they  a6lually  partners,  or  just  as  they 
would  be  had  all  joined  expressly,  and  by  their  indi- 
vidual names,  in  the  contract,  whatever  the  private 
arrangement  was. 

12.  Partner  must  notify  customer,  or  prevent  use  of  Iiis  name.  B, 
knowiug  that  C  did  business  as  B  &  Co.,  told  C  not  to  use  his  name, 
so  as  to  hurt  him,  which  C  promised  not  to  do.  A  sued  B  on  a  prom- 
issory note,  signed  B  &  Co.  by  C. — Iviable.  B  relied  on  C's  indem- 
nity. Smith  V.  Hill,  45  Vt.  372  (1850). 

13.  Reputation  insufficient,  unless  faB.  known  by  reputed  partner.  A, 
who  sued  B,  C,  D  &  E  for  a  deposit,  proved  a  common  report  that 
they  were  partners,  but  not  that  D  &  15  knew  of  the  report. — Judg- 
ment against  defendants  stood  against  B  and  C,  but  replaced  by  judg- 
ment for  D  &  E.  Gaffney  v.  Hoyt,  10  Pac.  Rep.  34,  Idaho  (18S6). 

14.  No  prima  facie  case  of  partnership  established  by  reputation.  B 
contracted  a  partnership  with  C  and  two  others,  of  Chicago,  to  deal 
in  Montana  furs.  C  bought  groceries  from  A,  showing  him  articles 
of  co-partnership,  and  telling  him  B  would  pay  for  the  groceries.  A 
sued  B. — Non-suit.  Purchase  beyond  scope  of  business.  Evidence  of 
reputation  to  enlarge  its  scope,  incompetent  to  make  o\xt  prima  facie 
case  against  B.  Taylor  v.  Webster,  10  Vr.  102  E.  &  A.,  N.J.  (1878). 

15.  Public  notoriety,  if  a  groimd  to  charge,  is  a  ground  to  relieve  a 
retiring  partner.  Firm  name  and  sign  of  B  &  C  was  Atlantic  Forge 
Co.  C  managed  the  business  in  his  own  name,  which  was  also  on  the 
sign.  B  withdrew  without  publishing  notice.  C  took  in  D,  and 
changed  sign  to  C  &  D.  A  new  customer,  A,  knew  of  B's  connedlion 
with  the  firm  by  reputation,  but  not  of  the  dissolution,  though  it  was 
a  matter  of  public  notoriety.  A  sued  B  for  goods  sold  to  C. — Judg- 
ment for  B.  Public  notoriety,  if  ground  to  charge,  is  a  ground  to 
relieve  a  retiring  partner.  Holdane  v.  Butterworth,  5  Bosw.  i,  N.  Y. 
(1859). 

16.  Declarations  become  competent  if  kiiown  by  alleged  partner  and  not 
denied.  A  sued  B  &  C,  as  partners,  on  notes  signed  by  "D,  agent." 
C  denied  partnership,  but  court  refused,  at  his  request,  to  charge  that 
if  B  represented  to  A  that  C  was  his  partner,  and  A,  on  the  strength 
of  these  representations,  lent  them  money,  and  if  A  told  C  of  the 
representations,  who  made  no  denial,  he  would  be  liable. — Judgment 
reversed.  Slade  v.  Paschal,  67  Geo.  541  (18S1). 

Plaintijf's  evidence  of  reliance  upon  defendant  competent,  if  fol- 
lowed up  by  faRs  sliowing  holding  out.  B  circulated  handbills  in 
his  and  C,  D  &  Co.'s  name,  calling  for  workmen  to  get  out  and  haul 
railroad  ties.  A  sued  B,  C  &  D  for  ties  delivered,  but  effecfted  serv- 
ice only  upon  C  &  D.  Evidence  admitted:  i.  That  B  had  said  he 
was  in  partnership  with  C,  D  &  Co.,  but  not  in  their  presence;  2, 
Evidence  rejected  :  A's  testimonj-,  upon  whose  credit  he  did  the 
work,  and,  3,  admitted  that  C,  D  &  Co.  took  charge  of  ties,  and  also 
their  receipt  from  B,  showing  his  sale  to  them. — Judgment  for  A  re- 
versed: I,  incompetent;  2,  competent;  3,  subsequent  to  transacftion. 
Remel  v.  Hayes,  83  Mo.  200  (1S84). 

Clerk'' s  knowledge  of  holding  out  imputed  to  principal.  A  sued  C 
on  certificate  of  deposit  made  with  B  &  Co.  Evidence :  B's  testi- 
mony, advertisement  of  B  &  C's  partnership  in  banking  for  five 
months  in  newspaper  taken  by  C,  and  letters  written  by  B  to  C  under 

203 


§69.  Holding  Out.  Pt.  2,  Ch.  3. 

firm  letter-heads.  C's  defence  :  He  could  not  read,  did  not  know  of 
advertisement  or  letter-heads,  and  clerk  read  letters  to  him. — ^Judg- 
ment and  vcrdicl;  for  A  affirmed.    Rizer  v.  James,  26  Kan.  221  (1881). 

17.  What  evidence  is  competent  to  charge  the  party  held 
out?  Proof  of  any  a^l,  or  admission,  by  him  that  he  is 
a  principal  in  the  business.  His  name  in  the  firm,  on 
the  sign,  firm  a6ls  or  declarations,  though  not  made  to 
the  plaintiff,  are  sufficient  to  charge  the  defendant.  He 
must  disavow  and  prevent  the  use  of  his  name.  Hold- 
ing out  is  a  question  of  fadl,  and  belongs  to  the  jury. 

Holdiiia;  out  for  jury ;  if  sufficient  evidence,  knoum  to  plaintiff ,  and 
aRcd  on  by  lii)n.  Whether  husband  a  principal  or  agent  for  his  wife, 
the  nominal  partner,  for  jury.  Three  brothers,  B,  C  &  D,  in  1875, 
went  into  partnership  in  the  lumber  business.  B  furnished  the  capi- 
tal, f6,ooo.  He  sold  out,  in  1876,  to  C  &  D,  taking  their  note  for  the 
f6,ooo,  and  they  agreed  to  pay  the  firm  debts.  The  dissolution  was 
duly  advertised,  and  notice  sent  to  all  customers.  C  assigned  his  in- 
terest to  B's  wife,  E,  and  died  in  1877.  D  &  E  gave  B  their  judgment 
note  for  his  |6,ooo.  B  helped  to  condu6l  the  business,  and  ordered 
lumber  of  A,  in  the  firm  name.  A  obtained  a  verdi(5l  against  B  and  D 
after  striking  out  E  as  defendant. — Jury  competent  to  decide  question 
of  lidding  out,  if  sufficient  evidence  of  it,  which  A  knew  and  relied 
on  in  selling.  Jury  also  decides  whether  B  is  a  principal  or  the  agent 
of  his  wife,  the  nominal  partner.  Burgan  v.  Gaboon,  i  Pennypacker 
320,  Pa.  (1881). 

Adinissioits.  A  sued  B,  co-owner  of  a  steamboat,  on  a  note  given 
by  C  &  D  in  adjustment  of  a  loss  for  goods  damaged  on  the  transit 
from  Pittsburgh  to  St.  Louis.  The  evidence  against  B  was  a  bill  of 
sale  by  C  to  E,  who  said  he  was  a  trustee  for  B,  and  also  B's  admis- 
sions to  others,  judgment  for  A.  Hill  V.  Voorhies,  10  Harris,  68,  Pa. 
(1853). 

In  what  order  must  the  plaintiff  proceed  to  establish 
a  partnership?  The  members  form  a  circle,  and  the 
plaintiff"  can  begin  with  any  member.  The  admissions 
of  the  different  partners  are  sufficient,  and  if  each  admits 
in  turn,  the  relation  is  established.  A  declaration  of  his 
menibership,  made  in  a  partner's  presence,  and  uncon- 
tradidled  by  him,  would  be  an  admission.  No  partner 
can  admit,  except  for  himself,  but  his  admission  impli- 
cates his  co-partners  as  the  other  parties  to  the  contrail. 
As  an  admission,  it  binds  him,  and,  as  his  declaration, 
it  is  evidence  against  them,  if  followed  up  by  their  ad- 
missions, a6ls  and  declarations. 

An  admission  by  one,  unless  in  the  other's  presence,  incompetent  to 
prove  them  partners.  A  sold  sheep  to  B,  and  subsequently  hearing 
that  C  was  his  partner,  sued  B  &  C's  administrator  for  the  price.  B 
denied  partnership,  but  his  declarations,  made  in  C's  absence,  that  C 
was  a  partner,  were  admitted  in  evidence.— Error.  B's  declarations 
incompetent  to  prove  partnership.  Cowan  v.  Kinney,  33  Ohio  St.  442 
(1878), 


204 


Pt.  2,  Ch.  3.  Holding  Out.  §69. 

Adtnissions  of  alleged  partner  incompetent  to  prove  partnership. 
A  sold  goods  to  B,  who  failed.  A  sought  to  hold  C  as  B's  partner, 
and  prove  B's  declarations,  that  C  was  his  partner,  and  to  set  aside 
C's  judgment.  C's  defence:  Only  transadlion  with  B  was  to  let  him 
coal  C's  timber  for  4-5  of  the  coal,  and  holding  his  note. — Evidence 
incompetent  to  prove  partnership.  Flanigan  v.  Champion,  i  Gr.  Ch. 
51,  N.J.  (1838). 

Declarations  incompetent  to  charge  one  as  partner  if  he  did  not  ap- 
prove them.  A  sued  B  for  balance  of  account.  B  plead  a  set-oflF.  A 
averred  that  debt  set-ofF  by  B  was  owing  to  B  &  E,  as  partners,  and 
offered  letters  of  E  to  A  to  establish  the  partnership.  Rejedled.  E 
not  party  to  suit,  and  letters  not  admissions,  nor  competent  evidence, 
if  not  made  in  B's  presence,  or  ratified  by,him. — Verdidl  and  judgment 
for  B  affirmed.  Flournoy  v.  Epping,  68  Geo.  707  (1882) 

Contra.  A  sued  B  &  C,  for  merchandise  furnished  D,  whom  A 
alleged  was  B  &  C's  partner.  B  &  C  denied  partnership.  A  offered 
B's  letter  to  D,  enclosing  business  license  in  name  of  B  &  C.  Re- 
iedled,  on  ground  that  declarations  of  B  in  C's  absence  were  incom- 
petent.— Error.  Rogers  v.  Suttle,  igBradwell  J63,  111.  (1885). 

18.  Holding  out  partner  charges  for  his  promise  of  firm  acceptance. 
A,  B  &  C  agreed  to  go  into  partnership  as  soon  as  B  contributed 
|6,ooo.  In  meanwhile,  they  rented  office,  put  up  sign,  and  got  out 
letters  and  bill-heads  in  firm  name.  C,  for  firm,  employed  agent, 
promising  to  accept  draft  in  plaintiff's  favor  for  agent's  services. 
Acceptance  refused,  and  plaintiff  sued  firm  as  acceptors.  A  denied 
partnership,  because  B  had  never  contributed  |6,ooo,  and  A  had  never 
authorized  use  of  his  name,  except  by  allowing  firm  sign  to  be  put  up. 
— vSuflficient  evidence  of  holding  out,  and  agent  dealt  with  them  on 
faith  of  partnership.  Plaintiff  may  enforce  agent's  right.  Burns  v. 
Rowland,  40  Barb.  368,N.  Y.  (1863). 

Firm  note  charges  partner  held  out.  B's  share  in  firm  of  B  &  Co. 
was  sold  out  by  the  sheriff,  and  bought  in  by  C  &  D,  his  partners, 
who  continued  the  business  as  B  &  Co..  employing  B  at  a  salary.  A 
sued  B  on  a  firm  note  made  after  his  interest  had  been  sold. — -Liable, 
because  he  did  not  forbid  the  use  of  his  name  by  the  firm.  Freeman 
V.  Falconer,  12  J.  &  S.  132,  N.  Y.  (1878);  579  (1879). 

19.  Liability  of  partner  by  estoppel  entitles  him  to  control  interest  for 
his  proteHion.  B  &  C  traded  as  B  &  Co.  C  retired,  and  A,  his  wife, 
took  his  place,  putting  in  some  capital  advanced  by  her  father.  She 
was  really  adling  as  trustee  for  C.  She  sued  B  for  an  account.  De- 
fence :  A  trustee  for  C,  and  had  no  standing  as  partner. — Decree.  C 
was,  of  course,  the  partner  in  facfl,  and  his  creditors  could  take  A's 
nominal  interest  in  firm  as  his  property.  But  she  was  liable  as  osten- 
sible partner,  and  had  the  right  to  control  the  share,  which  she  held 
as  trustee,  for  her  own  prote(5lion.  B  waived  C's  joinder  as  plaintiff 
or  defendant  by  denying  his  interest.  N.  Y.  Statute,  Laws,  i860,  Ch, 
90,  ^i,  ?2,  permits  married  woman  to  trade  on  her  own  account.  Bit- 
ter V.  Ratbman,  61  N.  Y.  512  (1875). 

Part7ier  by  estoppel  entitled,  luith  partners  infafl,  to  marshal  assets 
in  relief  of  their  joint  liability.  Br  secretly  retired  from  firm  of  B 
&  C,  composed  of  Bi,  B2  &  C.  B2  &  C  continued  to  use  firm  name 
of  B  &  C,  with  Bi's  assent.  D  made  a  note,  which  B  &  C  endorsed  to 
A.  At  same  time  D  gave  B  &  C  a  chattel  mortgage,  as  security  for 
present  and  future  endorsements,  and  subsequent!}'  transferred  to 
them  the  mortgaged  property  -which,  they  inter  alia  assigned  to  E  for 
creditors.  A  having  recovered  judgment  against  D,  maker,  and  Bi, 
B2  &  C,  endorsers,  claimed  to  be  subrogated  to  B  &  C's  place  in  re- 

205 


§6c^.  Holding  Out.  Pt.  2,  Ch.  3. 

specl  to  the  mortgaged  property,  in  preference  to  other  creditors. 
Defence:  While  Hi,  B2  &  C  were  liable  on  the  note,  they  took  no 
joint  title  to  mortgaged  property,  for  Bi  had  retired.  Hence  no 
subrogation,  because  parties  were  different. — Subrogated.  Mortgage 
was  given  to  cover,  and  did  cover,  liability.  Bufialo  City  Bank  v. 
Howard,  35  N.  Y.  500  (i886). 

Would  a  partner  by  estoppel  be  disqualified  on  the 
ground  of  interest?  He  would  have  no  interest  in  the 
business,  but  he  has  an  interest  in  the  matter  in  suit. 
If  an  action  is  brought  against  the  real  partners,  and  a 
judgment  recovered,  btit  no  satisfaction  obtained,  he  is 
liable  to  the  creditor  in  an  independent  suit. 

20.  Failure  to  deny  partnership  at  age  is  holding  out.  B  acSled  as  a 
partner  with  C  until  nearly  of  age,  and  did  not  disaffirm  the  partner- 
ship at  age.  A,  who  sold  C  goods  afterwards  on  B's  credit,  sued  him 
as  a  partner. — Liable,  as  he  became  a  partner  by  failing  to  disaffirm 
the  contrail  at  age.   Goode  v.  Harrison,  5  B.  &  Al.  147  (1821). 

iMarried  woman  as  partner.  Partnership  between  A  &  B,  a  mar- 
ried woman,  continued  6  years  after  husband's  death.  B  died,  and 
her  executor  brought  account.  Defence:  No  partnership,  because  B 
a  married  woman. — Bill  sustained.  Though  no  partnership  during 
coverture,  continuing  the  business  after  husband's  death  created  a 
partnership  from  the  beginning.  Everit  v.  Watts,  10  Paige  85,  N.  Y. 
US43)- 

21.  Holding  out  makes  partners  plaintiffs,  as  nell  as  defendants.  A 
sued  C,  acceptor  on  bill  of  exchange  drawn  by  A  &  B.  C  pleaded 
non-joinder  of  B,  who  was  a  clerk  in  A's  business,  which,  however, 
was  carried  on  in  the  name  of  A  &  B. — Plea  sustained,  because  B  held 
out  as  partner.  If  C  had  a  set-off  against  A  &  B,  she  could  not  use  it, 
unless  B  joined  as  plaintiff.   Guidon  v.  Robson,  2  Camp.  302  (1S09). 

Contra.  Nominal  partner  need  not  be  joined  as  co-plaintiff.  A 
furnished  capital  and  B  his  labor  for  half  the  profits,  but  without  any 
interest  in  the  business.  A  sued  C  for  work  and  materials  furnished 
by  firm  on  contracl  made  by  B  in  the  name  of  A  &  B.  C  pleaded 
non-joinder  of  B,  and  set-off  of  claim  against  him. — Adlion  main- 
tained. B,  though  nominal  partner,  had  no  interest  in  the  contradl. 
Bendell  v.  Hettrick,  3  Jones  &  Spencer  405,  N.  Y'.  {1S73). 

22.  Bankruptcy  procedure  excludes  a  construElive  partnership.  A  et 
al.  petitioned  to  put  B  et  al.  in  bankruptcy  as  partners,  on  the  ground 
that  they  held  themselves  out  as  dire<5lors  of  "The  W.  Bank."  The 
referee  found  that  B  et  al.  did  not  know  that  they  were  held  out  as 
directors.— Dismissed.  If  B  et  al.  had  been  held  out  with  their  knowl- 
edge, they  would  be  liable  to  no  creditor  who  did  not,  in  dealing  with 
the  bank,  rely  upon  them  ;  but  if  adjudged  bankrupts,  they  would  be- 
come liable  also  to  creditors  of  the  bank,  who  did  not  know  of  the 
holdmg  out.  In  re  Murray,  13  Fed.  Rep'r550  (1882). 


sof 


Pt.  2,  Ch.  3.  Holding  Out.  §70. 

§70. 

(^\)e  nominal  partner  man  be  sixtii  nj'itl)  t\]t  partners  in  a  ^oint 
action. 

Having  established  holding  out  as  a  ground  of  lia- 
bility, the  question  arises,  how  the  individual  held  out 
is  to  be  charged.  Is  he  liable  in  a  separate  a6lion  alone, 
or  may  he  be  sued  with  the  adlual  partners  in  a  joint 
a6lion?  According  to  the  English  view,  although 
the  holding  out  charges  the  individual  with  the  lia- 
bility of  a  partner,  nevertheless,  as  there  is  no  part- 
nership t'u^er  se,  and  the  liability  is  made  to  rest  upon 
the  independent  ground  of  estoppel,  the  adlion  must 
be  several.  And  further,  the  remedies  are  alternate, 
and  if  the  creditor  has  j  udgment  against  the  nominal 
partner,  he  cannot  afterwards  sue  the  a6lual  partners; 
if  he  has  judgment  against  the  a6lual  partners,  he 
cannot  afterwards  sue  the  individual  who  has  been 
held  out.'  This  view  involves  a  mistaken  notion  of  the 
effedl  of  holding  out.  When  a  man  is  charged  with 
responsibility  as  a  partner,  the  creditor  should  have 
against  him  the  remedies  which  may  be  employed 
against  any  partner.  The  individual  held  out  must 
have  been  in  the  contemplation  of  the  creditor  a  party 
to  the  joint  contra6l  of  the  firm,  otherwise  he  would 
not  be  liable.  Why,  then,  should  he  not  be  liable  in 
a  joint  a(ftion?  How  can  he  inje(5l  himself  into  the 
joint  contrail,  and  yet  escape  the  joint  suit?  The 
basis  for  the  joint  adlion  is  the  joint  contra(fl  with  the 
creditor,  and  it  is  a  matter  of  no  moment  by  what  an- 
terior processes  the   co-promissors  made  themselves 

parties  to  that  contrail.     The  explanation  of  the  rule 

207 


^jo.  Holding  Out.  Pt.  2,  Cm.  3. 

is  to  be  found  in  the  disposition  to  deduce  partnership 
liability  solely  from  the  partnership  agreement.  It  is 
true  that  persons  cannot  be  made  partners  between 
themselves,  except  by  their  own  agreement,  but  the 
primary  obje(5l  of  this  agreement  is  the  regulation  of 
the  rights  and  duties  of  the  partners  between  them- 
selves. Their  liability  to  third  persons  is  determined 
by  the  law,  and  is  nothing  more  than  the  ordinary  re- 
sponsibility of  the  parties  to  a  joint  contract.  Partners 
are  not  liable  to  third  persons  upon  their  partnership 
agreement,  but  upon  obligations  incurred  independ- 
entl}^  in  the  course  of  the  business.  If  these  obliga- 
tions are  incurred  with  the  concurrence  of  all  the  part- 
ners, it  is  a  matter  of  no  moment  whether  they  were 
contemplated  in  the  partnership  agreement,  or  not. 
Therefore,  as  to  creditors  who  sue  the  partners  in  a 
joint  a(5lion,  the  question  hinges  not  upon  the  nature 
of  the  partnership  agreement,  but  upon  the  concur- 
rence of  the  partners  in  the  contrail  upon  which  suit 
is  brought.  The  partner  by  estoppel  is  undoubtedly 
a  party  to  this  joint  contradl,  and  the  creditor  should 
be  enabled  to  sue  him  as  such,  though  he  had  no  part 
in  the  partnership  agreement. 

It  is  true  that  partnership  is  a  question  of  intention, 
and  that  the  contra6l  upon  which  partnership  liability 
is  based,  is  a  question  of  intention,  but  the  intention 
which  underlies  the  partnership  agreement  is  different 
from,  and  not  necessarily  the  parent  of,  the  intention 
which  forms  the  basis  of  the  obligation  to  third  per- 
sons. The  confusion  arises  from  the  attempt  to  de- 
duce all  partnership  liability  from  the  original  inten- 
tion expressed  in  the  partnership  agreement.  As  far 
as  third  persons  are  concerned,  there  is  no  partnership 


208 


Pt.  2,  Ch.  3.  Holding  Out.  §70. 

except  upon  the  question  of  liability.  The  only  part- 
nership intention  which  interests,  or  concerns,  the 
creditor,  is  the  intention  to  do  the  a(5l  upon  which  the 
law,  in  its  function  of  interpreter,  entails  the  partner- 
ship liability.  This  is  the  operative  intention,  in  all 
cases  where  the  law  raises  a  partnership  as  to  third 
persons,  whether  by  defining  the  effedl  of  the  private 
arrangement  between  the  principals  (§50) ,  or  the  effe(5l 
of  the  public  a6ls  of  any  principal,  that  is,  the  holding 
out.  In  both  cases  the  man  becomes  a  partner  without 
the  original  intention  inter  se ;  in  the  first  case,  the 
court  experiences  no  difficulty  in  permitting  him  to  be 
sued  jointly  with  his  associates,  why  should  the  court 
hesitate  in  the  second  case?  Wherever  a  man  has  put 
himself  in  the  position  to  incur  the  partnership  lia- 
bility, by  whatever  course  he  has  done  so,  he  becomes, 
in  all  respe6ls,  a  partner  as  to  third  persons,  and  should 
be  sued  as  such.^ 

I.  Cusiotner  without  notice  of  change  iri  firm  must  eleH.  betweeti  old 
and  new  members.  B  &  C,  trading  as  B  &  Co.,  dissolved  27  July, 
1874,  by  C's  retirement,  but  B  continued  the  business  with  D,  under 
the  same  name.  B  &.  Co.  bought,  in  January,  1878,  merchandise  of  A, 
who  was  an  old  customer,  and  did  not  know  of  the  change.  He  re- 
ceived a  circular  in  February,  1878,  annouucing  the  dissolution  and 
notifying  him  of  a  liquidation  by  B,  and  of  the  continuation.  A  con- 
tinued to  sell  to  B  &  Co.  without  changing  his  account.  He  took,  in 
July,  1878,  B  &Co. 's  check  for  the  aggregate  balance,  which  included 
the  claim  against  B  &  C,  aud  on  non-payment  sued  B  &  D,  who  failed 
in  August,  1878,  when  he  proved  for  the  balance  agaiust  them  in 
liquidation.  A  then  sued  C  for  the  claim  against  B  &  C. — ^Judgment 
for  C.  A  bound  by  his  eledlion.  C  liable  only  by  estoppel,  but  B  & 
D  the  debtors  in  facfk.  Scarf  v.  Jardine,  7  App.  Car.  345  (1882). 

The  election  was  between  suing  the  new  and  continu- 
ing partner  or  the  retired  and  continuing  partner.  Had 
the  plaintiff  elected  to  sue  the  old  firm,  defendant  would 
have  been  deprived  of  his  remedy  against  the  new  part- 
ner, who  was  primarily  liable  as  a  debtor  in  fact  accord- 
ing to  the  discription  of  the  court. 

2.  Partner  by  estoppel  liable  jointly  with  partners  in  facl.  A  sued  B, 
C  &  D,  late  trading  as  B  &  Co.,  for  merchandise  sold  firm  in  1872.  B 
&  C  traded  in  Cincinnati,  as  B  &  Co.,  from  1S66  to  187 1.     In  1871,  B 

209 


§71.  Executors.  Pt.  2,  Ch.  4. 

sold  his  interest  to  C  and  another  son,  D,  who  continued  business  in 
Cincinnati,  and  also  carried  on  l)usiness  in  Brookvillc,  Indiana.  No- 
tice of  dissolution  of  old,  and  formation  of  new,  firm  published  in 
Cincinnati  and  Brookville.  A  had  no  previous  dealings  with  old  or 
new  firm  of  B  &  Co.  Court,  sitting  for  jury,  found  for  A,  and  entered 
judgment. — Affirmed.    Speerv.  Bishop,  24  O.  St.  59S  (1874). 

Joint  aclion  lies  ai^aiiist  retired,  continuing  and  new  partner.  A 
sued  B  etal.,  in  assumpsit,  for  deposits  made  with  them  as  stock- 
holders of  "The  Citizens  Bank."  B  was  a  partner  during  part  of 
187 1  and  1872,  but  he  failed  to  give  notice  of  his  retirement  and  sale 
of  stock.  A,  who  did  not  know  B  was  a  partner,  made  one  deposit 
in  January,  1871,  before  B  became  a  partner,  and  one  other  in  1873, 
after  his  retirement.  Interest  was  paid  on  the  aggregate. — B  liable 
with  aclual  stockholders  for  deposit  made  after  his  retirement.  Evi- 
dence insufficient  for  jury  to  infer  B's  assumption  of  deposit  made 
before  he  became  a  partner.  Shamburg  v.  Ruggles,  2  Norris  148.  Pa. 
(1876). 

Partner  by  estoppel  atid partner  in  fafl  jointly  liable.  B  &  C  gen- 
eral partners,  D,  special  partner.  B  retired,  but  let  C  &  D  continue 
business  under  name  of  B  &  C  until  outstanding  notes  were  paid.  A 
sued  the  three  for  notes  given  for  new  business. — Recovered.  D,  new 
partner,  liable  as  well  as  old  partners.  Bulkley  v.  Dingman,  11  Barb. 
289,  N.  Y.  (1851). 


-O- 


CHAPTER  IV. 

EXECUTORS    AND    ADMINISTRATORS    AS    PARTNERS. 

§71. 

CX  partnfrsl)ip  mail  be  matic  to  surobe  a  partner's  beatl). 
^\)t  cieeutor,  or  atiministrator,  uioulii  toutributc  tl)e  kteaseii 
partner's  estate,  anb  replace  i)im  in  tl)e  firm. 

Can  partners  by  agreement  continue  the  partner- 
ship in  spite  of  a  partner's  death?  In  other  words, 
can  a  man  prolong  his  existence  by  agreement  after 
his  physical  death,  and  b}/  means  of  the  contrail  per- 
petuate the  firm,  so  that  it  shall  continue  as  if  he  re- 
mamed  alive  ?  If  he  can,  does  the  executor  or  admin- 
istrator, who  succeeds  the  deceased  partner  in  the  firm. 


% 


Pt.  2,  Ch.  4.  Executors.  §71. 

personate  him?  The  executor  or  administrator,  who 
takes  the  partner's  place,  does  not  resuscitate  him,  but, 
on  the  contrar}^,  is  compelled  to  assume  the  position, 
because  the  deceased  cannot  remain  a  partner.  He 
must  be  exchanged  for  a  person  who  is  in  existence, 
to  acft  in  the  capacity  of  a  partner,  and  especially  to 
incur  the  unlimited  liability  which  is  the  character- 
istic of  a  partner.  Does  the  change  of  persons  work, 
according  to  the  partnership  theor}^,  a  dissolution  of 
the  firm,  and  make  its  continuance  an  impossibility? 
These  are  questions  which  may  be  answered  as  fol- 
lows : 

The  firm,  although  said  to  continue,  does  not  sur- 
vive, except  in  form,  the  partner's  death. ^  The  exr 
ecutor  or  administrator  adds  a  new  constituent  in  his 
personal  liabilit}',  to  the  aggregate  which  constitutes 
the  firm,  and  a  deceased  partner  takes  away  an  in- 
tegral portion.  Nor  is  one  the  complement  of  the 
other.  If  there  were  but  two  partners,  A  &  B,  who 
agreed  that  the  death  of  either  should  not  dissolve 
the  firm,  and  each  made  the  other  his  executor,  what 
would  the  firm  gain  by  the  executor's  membership  to 
make  up  for  the  loss  of  the  deceased  partner?  But 
in  some  of  the  decisions  theory  and  consistency 
yield  to  expedienc3^  The  business  is  the  substantial 
thing  which  is  continued,  and  the  agreement  (or  the 
testator's  dire(5lion)  relates  to  the  continuance  of  the 
business.  To  preserv-e  this,  the  partnership  is  not 
dissolved,  as  it  otherwise  would  be,  by  the  partner's 
death, but  the  firm,  as  well  as  the  business, is  continued. 
The  law  changes  itself  for  the  occasion,  and  permits 
the  testator  to  delegate  his  capacity  as  a  partner  to 
his  executor,  and  if  the  co-partners  have,  by  agree- 


§j2.  Executors.  Ft.  2,  Ch.  4. 

nient,  accepted  liim,  or  au  administrator,  in  advance, 
he  is  the  partner's  substitute,  and  becomes  a  partner 
iu  turn.  The  firm,  by  the  agreement,  included  him 
as  a  member  according  to  its  original  constitution, 
although  onl}'-  as  an  alternate  for  the  partner  in  the 
event  of  his  death.  The  executor,  or  administrator, 
being  the  partner,  the  deceased  partner's  estate  is 
his  contribution.  The  executor,  or  administrator 
takes  the  deceased  partner's  place,  and  represents  him 
in  the  business.  The  unlimited  liability  of  the  estate 
naturally  continues  in  the  hands  of  the  representa- 
tive.' Although  a  partner,  he  slSls  as  a  delegate,  and 
represents  the  deceased  in  his  capacity  to  bind  the 
estate. 

1.  Executor  cannot  perpetuate  finn  after  testator' s  death.  D  executed 
to  B  and  his  executors  a  bond  for  C's  faithful  discharge  of  his  duties 
as  clerk.  B's  will  diredled  A  et  at.,  his  executors,  to  carry  on  his 
business.  They  settled  up  the  accounts  for  B's  lifetime,  and  made  a 
new  contradl  with  C,  as  clerk.  He  failed  to  account  for  his  subse- 
quent receipts,  and  A  et  at.  sued  D  on  his  bond. — Judgment  for  D. 
He  did  not  contrail  for  C,  as  clerk  in  executor's  business,  but  in  B's, 
which  ended  with  his  death.   Barker  v.  Parker,  i  T.  R.  287  (1786). 

2.  By  cojitrafl  firm  contmiied  after  partner's  death  by  administrator. 
Testator' s  estate  liable,  and  administrator  partner.  B  formed  with 
C  the  firm  of  B,  C  &  Co.,  which  should  not  be  dissolved  by  death  of 
either  until  August  following  such  death,  and  then  should  be  settled 
up  by  surviving  and  representatives  of  deceased  partner.  B  died  in- 
testate, in  Ocflober,  and  C  continued  business  until  next  August. 
Then  C  formed  new  firm  of  B,  C  &  Co.,  with  D,  son  and  administra- 
tor, and  E,  administrator  of  B.  New  firm  paid  debts  of  old,  and 
pledged  claim  to  A,  who  charged  B's  administrators  as  partners  be- 
tween Odlober  and  August,  and  B's  estate  as  debtor. — Recovered. 
Claim  put  holder  in  shoes  of  creditors  paid.  B's  whole  estate  liable, 
as  no  part  designated.  Administrators  partners  under  agreement  for ' 
interval.  Laughliu  v.  Lorenz,  12  Wright  275,  Pa.  (1864). 


§72. 


^3  £qnitti  bo€S  not  spccifualhi  enforce  tl]e  betcaseb  partner's 
foiitract,  or  compel  l)is  eiiecutor  to  be  a  partner,  tlje  ciistributees 
become  special  partners. 


Pt.  2,  Ch.  4.  Executors.  §72. 

Where  the  executor  or  administrator  does  not  a6l, 
in  spite  of  the  contrail  which  obliges  him  to  continue 
the  firm,  and  the  courts  have  no  jurisdi6lion  to  enforce 
his  performance  of  the  obligation,  there  is  no  partner 
to  replace  the  deceased.  The  surviving  partner  con- 
tinues the  firm  without  a  substitute  for  the  deceased 
partner.^  The  effe(5l  of  continuing  the  firm  with  the 
deceased's  estate,  but  without  a  person  to  succeed  him, 
is  to  introduce  a  novelty  into  partnership  law.  The 
fund,  or  estate,  becomes  a  special  contribution,  and  the 
beneficiaries  of  the  estate  are  special  partners.  The 
privilege  of  a  special  partnership  is  established  for  a 
class.  All  others  must  comply  with  the  requirements 
of  the  statutes,  which  regulate  special  partnerships; 
but  the  beneficiaries  of  a  deceased  partner  are  not  re- 
quired to  conform  to  the  statutory  law.  They  are 
special  partners  by  inheritance. 

Can  a  partner  grant  his  executor  a  dispensation 
from  the  law  by  will  ?  If  a  partner  can  get  the  bene- 
fit of  the  special  partnership  a(5l  by  a  contracft,  why 
can  he  not  abrogate  the  law  by  his  will  ?  The  execu- 
tor is  nothing  but  the  testator's  instrument,  and  is 
obliged  to  carry  out  the  will  or  commit  a  breach  of 
trust.  If  there  is  a  contrail  to  continue  the  firm,  the 
executor  must  a6l,  in  order  to  save  the  estate,  which 
would  otherwise  be  liable  for  a  breach.  The  testator 
can  accomplish  the  result  without  an  executor ;  why 
may  he  not  avail  himself  of  an  executor?  The  emer- 
gency surely  demands  an  executor.  New  York  and 
Maryland  have  recognized  the  exigencies  of  the  situa- 
tion, and  have  exonerated  from  personal  liability  the 
executor  who  adled  under  the  diredlion  of  the  deceased 
partner  in  continuing  the  firm.^ 

213 


§73-  Executors.  Pt.  2,  Ch.  4. 

1.  Finn  continued  by  surviving  as  appointee  of  deceased  partner. 
Administrator  caifl  reclaim  money  used  by  surviving  partner  as 
guardian,  but  may  share  dividend  ivithfirni  creditors.  B  &  C  formed 
partiiershij)  of  B  &  Co.  for  5  years,  and  agreed  that  if  B  died  within 
the  period  C  should  carry  on  the  business  for  himself  and  B's  heirs, 
subject  to  advice  and  inspection  of  B's  executor  or  administrator; 
money  contributed  by  B  to  carry  interest,  biit  amount  lelt  blank.  B 
died  intestate,  in  1817,  when  C  was  appointed  guardian  of  B's  chil- 
dren, and  A  his  administrator.  A  paid  over  to  C,  as  guardian,  sums 
which  he  used  in  firm  business.  In  1S19,  firm  failed,  and  C  assigned 
his  separate  and  the  joint  estate  to  E,  for  creditors.  A  reclaimed 
pavments as  B's  separate  estate.  D,  etal.,firna  creditors,  contested. — 
A  entitled  only  to  dividend  for  B's  advances.  Executor  or  admin- 
istrator's supervision  not  condition  of  firm's  continuance,  though 
equitable  jurisdiction  in  Pennsylvania  to  control  trustee.  Gratz  v. 
Bayard,  11  S.  &  R.  41,  Pa.  (1824). 

2.  Executors  of  a  partner  do  not  become  partners  by  leaving  /lis  capital 
in  the  firm  under  the  partnership  contract.  By  articles,  B  &  C  agreed 
that  they  should  carry  on  business  until  1870,  and  that  if  B  died  his 
capital  of  ^20,000  should  remain  for  the  benefit  of  his  family.  B 
died  in  1866,  and  D,  his  executor,  left  the  i^20,ooo  in  the  business 
under  the  contrail.  A  sued  D,  as  a  partner,  for  merchandise  bought 
by  the  firm  after  B's  death. — D  not  a  volunteer,  and  exonerated  in 
carrying  out  his  testator's  contracfl.  Richter  v.  Poppenhusen,  39 
Howard  Pr.  82  (1870). 

Executors  of  a  partner  do  not  become  partners  by  leaving  his  capi- 
tal in  the  firm,  if  direRed  to  do  so  by  his  ivill.  B,  a  partner,  directed 
his  executors,  who  were  his  co-partners,  C,  his  widow,  E  and  D,  by 
will,  not  to  withdraw  his  capital  from  the  firm  of  B,  C  &  Co.  D  left 
B's  share  in  the  firm,  which  was  continued  by  C.  E  joined  the  firm, 
and  D  also  signed  the  articles.  C  died,  and  by  his  will  firm  con- 
tinued, his  executors,  D  &  E,  signing  new  articles.  A,  who  con- 
tradled  with  the  firm  after  B's  death,  sued  D  as  a  partner, — Not  lia- 
ble. Executor  was  merely  the  instrument  of  the  testator,  and 
obliged  to  carry  out  the  will,  or  commit  a  breach  of  trust.  Owens  v. 
Mackall,  2)T^  M'd  372  (1870). 


§73. 


\ 


^s  \\\t  f  «cntor,  or  atimmistrator,  mail  renounce,  anii  rannot 
be  forceti  to  act,  l)e  toill  not  be  eiouerateb  from  liability  if  Ije  boes 
act  as  a  partner. 

The  authorities  in  general,  however,  do  not  admit 
any  exception.  By  them  personal  and  unlimited  lia- 
bility is  the  incident  of  a  partner,  and  every  person 
who  acT;s  as  a  partner  incurs  the  liability  of  a  partner. 

2 14 


Pt.  2,  Ch.  4-  Executors.  §73. 

A  man  cannot  divide  himself  into  parts,  and  become 
a  partner  in  one  part,  or  capacity,  but  not  in  all.  He 
must  enter  the  partnership  as  an  individual,  or  a  unit. 
The  executor,  who  represents  the  deceased  partner's 
estate  in  the  firm,  is  the  only  person  who  could  control 
the  destination  of  the  property,  or  recover  it  if  stolen. 
His  ailing  in  the  capacity  of  executor  would  none  the 
less  be  a(5ling,  and  commit  him,  as  a  partner.^  He  is 
not  permitted  to  qualify  his  a6ls,  and  make  them  con- 
ditional upon  his  capacity  being  recognized.  The 
capacity  is  disregarded,  and  the  individual  is  held." 

As  the  testator  cannot  furnish  the  personal  liability, 
his  executor  will  be  charged  on  the  slightest  indica- 
tion that  he  a6ls  for  the  testator.  If  the  diredlion,  or 
agreement  is  to  continue  the  firm,  and  the  executor 
does  not  renounce,  he  is  liable  from  his  position  which 
compels  him  to  carry  out  the  arrangement. 

I.  Executors,  by  leaving  the  testator's  property  in  the  firm,  become 
partners.  The  executors  left  the  share  of  a  deceased  partner,  for  the 
benefit  of  his  daughter,  in  the  firm,  which  continued  the  business 
without  changing  its  name.  They  accounted  to  her  for  the  profits, 
and  took  no  part  in  the  business.  A  sued  them  for  price  of  draft 
ordered  by  firm. — Liable,  because  no  one  else  to  represent  deceased 
partner,  or  his  interest.  Suit  could  be  brought  for  his  share,  or  in- 
didtment  for  theft  of  it,  only  by  them.  They  could  not  bind  infant, 
or  make  her  a  partner.   Wightman  v.  Tonroe,  4  Taunt  412  (1S13). 

Executors  who  leave  deceased  partner's  contribution  in  firm,  and 
share  the  profits,  are  tenders,  unless  they  co-operate  in  the  management 
of  the  business,  ivhen,  like  others,  they  become  partners.  By  articles, 
B,  C,  D  &  E  agreed  to  trade  as  B  &  Co.  for  3  years  from  i  November, 
1S80.  If  any  partner  died  during  the  term  the  balance  due  him  to 
remain  part  of  the  firm  capital.  At  expiration  of  partnership,  con- 
tributions to  be  repaid  before  profits  divided.  D  died,  in  July,  1881, 
and  F  et  at.  were  his  executors.  D  had  contributed  115,000.  At  his 
death  117,000  stood  to  his  credit,  and  remained  in  the  partnership 
until  it  expired,  31  October,  18S3.  Surviving  partners  continued  the 
business.  F  et  at.  examined  the  firm  books,  but  did  not  interfere  or 
participate  in  the  management.  In  Odlober,  1883,  A  sold  the  firm 
merchandise,  and  sued  surviving  partners  and  executors  of  D. — Judg- 
ment for  F  et  at.  D's  capital  remained  a  loan  to  the  firm.  Wild  v. 
Davenport,  7  A.  R.  295  (1886). 

A  fling  iti  the  capacity  of  executor  no  protcRion  as^ainst  liabilitv  as 
partner.  B,  C  et _al.,  partners  in  banking  company,  each  covenanted 
to  answer  for  business  until  his  executor  sold  his  shares,  or  his  bene- 

21.S 


^74-  Executors.  Pt.  2,  Ch.  4. 

ficiarit-s  became  proprietors.  B  died,  and  C  acTted  as  his  executor  in 
the  ilrm  business.  No  transfer  or  registration  of  B's  shares.  A 
liroughtbill  against  C  and  the  beneficiaries,  for  debt  contracted  after 
B  (bed. — Recovered.  The  avowal  of  his  capacity  does  not  exempt 
executor  from  individual  liability.  Labouchere  v.  Tupper,  ii  Moore 
P.  C.  198(1857). 

2.  If  executor  aHs  as  partner  under  will,  or  contract,  liable  as  partner. 
Stock  in  City  of  Glasgow  Bank  was  accepted  for  cesttiy  que  trust  by  A 
&  B,  who  had  the  shares  entered  to  them  as  trustees.  The  charter 
contained  no  limitation  of  liability,  and  the  bank,  which  was,  in  ef- 
fect, a  partnership,  failed.  A  &  B,  who  were  charged  as  contribu- 
tories  in  their  own  right,  applied  to  be  classed  as  representatives, 
and  charged  only  to  the  extent  of  the  fund. — Refused.  Liable  per- 
sonally, and  bank  could  not  accept  stockholders  with  limited  lia- 
bility. Muir  V.  City  of  Glasgow  Bank,  4  H.  L.  337  (1879). 


§74. 


3\\  as  murf]  aa  tl]c  fjrcctitor,  or  administrator,  replaces  fjis 
testator,  or  intestate,  ant)  incurs  tl)e  personal  anlr  unlimited 
liabilitn  of  a  partner,  tlje  amount  n)l)icl)  \]t  contributes  of  tl)e 
tiecebent's  estate  man  be  limiteti. 

The  law  is  on  the  lookout  for  the  personal  liability 
of  somebody,  but  is  satisfied  when  it  has  found  a  sub- 
stitute for  the  deceased  partner.  The  representative 
capacity  of  the  executor  is  ignored,  and  the  man  be- 
hind the  mask  succeeds  to  the  vacant  position.  Does 
he  necessarily  involve  the  whole  estate  in  the  busi- 
ness, as  the  partner  did  in  his  lifetime?  That  was  a 
consequence  of  the  partner's  personal  liability.  The 
natural  inference  is  that  the  whole  estate  is  embarked 
in  the  business,  as  that  corresponds  with  the  deceased 
partner's  liability  at  his  death. ^  But  at  that  epoch  a 
legal,  as  well  as  a  physical,  change  takes  place.  The 
dissolution  extends  to  the  partner's  legal  fundions. 
He  becomes  a  special,  and  his  executor  becomes  a 
general,  partner.-     The  recipients  of  the  estate  take 

216 


Pt.  2,  Ch.  4.  Executors.  §74. 

all  the  benefits,  and  the  executor  bears  all  the  bur- 
dens. The  law  makes  the  testator  a  special  partner 
in  the  firm.  As  such,  he  need  not  let  his  estate  re- 
main subject  to  the  risks  of  the  business,  but  may- 
withdraw  a  portion,  and  limit  the  amount  which  the 
executor  shall  employ  in  the  firm,'*  The  limit  may- 
be left  to  the  executor's  discretion,  which  is  then  per- 
sonal, and  cannot  be  exerted  by  any  one  else.  The 
executor  is  bound  by  the  testator's  diredlion,  and  only 
so  much  of  the  estate  will  be  charged  with  the  debts 
of  the  firm  as  the  testator  has  diredled  to  be  put  in  the 
business.  The  residue  will  be  distributed  without 
awaiting  a  termination  of  the  partnership.^  Any  con- 
tribution made  by  the  executor  in  excess  of  the  limit 
fixed  by  the  testator  is  a  breach  of  trust,  and  the  prop- 
erty so  contributed  may  be  recovered  from  the  firm  in 
preference  to  other  creditors.^  The  creditors  of  the 
firm  may  proceed  diredlly  against  the  testator's  estate 
for  satisfaction,  so  far  as  it  has  been  pledged  by  the 
contribution  for  the  firm  debts." 

Will  the  executor  be  reimbursed  out  of  the  deceased 
partner's  estate  for  the  losses  Avhich  he  has  incurred 
on  its  behalf?  The  right  to  indemnity  from  his 
estate  would,  at  least,  afford  the  executor  only  a  par- 
tial and  inadequate  relief.  His  liability  is  unlimited 
in  extent,  and  might,  as  it  did  in  the  Glasgow  Bank 
case,  sweep  away  the  executor's  fortune.  The  testa- 
tor's estate,  on  the  other  hand,  is  a  limited  fund,  and 
might  not  be  sufficient  to  make  up  the  loss,  or  meet 
the  outstanding  liabilities.  Even  this  modiatm  is 
taken  away  when  the  testator  leaves  a  specified  por- 
tion of  his  estate  in  the  firm.  The  appropriation  of 
a  part,  it  is  interpreted,  withholds  the  residue,  and  the 

217 


§74-  Executors.  Pt.  2,  Ch.  4. 

executor  is  not  allowed  indemnit}^  out  of  the  portion 
witlilield  by  the  testator.'  The  executor  risks  the 
only  fund  which  is  pledged  for  his  relief,  in  the  busi- 
ness, and  although  he  risks  it  by  the  testator's  com- 
mand, that  fa6l  does  not  found  a  claim  against  the 
residue  of  his  estate. 

The  settlement  in  distribution  of  an  interest  in  the 
testator's  estate  vests  the  allotment  in  the  beneficiary, 
and,  by  withdrawing  it  from  the  firm,  takes  away  the 
executor's  claim  for  reimbursement  for  any  subsequent 
loss,  out  of  the  share.*' 

The  creditors  of  an  executor  may  be  subrogated  to 
his  position,  and  assert  his  right  against  the  testator's 
estate.^  Their  claim,  however,  is  said  to  be  dependent 
upon  his  equity,  and  if  he  had  debarred  himself  from 
exerting  his  right,  or  forfeited  it,  they  are  precluded 
by  his  dereli6lion,  and  have  no  access  to  the  estate.^'' 
But  when  that  obstacle  is  removed,  the  claim  is  recog- 
nized as  a  diredl  right  against  the  testator's  estate, 
and  entitles  the  claimants  to  administration  as  cred- 
itors of  the  estate." 

1.  Contracl  to  coiiliiine  Jirtii,  in  spite  of  partner's  death,  prevents  his 
restriHinfi^  lyy  vjill  the  liability  to  a  part  of  his  estate.  B,  father,  C, 
son,  and  D,  son-in-law,  in  turning  over  stock  of  existing  business  to 
new  firm,  for  the  purpose  of  carrying  on  the  business,  provided,  by 
articles,  that  firm  should  not  be' dissolved  by  B's  death,  but  should 
be  continued  by  his  executor  until  expiration  of  term.  B  agreed  to 
contribute  12,500  cash,  but  stipulated  for  repayment  as  soon  as  firm 
could  spare  it,  and  for  interest  in  cash,  after  first  year,  on  aggregate 
contrilnition.  B's  contribution  amounted  to  about  ^41,000.  The 
firm  indebtedness  to,  at  least,  $85,000.  B  died  shortly  after  executing 
articles,  and  disposed  of  his  whole  estate  by  will,  leaving  all  to  C,  1-6 
for  himself  and  5-6  for  widow  and  daughters.  C,  acting  executor, 
continued  business  with  D,  and  pledged  assets  of  B's  estate  held  for 
beneficiaries,  to  A  for  discounts.  Firm  insolvent  at  expiration  of 
term. — Decree  for  A.  Contracft  charged  B's  entire  estate,  and  he 
could  not  restrict  his  liability  by  a  will.  Blodgett  v.  Am.  Nat.  Bank, 
49  Conn.  9(x88i). 

2.  The  Societas  leonina,  or  tvpe  of  an  impossible  partnership  at  the 
Civil  law. 

2r8 


Ft.  2,  Ch.  4.  Executors.  §74. 

3.  Partner  may,  oy  will,  cotitiniw  firm  and  rcstriil  the  liability  of  his 
estate  to  his  contribution.  B,  in  uSjo,  trading  with  his  son,  C,  as  B 
&  Co.,  by  will  directed  C  to  continue  the  business  of  B  &  Co.  until 
youngest  son  21,  or  for  shorter  period  if  business  unprofitable.  B 
charged  his  contribution  with  liabilities  of  firm  after  his  death,  but 
direAed  that  the  rest  of  his  estate  should  not  be  charged.  B  died,  in 
1872,  and  profits  were  made  and  distributed  to  beneficiaries  under 
the  will.  In  1877,  firm  became  insolvent,  and  A  appointed  assignee. 
The  debts  were  all  incurred  after  distribution  of  profits.  A  sued  B's 
legatees. — ^Judgment  for  defendants.  Jones  v.  Walker,  103  U.  vS.  444 
(1880). 

4.  Executor  reimbursed  only  out  of  testator's  contribution.  B,  test?. 
tor,  directed  C,  his  wife,  to  carry  on  his  business,  and  A,  his  trustee, 
to  advance  her  ^600,  taking  her  note  for  the  advance,  and  for  the 
value  of  his  stock.  He  made  C  and  A  his  executors.  C  incurred  au 
additional  debt  of  ^768,  55.  ^d.  to  B's  estate,  and  became  bankrupt. 
A  offered  to  prove  for  ^600,  for  f  1,367,  55.,  valuation  of  the  stock, 
and  for  ^768,  2s.  ^d. — Proof  of  first  two  items  rejeAed,  because  con- 
tributed by  testator's  dire6lion,  but  of  last  item  allowed,  because  in- 
demnified only  to  extent  of  capital  embarked  by  testator  in  business. 
Bx  parte  Garland,  10  Ves.  110(1804). 

Partner's  dispositioji  by  will  of  all  his  estate,  although  he  direBs 
co-partner  to  continue  firm  for  unexpired  term,  limits  liability  of  de- 
ceased par-tner's  estate  to  amount  contributed.  B  &  C,  by  articles,  in 
1836,  entered  into  partnership  for  two  years.  In  1837  B  disposed,  by 
will,  of  all  his  real  and  personal  estate,  adding  a  codicil,  that  C 
should  continue  firm  until  end  of  term.  B  died  in  1837.  C  carried 
on  business,  and  failed  before  expiration  of  period.  A  brought  bill 
against  C  and  against  B's  executor,  D,  on  note  of  C  &  Co.,  given  for 
debt  incurred  subsequent  to  B's  death.  B's  residuary  legatee,  inter- 
vened and  demurred,  on  ground  that  B  limited  liability  of  his  estate 
to  amount  contributed  to  C  &  Co. — Demurrer  sustained.  Burrell  v. 
Mandeville,  2  How.  560,  S.  C.  (1844). 

Will  -may  fix  period  of  liquidation,  and  limit  testator''  s  partnership 
liability  to  his  cofitribution  during  liquidation.  By  will,  B  dire<5led 
banking  business  of  B,  C  &  Co.,  with  its  present  capital,  to  be  con- 
tinued by  C,  surviving  partner,  for  2  years,  or  period  necessary  for 
liquidation,  testator's  profits  being  shared  by  his  beneficiaries,  and 
empowered  C  to  transact  business  as  if  B  were  living.  A,  holding 
certificate  of  deposit  made  after  2  years,  brought  bill  against  D,  ex- 
ecutor and  residuary  legatee,  and  C,  to  charge  B's  estate. — ^Judgment 
for  defendants.  B's  estate  liable  only  for  contribution.  Authority 
to  C  declaratory.    Brasfield  v.  French,  59  Miss.  632  (1882). 

5.  Executor's  pledge  of  assets  zuhich  testator  did  not  contribute  to  firm 
not  binding.  By  his  will,  B,  a  partner,  direcfled  C,  his  brother  and 
executor,  to  continue  the  firm,  and  represent  B's  share,  which  be- 
longed to  three  parties.  C  pledged  two  notes,  for  |;39,ooo  each  held 
by  B,  to  defendants,  for  loans  to  C  on  behalf  of  the  firm.  A,  B's  ad- 
iniuistra-i or  de  bonis  71011,  reclaimed  the  notes. — Recovered.  The 
pledge  of  assets  not  embarked  by  B  in  firm,  exceeded  C's  authority 
under  the  will.    Smith  v.  Ayer,  13  Otto  320.  S.  C.  (1879). 

Executor  does  -not  umke  co-executors  and  beneficiaries  partners  by 
continuing  testator's  estate  infirm  business,  nor  bind  them  by  pledging 
his  stock  for  the  business.  B,  father,  &  C,  son,  partners.  B  died, 
making  C,  D  ct  al.  executors.  I)  et  at.  empowered  C  to  a6l  for  B's 
estate.     C  continued  business  without  changing  firm  name,  and  used 

2  I  9 


S74- 


Executors.  Pt.  2,  Ch.  4. 

B's  property,  which  constitute<l  2-3  of  the  assets.  C  pledged  stock 
of  B's  estate  in  bank  E,  to  A,  for  loans  made  to  firm  business.  D  et 
al.  contested  A"s  claim,  and  E  refused  to  permit  transfer. — ^Judgment 
for  U  et  al.  Firm  dissolved  by  B's  death,  and  C  could  not  embark 
B's  estate  without  D  et.  al.'s  consent.  A,  who  knew  stock  pledged 
not  for  administration  of  B's  estate,  but  for  the  business,  not  a  bo}ia 
tide  holder.  I'irst  Nat.  Bank  of  Allegheny  v.  Farmers'  Deposit  Bank 
of  PitUburgh,  5  Central  Rep'r  505  (1S86). 

6.  Executor  liable  first,  and  then  testator's  estate.  By  will,  B  diredled 
C  his  widow,  to  carry  on  his  business,  unless  it  should  turn  out  un- 
profitable. His  executors  took  possession  when  it  proved  a  loss,  and 
A  claimed  payment  for  debts  incurred  by  C. — The  stock  acquired  by 
C  in  carrying  on  the  business  applied  first  to  payment  of  her  debts, 
and  the  deficiency  made  up  out  of  testator's  assets.  Hankey  v.  Ham- 
mock, I  Buck,  Cases  in  Bankruptcy,  210;  3  Madd.  14811.  (b)  (1786). 

7.  Creditors  of  executors  reimbursed  only  out  of  testator' s  contribution. 
B,  testator,  directed  C,  his  wife,  to  carry  on  his  business  until  young- 
est child  twenty-one,  and  gave  her  the  use  of  his  stock  in  trade.  He 
authorized  1),  liis  executors,  to  increase  the  capital  in  the  business  in 
their  discretion.  D  renounced,  and  C  took  administration.  She 
failed,  and  her  creditors  sought  to  come  in  with  B's  creditors  upon 
his  estate,  or,  at  least,  be  substituted  for  those  whom  she  had  paid 
out  of  B's  stock. — Refused.  None  of  B's  estate  liable,  except  the 
stock  diredted  to  be  put  in  business  by  the  will.  Cutbush  v.  Cutbush, 
I  Beav.  185  (1838). 

8.  Testator  cannot  exonerate  tlie  executor  from  liability.  B  gave  her 
daughters,  C  and  D,  each  a  legacy  of  _;^2,ooo  for  life,  with  remainder 
to  legatee's  children.  Testatrix,  who  held  Glasgow  bank  stock,  gave 
E  and  F,  trustees,  express  power,  in  their  discretion,  to  retain  the 
shares  without  any  personal  liability  for  loss.  E  and  F,  who  allotted 
the  stock  to  C,  and  retained  it,  with  her  concurrence,  as  an  invest- 
ment, claimed  indemnity  for  the  liability,  which  they  incurred  as 
partners,  from  D. — Disallowed.  Distribution  of  assets  severed  the 
trust,  and  indemnity  limited  to  investment  allotted  to  C.  Liability 
resulted  from  act  of  E  and  F,  and  not  from  anything  done  by  D,  who 
was  not  interested  or  compelled.  Frazer  v.  Murdock,  6  H.  L.  855 
(18S1). 

9.  Reimbursement  limited  to  amount  authorized  by  will,  and  subjeB 
to  that  amount,  beneficiaries  may  claim  against  creditors  of  executor. 
No  equity  exists  in  a  legatee  over  a  creditor,  and  the  intermediate 
barrier  of  an  executor's  trade,  W'hich  is  only  a  trust,  does  not  prevent 
the  recourse  over.  B  directed  his  executor,  C,  to  continue  testator's 
busines  of  a  dairyman  for  the  benefit  of  his  family.  C  took  posses- 
sion in  1870,  and  carried  on  the  business  in  his  own  name.  In  1876 
he  surrendered  the  lease,  and  obtained  a  renewal  in  his  own  name, 
of  the  place  of  business.  In  1879  he  pledged  the  lease,  for  a  loan,  to 
A,  who  did  not  know  of  C's  being  an  executor.  C  used  ^130  for 
himself,  and  ^66  for  the  estate.  D,  the  testator's  son,  claimed  ad- 
ministration. A  recovered  judgment  against  C,  and  levied  on  the 
stock  and  leasehold.  The  parties  consented  to  a  sale  without  preju- 
dice. A  gave  up  the  lease,  to  effedl  the  sale,  but  claimed  his  debt 
out  of  the  proceeds.  His  argument:  No  notice  of  a  trust,  and  enti- 
tled to  take  the  property  as  C's  own.  C,  also,  had  authority,  as  ex- 
ecutor, to  pledge  the  leasehold,  and  A  could  not  be  deprived  of  his 
legal  possession  without  payment. — Beneficiaries'  equity  paramount 


Pt.  2,  Ch.  4.  Executors.  §75. 

to  A's. — Executor  personally  liable  for  contiuuing  testator's  business, 
though  entitled  to  indemnity  from  his  estate,  if  continued  by  his 
will,  for  debts  incurred  in  carrying  on  the  business  for  the  testator. 
C  acquired  no  title  by  trading  in  his  own  name,  and  beneficiaries' 
acquiescence  related  to  his  title  as  trustee.  Executor  binds  assets 
only  if  he  deals  with  them  as  executor.  No  execution  against  him 
could  seize  the  trust  estate,  except  for  ^66  used  on  account  of  it. 
Renewal  of  the  lease  enured  to  the  trust,  and  cestuy  que  trusts^ 
equity  attached  at  that  date.  A's  equity  arose  with  the  pledge. 
Court  could  decree  a  sale  of  the  freehold  without  possession  of  the 
lease,  by  adding  a  condition  that  the  holder  was  bound  by  the  sale. 
In  re  Morgan.     Pilgrem  v.  Pilgrem,  i8  Ch.  D.  93  (1S81). 

10.  Creditors  of  executor  no  right  to  estate,  except  through  executor. 
If  executor  bars  his  right  of  recourse  to  the  testator's  estate,  credit- 
ors who  claim  through  him  also  excluded.  Unless  the  executor  has 
intercepted  the  equity  by  a  default,  which  bars  his  right  to  indemnity 
when  it  exists.  If  he  is  excluded  from  the  estate  by  his  miscondu(ft, 
the  creditors  who  are  subrogated  to  his  claim  are  unable  to  get 
access  to  the  testator's  estate.  By  will,  B  dire<5ted  C,  his  executor, 
to  let  D,  a  nephew,  carry  on  business,  under  C's  supervision,  with 
D's  share,  1-8  of  B's  estate,  and  gave  D  option  at  majority  to  take 
stock  or  bring  it  into  hotchpot.  C  carried  on  the  business  himself, 
became  in  default  to  the  estate,  and  insolvent.  A,  creditor,  sued  C 
and  claimed  equitable  lien  on  D's  quota  employed  by  B's  direction 
in  trade. — No  standing  except  by  bill.  But  C's  default  barred  his 
right  and  A's  equity  to  the  portion  of  B's  estate  embarked  in  trade. 
In  re  Johnson,  15  Ch.  D.  548  (1880). 

11.  Creditor  of  executor  entitled  to  administration  of  testator' s  estate. 
By  will,  B  gave  all  his  estate  to  C,  executors  and  trustees,  to  permit 
D,  his  widow,  to  employ  the  rents  and  profits  in  carrying  on  his  busi- 
ness of  draper  during  her  lifetime.  They  renounced,  and  she  took 
administration  c.  t.  a.,  continued  the  business,  and  died  insolvent. 
A,  her  creditor,  claimed  administration  on  B's  estate. — Entitled,  as 
creditor  in  equity  of  B.  Fairlamb  v.  Percy,  3  P.  &  M.  217  {1875). 


§75. 


<l\)t  intention  of  tl]e  partner,  an^  of  l]is  f iterator,  determine 
l)ou),  an^  bp  tuljoni,  tl)e  business  sl)all  be  tarrieti  on  after  a 
partner's  ^ta\\).  ®l)e  intention  must  be  ascertainei),  as  in  all 
tases,  bn  tije  acts  ani)  declarations  of  tl)e  parties. 

If  the  executor  is  unwilling  to  follow  tlie  directions 
of  the  testator,  and  carry  out  his  plans,  he  can  re- 
nounce the  office,  and  avoid  the  risks  incident  to  the 
business.     If  he  does  not  i-efuse  to  undertake  the  task, 


5-.r.  Executors.  Pt.  2,  Cii.  4. 

but  assumes  it,  his  position  must  be  fixed.  Whether 
he  makes  himself  a  partner,  or  not,  can  be  determined 
only  as  the  membership  of  any  individual  partner  is 
ascertained.  The  fadl  that  the  executor  derives  no 
benefit  as  a  partner,  but  incurs  loss  as  if  he  were  such, 
although  a  strong  argument  against  his  being  a  part- 
ner is  not  conclusive.  He  might  be  willing  to  under- 
take the  risk,  or  he  might  do  acT:s  which  w^ould  charge 
him  as  a  partner,  in  spite  of  his  will. 

In  the  attempt  to  solve  the  difficulty  of  the  situation, 
this  view  has  been  taken:  The  surviving  partners 
continue  the  business,  although  the  firm  is  dissolved 
by  the  death  of  a  partner,  and  no  break  is  made  in  the 
continuity  of  the  firm  transadlions.  The  deceased 
partner  does  not  withdraw  his  capital,  or  direct  the 
business  to  be  wound  up;  on  the  contrary,  he  leaves 
his  interest  undisturbed  in  the  business,  which  he 
wishes  to  preser\'e,  in  order  to  secure  his  share  of  the 
profits.  He  appoints  an  executor  to  take  charge  of 
that  interest,  and  direcfhs  him,  in  effecft,  not  to  inter- 
fere with  the  continuation  of  the  business  by  the  sur- 
viving partners.  The  executor  represents  the  de- 
ceased's interest.  The  testator  meant  to  withdraw 
from  the  business  as  a  partner,  but  he  also  meant  to 
leave  his  interest  invested  in  the  business,  which  he 
refrained  from  destroying,  in  order  to  keep  his  invest- 
ment produ6live.  By  this  arrangement  he  ceases  to 
be  a  partner,  and  becomes  a  lender,  receiving  a  share 
of  profits,  in  lieu  of  interest  upon  his  capital.^ 

It  is  far  more  natural  for  a  testator  to  appoint  an 
executor  to  take  charge  of  an  investment  than  to  un- 
dertake a  partnership,  and  carry  all  the  liabilities  of 
the  business  upon  his  shoulders,  out  of  pure  friend- 


Pt.  2,  Ch.  4,  Executors.  §75. 

ship  for  tlie  testator.  In  such  a  case,  the  only  thing 
which  the  executor  could  own  in  the  business  would 
be  its  debts.  As  it  seems  almost  incredible  that  any 
executor  would  assume  the  task,  under  such  circum- 
stances, he  should  not  be  made  a  partner  by  construc- 
tion of  law.'- 

There  is  one  way,  however,  in  which  he  can  acft  with 
safety,  and  escape  the  liabilities  of  a  partner.  He  can 
enter  into  a  special  partnership,  and  make  the  testa- 
tor's estate  his  contribution.  The  statute  will  prote6l 
him,  and  the  decedent's  estate  will  be  in  the  same  po- 
sition as  if  he  had  assumed  the  liabilities  of  a  partner.^ 
There  is  no  occasion  for  his  incurring  any  liability 
on  behalf  of  the  estate. 

1.  If  executors  do  not  aB,  but  lend,  under  zaill,  estate  not  liable  nor 
executors  partners.  B,  C  &  D  were  in  partnership,  as  audlioneers. 
Articles  provided  that  firm  should  continue  for  seven  years,  and  if  a 
partner  died  during  period  his  executors  should  take  his  share.  B 
did  die,  and  subsequently,  during  term,  A  commissioned  firm  to  sell 
mill,  and  sued  B's  executors  for  the  proceeds. — Not  liable,  because 
no  contra(5l  by  executors.  Holme  v.  Hammond,  L.  R.  7  Exch.  218 
(1872). 

A,  B  &  C,  partners,  agreed  that  A  might  nominate  a  partner  on  his 
death;  that  ^100,000  of  his  share  should  be  continued  in,  and  be 
considered  part  of,  the  partnership  effedls;  that  surviving  partner 
should  give  bond,  to  pay  said  amount,  with  interest,  and  permit  A's 
executors  to  inspedl  books.  A  died,  and  his  executors  assigned  his 
interest  to  B  &  C,  taking  bond  of  indemnity  against  debts.  B  &  C 
became  bankrupt,  and  A's  executors  proved  for  amount  due. — Al- 
lowed. A's  estate  not  embarked  in  business,  but  a  creditor.  Ex 
parte  Edmunds,  11  D.  F.  &J.  488  (1S62). 

2.  Executor,  who  leaves  testator's  capital  in  firm,  not  liable  as  part- 
ner because  he  fails  to  compel  innnediate  liquidation.  B,  C  &  D 
traded  as  B,  C  &  Co.  B  died,  and  his  executor,  E,  left  with  them  B's 
capital,  which  entitled  his  beneficiaries  to  share  the  profits.  E  knew 
that  business  was  advertised  to  continue,  but  took  no  part  in  its  man- 
agement, and  repeatedly  urged  C  and  D  to  close  the  business.  The 
firm  became  insolvent,  and  A  sued  E,  as  co-defendant,  for  debt  con- 
tracted since  B's  death. — ^Judgment  for  E.  Avery  v.  Myers,  60  Miss. 
368(1882). 

3.  For  fixed  term  dissolved  by  death.  A  &  B  contradled  partnership 
for  10  years.  Articles  gave  heirs,  or  representatives  of  deceased 
partners,  3  months  to  eledl  to  continue  association,  as  general  or 
special  partnership;  if  no  eledlion,  a  special  partnership.  A  died; 
his  representatives  made  no  election  within  3  months,  and  brought 

223 


%ye.  Business  Contracts.  Pt.  2,  Ch.  5. 

bill  for  account  and  receiver.  B  denied  right  to  dissolve  before 
expiration  of  term. — Firm  could  not  continue  as  special  partner- 
ship, because  statutory  requirements  not  observed.  Representa- 
tives not  having  eledled  to  continue  general  partnership,  death 
operated  as  a  dissolution.  Surviving  partner  entitled  to  wind  up 
business.   Jacquiu  v.  Buissou,  ii  How.  Pr.  3S5,  N.  Y.  (1S55). 


-O- 


CHAPTER  V. 

NATURE  OF  THE   CONTRACT   MADE  BY  THE  FIRM  IN 

TRANSACTING  ITS  BUSINESS  WITH 

THIRD   PERSONS. 

§76. 

(Elje  partners  ma-q  be  railed  bn  a  colkrtbc  name  for  conoe- 
ntence,  eircept  in  legal  proceedings. 

The  firm  is  not  recognized  in  law  as  a  person,  and 
can  neither  sne  nor  be  sued.^  The  firm  is  simply  an 
aggregate  of  individnal  partners.  They  are  the  par- 
ties who  must  be  sued.'  One  partner  cannot  sue  for 
the  firm  claim ;  not  even  if  he  is  the  assignee  of  his  co- 
partner's interest.^  All  the  original  promisees  must 
join  as  plaintiffs.^  Nor  can  one  partner  be  sued  alone, 
but  all  within  the  reach  of  process  must  join  as  de- 
fendants.* 

If  the  firm  is  organized  as  an  unincorporated  asso- 
ciation, the  articles  may  provide  for  suing  and  being 
sued  in  the  company  name,  or  in  the  name  of  trustees 
appointed  to  condu61;  the  business.*^  This  is  an  arange- 
ment  binding  between  the  partners.  The  firm,  in  its 
colledlive  name,  or  the  trustees,  may  sue  or  be  sued  by 

224 


Pt.  2,  Ch.  5.  Business  Contracts.  §76. 

a  partner,  provided  the  claim  does  not  involve  partner- 
ship accounts.7 

I.  Finn  no  standitig  as  a  party  in  U.  S.  court.  A  &  Co.  averred 
themselves  citizens  of  Peunsylvauia,  and  petitioned  for  removal  of 
cause  from  Iowa  state  court. — Remanded.  Citizenship  of  each  partner 
requisite  to  give  jurisdi(5lion.  Adams  v.  May,  27  Fed.  R.  907,  U.  S. 
Cir.  Court  (1886). 

California.  "Associates  may  be  sued  by  name  of  Association." 
"When  two  or  more  persons,  associated  in  any  business,  tiansatfl 
"such  business  under  a  common  name,  whether  it  comprises  the 
"names  of  such  persons  or  not,  the  associates  may  be  sued  by  such 
"common  name,  the  summons  in  such  case  being  served  on  one  or 
"more  of  the  associates;  and  the  judgment  in  the  adlion  shall  bind 
"the  joint  property  of  all  the  associates,  in  the  same  manner  as  if  all 
"had  been  named  defendants  and  had  been  sued  upon  their  joint 
"liability."  Cal.  Codes  and  Stats.,  1876,  ^{^388-389. 

Common  law  form,  a  suit  against  individual  partners  in  Calif 07-nia. 
A  sued  B  and  C,  trading  as  B  Bros.,  defendants,  served  B,  and  took 
judgment  by  default  against  him  for  want  of  appearance.  A  moved 
to  amend  judgment,  and  make  it  a  judgment  against  firm,  in  order 
to  issue  execution  against  firm  assets,  as  well  as  separate  property  of 
B. — Refused.  Suit  against  individual  partners.  Judgment  author- 
ized by  ^414,  and  other  partners  might  be  brought  in  under  II989- 
994.   Fedor  v.  Epstein,  10  Pacif  R.  785  (1886). 

Partnership  description  surplusage.  A  and  B,  having  sued  as  part- 
ners trading  as  B  &  vSons,  and  obtained  judgment  against  C,  brought 
suit  to  set  aside  prior  judgment,  and  sale  under  it  to  D,  on  account 
of  fraud.  Defence:  No  publication,  as  required  by  Cal.  C.  C,  ^2466 
^2468. — Judgment  for  plaintiffs.  Partnership  description  surplusage. 
Lee  V.  Orr,  11  Pac.  R.  745  (18S6). 

Iowa.  "  Suits  may  be  brought  by  or  against  a  partnership  as  such, 
"or  against  all  or  either  of  the  individual  members  thereof,  and  a 
"judgment  against  the  firm,  as  such,  may  be  enforced  against  the 
"partnership  property  or  that  of  such  members  as  have  apppearedor 
"been  served  with  notice."   Iowa  code  of  1884,  '/2553. 

Nebraska.  "Associations — F"irms,  how  named."  "Any  company 
"or  association  of  persons  formed  for  the  purpose  of  carrying  on  any 
"trade  or  business,  or  for  the  purpose  of  holding  any  species  of 
"property  in  the  state,  and  not  incorporated,  ma}-  sue  and  be  sued 
"by  such  usual  name  as  such  company,  partnership,  or  association 
"may  have  assumed  to  itself  or  be  known  by,  and  it  shall  not  be 
"necessary  in  such  case  to  set  forth  in  the  process  or  pleading,  or  to 
"prove  at  the  trial,  the  names  of  the  persons  composing  the  com- 
"pany."    Compiled  Statutes  of  1885,  \2A,. 

"  Process — Service."  "  Process  against  any  such  company  or  firm 
"shall  be  served  by  a  copy  left  at  their  usual  place  of  doing  business 
"within  the  county,  with  one  of  the  members  of  such  company  or 
"firm,  or  with  the  clerk  or  general  agent  thereof,  and  executions 
"is.sued  on  any  judgments  rendered  in  such  proceedings  shall  be 
"levied  only  on  partnership  property."    Ih.  i/,25. 

"  Individual  propert}- — How  subje<5led."  "If  the  plaintiff,  in  any 
"Judgment  so  rendered  against  any  company  or  partnership,  shall 
"seek  to  charge  the  individual  property  of  the  persons  composing 
"such  company  or  firm,  it  shall  be  lawful  for  him  to  file  a  bill  in 
"chancery  against  the  several    members    thereof,   setting  forth  his 

225 


§76.  Business  Contracts.  Pt.  2,  Ch.  5. 

"judgment  and  the  insufficiency  of  the  partnership  property  to  sat- 
"isfy  the  same,  and  to  have  a  decree  for  the  debt,  and  an  award  of 
"  execution  a<;ainst  all  such  persons,  or  any  of  them,  as  may  appear  to 
"  have  been  members  of  such  company  by  consent  of  firm."  lb.  i<27. 

Firm  a  partv  only  by  force  of  statute.  Robert  Dick  &  Son  obtained 
judgment  against  company  B,  in  Nebraska.  No  resident  of  county 
offered  as  security  for  costs,  nor  proof  that  firm  carried  on  business, 
or  owned  property  in  the  state  — Reversed.  Compliance  with  statu- 
tory requisitions  necessary  to  maintain  suit.  B.  &  M.  R.  R.  v.  Dick,  7 
Neb.  242  (1878). 

Common  laiu  right  unaffeRed  by  statute.  A,  B  &  C,  late  trading 
as  A,  B  &  Co.,  brought  suit  against  D.  Demurrer:  Plaintiffs  no  ca- 
pacity to  sue  without  showing  residence  and  business,  or  property,  in 
state. — Judgment  for  plaintiff  on  demurrer  affirmed.  Smith  v.  Gregg, 
9  Neb.  212  (1879). 

Firm  assets  must  be  exhausted  before  execution  against  separate 
partners.  A,  who  recovered  a  judgment,  in  Wyoming  Territory, 
against  B  and  associates,  and  also  a  judgment  against  B,  C  &  Co., 
sued  B,  C,  D,  E,  F  and  G,  in  Nebraska,  upon  said  judgments,  as  part- 
ners in  both  firms.  No  proof  of  Wyoming  law,  or  of  insufficiency  of 
firm  assets. — Judgment  for  defendants.  Wyoming  law  assumed  to  be 
like  Nebraska,  and  firm  property  primary  fund.  Ruth  v.  Lowrey,  10 
Neb.  260  (1880). 

Non-observance  of  statutory  requisitions  cured  by  judgment.  A  & 
B,  non-resident  firm,  attached  corporation  and  its  stockholders,  in 
Nebraska.  No  objection  raised,  in  any  form,  to  plaintiff's  capacity 
and  judgment  recovered.  On  appeal,  objedlion  raised. — Affirmed. 
ObjeAion  waived.    Cady  v.  Smith,  12  Neb.  628  (1882). 

Connecticut.  "  In  mesne  process  by  or  against  a  co-partnership, 
"it  shall  not  be  necessary  to  insert  the  names  of  the  partners,  pro- 
"  vided  the  partnership  name  is  stated ;  and  the  plaintiff  shall  have 
"the  right,  within  the  first  three  days  of  the  court  to  which  the  pro- 
"  cess  is  returnable,  to  amend  it,  without  costs,  by  inserting  the  name 
"of  the  partners;  and  writs  returnable  before  a  justice  of  the  peace 
"may  be  amended  in  the  same  manner,  at  any  time  before  the  plead- 
"  ings  are  closed."  Conn.  Stats.,  1875,  p.  400,  |i2. 

2.  Partners  must  sue  by  Christian  ttam.es.  A&  B  recovered  judgment. 
— Error.  No  Christian  names.  Seely  v.  Schneck,  Pen.  75  (1806); 
McCredy  V.  Vanneman,  Pen.  870  (1811);  Crandall  v.  Denny,  Pen. 
137  (1806)  ;  Burns  v.  Hall,  Pen.  984  (1812).  Though  no  evidence 
that  plaintiffs  had  any  Christian  names.  Tomlinson  v.  Burke,  5  Hal. 
295,  N.J.  (1829). 

3.  Interest  of  partner  in  a  claim  cannot  be  so  assigned  to  co-partner, 
that  he  can  sue  for  the  debt  in  his  own  name.  A  sued  B's  adminis- 
trators, on  implied  assumpsit,  for  professional  services  rendered  B 
between  1S55  and  1880.  During  the  25  years,  A  had  been  a  partner 
in  three  law  firms,  which  extended  nearly  through  the  entire  period. 
A  was  assignee  of  the  interests  of  his  late  co-partners.  B  had  paid  A 
his  fee  for  conducing  trials  and  controversies  on  the  settlement  of 
each  transaction.  No  pleadings  were  filed.  Defendant's  points : 
Statute  of  limitations,  and  plaintiff's  suing  alone.  VerdiA  for  A, 
^7,000,  reduced  by  court  to  135,000. — Judgment  reversed.  A  could 
not  join  with  his  cause  of  adlion  claims  for  which  he  could  not  sue  in 
his  own  name.  A  could  not  recover  for  his  services  as  a  whole,  but 
only  on  a  quantum  meruit^  as  the  right  to  compensation  accrued; 
•which,  in  the  absence  of  agreement,  would  be  from  year  to  year, 
like  any  hiring.     A's  claim  barred  at  all  events,  except  for  last  six 

226 


Pt.  2,  Ch.  5.  Business  Contracts.  §76. 

years,  Mosgrove  v.  Golden,  5  Out.  605,  Pa.  (1882) ;  citing  Horbach  v. 
Huey,  4  Watts  455,  Pa.  (1835). 

4.  Suit  in  name  of  claimants.  Claim  by  A,  and  others,  for  debt  which 
B  owed  A. — No  judgment.  Though  A  might  be  partner,  or  co-owner 
with  others,  claim  should  show  cause  of  adlion  in  plaintiffs.  Autin  v. 
Towusend,  Pen.  744  (181 1). 

5.  All  partners  must  be  joined,  unless  out  of  jurisdiBion.  A  &  B 
summoned,  but  C  ignored. — ^Judgment  reversed.  All  may  be  sued, 
but  non-served  must  be  out  of  jurisdidlion.  Ford  v.  Munson,  i  South. 
93  (1818);  Smith  V.  McDonald,  i  South.  103  (1818). 

6.  Procedure  ;  joinder  0/ partners.  A  subscribed  to  stock  of  unincor- 
porated society,  under  articles  which  vested  whole  power  of  the  body 
in  trustees.  Trustees  sued  him  for  subscription.  Defence  :  a  part- 
nership, and  all  stockholders  should  have  been  joined  as  plaintiffs. 
— Though  a  partner,  he  was  bound  by  his  contrail,  which  empow- 
ered trustees  to  sue.  Cross  v.  Jackson,  5  Hill  478,  N.  Y.  (1843),  rely- 
ing on  Radenhust  v.  Bates,  11  Moore  421  ;    3  Bing.  463. 

7.  Agreejnent  of  partners  enables  them  to  sue  a  partner  in  name  of  a 
cotnpany,  and  his  plea,  if  in  bar,  anticipates  their  case,  which  might 
shozu  a  cause  ofaElion  independent  of  firm  accounts.  B,  C  et  al.,  trad- 
ing in  partnership  as  a  company,  agreed  to  sue  and  be  sued  in  its 
name,  A.  Assumpsit  by  A  against  B,  for  merchandise.  Plea  in  bar  : 
Unincorporated  company  can't  sue,  nor  can  partner  sue  co-partner. — 
B  estopped  by  his  agreement  to  deny  A's  right  to  sue,  and  evidence 
might  disclose  at  the  trial  a  trausa<5lion  which  did  not  involve  part- 
nership accounts.  Manufadl'g  and  Mer.  Co.  of  Sandusky  v.  Schoolly, 
Tappan  223,  O.  (1818). 

Must  an  infant  partner  be  a  party  to  the  a(5lion  ?  It 
is  admitted  that  an  infant  partner  cannot  be  charged 
as  a  co-defendant.  The  requirement,  that  all  parties 
to  a  joint  contrail  must  be  made  parties  to  the  a6lion, 
is  relaxed  in  this  instance,  and  the  infant,  though  a 
co-promissor,  is  treated  as  a  cypher.  It  has  been  held 
that  an  infant  partner  must  be  made  a  co-plaintiff,  be- 
cause of  his  interest  in  the  business,  and  of  a  minor's 
privilege  of  enforcing  contrails  beneficial  to  himself.'^ 
This  is  taking  only  the  plaintiff's  side  in  view.  The 
defendant  might  set  up  a  counter-claim,  and  obtain 
judgment  upon  it,  against  the  plaintiff.  The  effe6l 
would  be  to  charge  the  infant  for  a  firm  debt  when  he 
is  exempt  from  liability  for  it. 

8.  Infant  partner  must  join,  unless  a  nominal  partner.  A  &  Son 
traded  as  bankers.     A,  alone,  sued  C,  a  customer,  for  the  amount  he 

227 


§76.  Business  Contracts.  Pt.  2,  Ch.  5. 

had  overdrawn  his  account.  C  pleaded  non-joinder  of  the  sou,  who 
was  a  minor. — Sustained,  in  default  of  proof  that  the  son  had  no 
property,  or  interest,  as  a  partner,  in  the  firm.  Teed  v.  Elworthy,  14 
East  210  (181 1 ). 

Infant  partner  may  join  as  co-partner  in  a  suit  for  money  lent.  B, 
an  adult,  &  C,  an  infant,  were  in  partnership.  A,  C's  father,  and  B 
sued  I)  for  a  loan  made  to  D  by  I?  &  C. — Judgment  for  D.  He  made 
no  contracl  with  A,  and  C  is  entitled,  in  a  suit  for  his  benefit,  to  be 
co-plaintiff  with  B  by  the  contracl  of  partnership,  which  is  not  void, 
but  only  voidable.  Osburn  v.  Farr,  42  Mich.  134  (1S79). 

Must  a  uominal  partner  be  j  oined  as  plaintiff  ?  The 
answer  depends  upon  the  manner  of  the  holding  out. 
If  the  nominal  partner  is  held  out  with  the  knowledge 
and  concurrence  of  the  a(5lual  partners,  the  defendant 
may  compel  his  joinder  as  co-plaintiff,  in  order  to  make 
available  any  set-off  the  defendant  might  have  against 
all  the  partners,  including  the  nominal  partner."  If, 
on  the  other  hand,  the  nominal  partner  held  himself 
out  without  the  knowledge  or  concurrence  of  the  a6lual 
partners,  the  defendant  could  not  compel  his  joinder  as 
co-plaintiff,  unless  such  nominal  partner  had  a(?ted  as 
the  agent  of  the  a6lual  partners  in  the  transaction  out 
of  which  the  suit  arose. 

9.     Supra  I69,  note  21.* 

Should  a  dormant  partner  be  a  party  to  the  ac1:ion  ? 
He  may  be  sued  with  the  ostensible  partner.""  The 
defendant  may  compel  his  joinder  as  a  co-plaintiff, 
because  he  is,  in  fa6l,  a  party  in  interest.  Moreover, 
as  the  ostensible  partners,  when  sued  alone,  may,  with 
the  dormant  partner's  consent,  set-off  his  claim  against 
the  plaintiff,  b}-  parity  of  reasoning  the  defendant  to 
a  suit  by  the  ostensible  partners,  should  be  permitted 
to  set-off  the  full  amount  of  a  claim  which  he  might 
have  against  them,  together  with  the  dormant  part- 
ner,'^ although  the  obligation  Avas  not  incurred  in  the 
course  of  the  firm  business.  But  if  this  be  not  ad- 
mitted, the  defendant  certainly  has  the  right  to  set- 

228 


Pt.  2,  Ch.  5.  Business  Contracts.  ^y6. 

off  such  proportion  of  his  counter-claim  as  corresponds 
to  the  number  of  ostensible  partners.  But  as  the  ac- 
tion is  really  prosecuted  for  the  benefit  of  all,  includ- 
ing the  dormant  partner,  the  defendant  should  be  en- 
titled to  compel  his  joinder,  in  order  that  the  entire 
set-off  may  be  made  available.  The  ostensible  part- 
ners cannot  compel  a  firm  creditor  to  make  the  dor- 
mant partner  a  co-defendant.  They  are  liable  on  the 
contraA  as  made.'^  In  England,  the  failure  to  plead 
the  non-joinder  of  the  dormant  partner  in  abatement, 
is  treated  as  an  eleAion,  although  the  defendant  did 
not  know  of  his  connexion  with  the  firm." 

10.  Dormant  liable  zvith  ostensible  partner.  B  bought  merchandise. 
A  sued  B  &  Co.  for  price.. — Recovered.  Crary  v.  Williams,  2  Ohio 
65  (1825). 

11.  Dormant  may  sue  as  surviving  partner^  and  defendant  sei-ojf firm 
debt.  A  dormant  and  B  ostensible  partner.  C  gave  B  note  for  mer- 
chandise. B  died,  and  A  sued  C  on  the  note.  He  set-off  firm  debt 
to  him. — Adlion  maintained.  Set-off  against  A,  as  surviving  partner. 
Beach  v.  Hayward,  10  Ohio  455  (1841). 

12.  Unknown  dormant  partner  need  not  be  joined  as  co-defendant.  A 
sued  B  on  his  warranty  of  two  horses,  sold  in  his  own  name  to  A, 
who  did  not  know  C  was  a  dormant  partner.  Defence:  Non-joinder 
of  C. — Recovered.  Contrail  with  B,  and  A  need  not  join  C  as  co- 
defendant,  because  he  did  not  contrail  with,  or  know  C  was  B's  dor- 
mant partner.  Cookingham  v.  Tasker,  2  Keyes  454,  N.  Y.  (1866). 

Dorjiiant  partner  need  not  be  wholly  unknozvn  and  inaRive.  B,  C 
and  D  did  business  as  B  &  C.  A6live  members  never  stated  that  D 
was  a  partner,  and  he  rarely  appeared  at  the  store,  though  he  ad- 
mitted, in  borrowing  money  for  the  firm,  that  he  was  a  partner;  but 
his  conneilion  was  not  generally  known  in  the  community.  Busi- 
ness cards,  with  his  name  as  a  partner,  were  printed,  but  not  issued. 
A,  who  was  agent  of  the  firm,  and  ignorant  of  D's  membership,  sued 
B  &  C.  Defence:  Should  have  joined  D. — Recovered,  because  D  a 
dormant  partner,  and  unknown  when  advance  made.  Dormant 
partner  need  not  studiously  conceal  his  conneilion,  nor  wholly  ab- 
stain from  the  business,  nor  be  absolutely  unknown  as  a  partner. 
North  v.  Bloss,  30  N.  Y.  374  (1S64). 

Money  paid  to  one  partner,  with  knozvledge  that  there  were  other 
partners,  gives  right  to  a  separate  aHion.  B,  C  &  D  bought  coal 
land,  for  |i7,ooo.  B  employed  E  to  solicit  A  to  join  them  in  buy- 
ing the  land.  E  represented  that  the  price  was  150,000,  and,  on 
that  basis,  A  contributed  |;i,ooo;  f4oo  would  have  been  his  quota  if 
price  |i 7,000.  A  sued  B  for  obtaining  money  on  false  pretence,  and 
for  money  had  and  received.  Defence :  C  and  D  should  be  co- 
defendants  in  assumpsit,  as  they  received  a  portion. — Recovered. 
Count  for  tort  disregarded.     C  and  D  need  not  be  joined,  because, 

229 


§76.  Business  Contracts.  Pt.  2,  Ch.  5. 

like  dormant  partner,  unknown  to  A.     Lesley  v.  Wiley,  47  N.  Y.  648 
(1872). 

13.  Kendall  v,  Hamilton,  infra  \  77,  n.  3. 

EnacSliiient  of  rule  that  parties  in  interest  must  join 
makes  it  inflexible.    N.  Y.  Code  of  Procedure,  §iiii. 

J  )or)nant  partner  must  join  as  co-plaintiff.  A  sued  C  for  firm  claim. 
Defence:  Non-joinder  of  dormant  partner,  B. — Judgment  for  C.  Code 
requires  joinder  of  all  parties  in  interest.  Secor  v.  Keller,  4  Duer  414 
(iS55)- 

Should  a  special  partner  be  a  party  to  the  allien? 
He  need  not  join,  though  he  may  do  so,  if  he  chooses 
on  account  of  his  ultimate  interest  in  the  disposition 
of  the  firm  assets  upon  dissolution/^  There  is  no 
reason  to  join  him  as  co-defendant,  because  his  lia- 
bility is  limited  to  his  interest  in  the  firm  assets,  and 
may  be  seized  to  satisf}^  a  j  udgment  against  tlie  gen- 
eral partners. 

14.  special  partner  a  proper,  though  not  a  -necessary,  party  to  firm  suits. 
Firm  creditors  sued  general  partners  for  injuncflion  and  receiver. 
Defence:  Non-joinder  of  special  partner. — Decree.  Notwithstanding 
statute  direcfts  suits  to  be  brought  in  name  of  the  general  partners, 
the  special  partner  is  a  proper  party,  because  he  has  an  interest  in 
the  ultimate  disposition  of  firm  property,  but  not  a  necessary  party, 
because  he  holds  no  firm  property.  Schulten  v.  Lord,  4  E.  D.  Smith 
206  (1855). 

If  trading  under  a  fictitious  name  is  made  a  penal 
offence  by  statute,  can  the  firm  recover  on  its  con- 
trails ?  It  is  probable  that  the  firm  cannot  sue  if  the 
contradl  in  question  was  made  in  the  course  of  its 
business/^  But  if  the  contradl  is  merely  incidental  to 
the  business  of  the  firm,  and  of  such  a  nature  that  no 
credit  could  have  been  given  to  the  firm  name,  it  is 
not  invalidated  by  the  statute/'' 

15.  "?r.  No  person  shall  hereafter  transaA  business  in  the  name  of  a 
"partner  not  interested  in  his  firm,  and  where  the  designation  'and 
"company,"  or  '&  Co.'  is  used,  it  shall  represent  an  adlual  partner 
"  or  partners." 

"  ^2.   Any  person  offending  against  the  provision  of  this  a(?t,  shall, 
upon  convi<5lion  thereof,  be  deemed  guilty  of  a  misdemeanor  and 
"be  punished  by  a  fine  not  exceeding  |iooo'"    Ch.  281,  N.  Y.  Laws, 
1833-. 

Wife's  answering  for  '  Co.'  in  husband's  firm  not  violation  of  stat- 
ute against  fictitious  najnes.     A  &  Co.  sued  B  for  price  of  merchan- 

230 


Pt.  2  Ch.  5.  Business  Contracts.  §76. 

dise.  Defetice:  'Co.'  represents  A's  wife,  and  married  womau  could 
not  be  partner  of  her  husband. — Judgment  for  A  &  Co.  Wife  a  real, 
not  a  fictitious,  person.   Zimmerman  v.  Erhard,  83  N.  Y.  74  (1S80). 

Statute  does  not  prevent  firm's  offering  credit  by  fictitious  name.  A 
Bros.  &  Co.,  book -publishers,  of  New  York  city,  employed  B,  as  can- 
vasser at  Buffalo,  who  executed  a  bond,  with  two  sureties,  C  andD,  to 
J.  A  &  C.  A,  for  performance  of  his  contrac5l.  B  failed  to  account  for 
proceeds  of  his  sales,  and  A  Bros.  &  Co.  brought  suit  on  the  bond. 
C's  defence:  Firm  designation  a  violation  of  s'tatute. — Judgment  of 
non-suit  reversed.  Statute  aimed  at  credit  obtained  by  fictitious 
name.  Gay  v.  Seibold,  97  N.  Y.  472  (1884). 

16.  Right  to  firm  property  not  destroyed  by  trading  tinder  an  untawfiil 
name.  New  York  statute  forbids  trading  under  a  fidlitious  name. 
A  and  B  traded  as  carriage  makers  in  the  name  of  A  Bros.  B  retired, 
and  A  continued.  He  shipped  a  carriage,  marked  A  Bros.,  by  C's 
road,  and  sued  for  damage  done  to  it  in  transportation.  Defence :  A 
engaged  in  unlawful  business. — Recovered.  Statute  meant  to  pro- 
tedl  persons  dealing  on  the  credit  of  the  firm.  Carrier  deals  on  the 
credit  of  the  goods  shipped.  Wood  v.  Erie  R.  R.,  72  N.  Y.  196  (1878). 

Fictitious  name  does  not  prevent  firm  suing  for  rent.  A,  B  &  Co., 
a  Philadelphia  firm,  with  a  branch  in  New  York,  let  a  portion  of 
their  building  in  New  York  to  C  &  Co.,  for  9  months,  at  lioo  a  month. 
C  &  Co.  left  at  end  of  4  months.  A,  B  &  Co.  sued  them  for  rent  for 
balance  of  term.  Defence:  B  dead,  and  plaintiffs  transacting  busi- 
ness under  fictitious  name. — ^Judgment  for  A,  B  &  Co.  Lease  not 
part  of  firm  business.  Sparrow  v.  Kohu,  3  E.  R.  293  (1S85). 

The  Civil  code  of  California  provides  that  persons 
transacting  business  in  that  State  under  a  fictitious 
name,  or  description  which  does  not  show  the  names 
of  the  parties,  cannot  sue  until  they  have  filed  and 
made  formal  publication  of  a  certificate  of  the  parties' 
names  and  residences. 

17.  Certificate  of  partnership  not  required  for  aBion  of  tort.  Firm  A 
&  Co.  sued  B,  constable,  for  conversion  of  crop  raised  by  A  &  Co.  on 
leased  land,  on  an  execution  for  the  debts  of  C,  the  landlord,  who 
was  employed,  as  farmer,  by  A  &  Co. — Judgment  for  A  &  Co.  Ralph 
V.  Lockwood,  61  Cal.  155  (1S82). 

Firm  which  has  not  filed  or  published  certificate,  may  assign  a 
claim.  B  &  Co.,  never  having  filed  or  published  certificate  required 
by  C.  C,  ^2468,  assigned  a  claim  to  A,  who  sued  C.  Defence:  As- 
signment made  to  evade  said  secSlion. — Judgment  for  A.  Cheney  v. 
Newberry,  67  Cal.  126  (1S85). 

Certificate  a  prerequisite  of  suit  by  firm.  Firm  sued  for  price  of 
merchandise,  and  alleged  the  filing  of  a  certificate,  required  by  C.  C. 
^2468.  Denial,  and  certificate  produced  did  not  comply  with  statu- 
tory requirements. — Non-suit.  Sweeney  v.  Stanford,  67  Cal.  635 
(18S5).. 

Certificate  niti.^t precede  suit.  A  &  Co.  sued  B  on  promissory  note, 
payable  to  A  &  Co.  After  bringing  suit,  plaintiffs  filed  and  published 
certificate  required  by  statute.  Judgment  for  plaintiffs. — Reversed. 
Adtion  cannot  be  begun  until  certificate  is  filed.  Byers  v.  Bourret, 
64  Cal.  73  (1883). 

231 


^76.  Business  Contracts.  Ft.  2,  Ch.  5. 

What  is  the  effedl  of  trading  in  an  individual  part- 
ner's name?  The  presumption  in  Pennsylvania  is, 
that  commercial  paper  is  given  for  the  firm  business  ;'* 
in  England,'"  and  generally"*^ there  is  no  such  presump- 
tion, but  the  paper  indicates,  according  to  its  form,  an 
individual  transaction  until  the  contrary  is  proved. 
The  presumption  of  a  firm  transaction  may,  however, 
be  rebutted  by  evidence  that  the  paper  was  used  on 
individual  account.-^ 

18.  Where  a  firm  transadls  business  in  the  name  of  one 
of  the  partners,  is  a  promissory  note  in  his  namQ  prima 
facie  his  individual  note,  or  is  it  chargeable  to  his 
firm?  It  has  been  decided  in  Pennsylvania  that,  in  the 
absence  of  evidence,  the  presumption  of  law  is,  that  the 
loan  was  made  on  the  credit  of  the  partnership  business. 

Commercial  paper  in  individual  partner'' s  name,  if  also  firm  name, 
presumed  to  be  for  firm.  Nathan  and  Newberry  Smith,  partners, 
carried  on  business  in  the  name  of  '  N.  Smith.'  Nathan's  business, 
whether  for  himself  or  for  the  firm,  was  done  under  the  same  name. 
Nathan  drew  two  checks  on  a  bank,  C,  for  |ii5o  each  ;  the  father  of 
one  of  the  partners  drew  a  note  for  |;6oo,  payable  to,  and  endorsed 
by,  N.  Smith;  and  Nathan  drew  a  note  for  |i,i5o,  which  was  en- 
dorsed by  the  father.  Nathan  then  deposited  these  checks  and  notes 
as  collateral  security.  He  borrowed  |i, 500  from  A,  and,  at  the  same 
time,  drew  a  check  on  a  bank,  D,  for  |i,5oo,  payable  to  himself,  or 
bearer.  Afterwards,  he  drew  a  check  on  the  same  bank,  D,  for 
$2,000,  payable  to  bearer,  on  which  A  lent  him  $1,500.  On  this 
check,  I288.35  remained  due.  A's  total  claim  was,  therefore,  %2,- 
088.35  on  all  the  checks  together.  A  brought  suit  for  this  amount 
against  Nathan  and  Newberry,  as  partners.  Defence  :  That  they 
were  not  liable  as  partners. — Recovered.  Rogers,  J.,  charged  (inter 
alia):  "It  is  the  opinion  of  the  Court  that,"  the  loan,  "is  to  be 
"considered  as  made  on  the  faith  and  credit  of  the  regular  lumber 
"business  in  which,"  Nathan  Smith,  "was  engaged,  and  not  on  ac- 
"  count  of  any  speculation  in  which  he  may  have  been  concerned 
"on  his  own  account."  That  is  the  presumption.  Mifflin  v.  Smith, 
17  S.  &R.  165(1827). 

Supra. 

19.  Transaction  not  less  individual  because  partner  traded  as  firm  in 
his  individual  name,  A  sued  firm  upon  two  bills,  one  accepted  and 
endorsed,  and  the  other  endorsed  by  Wm.  Beaston,  who  traded  in 
company  with  C,  under  the  individual  name  of  "AVm.  Beaston." 
There  was  no  evidence  to  charge  the  firm,  except  the  address  of  the 
bills,  at  the  works.^udgment'for  defendants.  The  individual  name 
prevails  in  default  of  evidence  to  show  a  partnership  transadlion. 
Yorkshire  Banking  Co.  v.  Beaston,  L.  R.,  4  C.  P.  D.  204;  5  Id.  109 
(1880). 

232 


_Z_I 


Pt.  2,  Ch.  5.  Business  Contracts.  §76. 

20.  Finn  trading;  in  indvidiial  name.  Firm  business  done  in  B's  name; 
note  given  by  B.— Presumption  an  individual  transadlion.  Oliphant 
V.  Matthews^  16  Barb.  608,  N.  Y.  (1853). 


21 


If  partner's  name  Jinn  designation,  slight  evidence  of  individual, 
sufficient  to  rebut  presumption  of  firm  transaFlion.  B  carried  on  a 
limited  partnership,  in  his  individual  name,  with  C  and  D,  two  non- 
resident partners,  and  also  settled  up  the  business  of  a  prior  firm,  of 
B  &  Co.  The  firm  failed,  and  assigned  to  E  for  creditors.  A  claimed 
for  loans  made  on  memoranda,  notes  and  checks,  all  signed  'B.'  Au- 
ditor upon  the  evidence  found  that  A's  claim  arose  out  of  transac- 
tions with  B  &  Co.,  or  individual  transactions  with  B,  and  rejedled 
claim  against  firm  assets. — Judgment  affirmed.  Burrough's  Appeal, 
2  Casey  264,  Pa.  (1856). 

Suppose  the  individual  name  was  the  designation 
of  two  firms.  The  plaintiff  would  have  2^  prima  facie 
case  against  each  firm,  and  he  might  prove  w^hich 
firm  adlually  received  the  consideration,  although  he 
had  designated  the  wrong  firm  in  his  suit,  the  descrip- 
tion being  surplusage. ^^ 

22.  Bank  v.  Dakin,  supra  §44,  n.  5. 

How  do  separate  creditors  stand  in  reference  to  a 
firm  which  has  for  its  trade-name  the  individual  des- 
ignation of  a  partner?  They  rank  as  joint  creditors, 
and  are  entitled  to  take  the  firm  assets  in  execution."^* 
This  position  is  consistent  with  none  but  the  Penn- 
sylvania view,  which,  in  such  cases,  makes  all  trans- 
actions in  the  individual  partner's  name  firm  business. 

23.  If  firm  in  individual  partner' s  name,  his  separate  creditors  rank  as 
firm  creditors.  B  traded  in  his  individual  name,  and  A  was  his 
dormant  partner.  B  confessed  judgment  for  his  individual  debts, 
and  sheriff  took  firm  assets  in  execution.  A  asked  for  injuncftion. 
Judgment-creditors  claimed  right  paramount  to  dormant  partner 
over  firm  assets. — InjunAion  refused.  Separate  creditors  of  acflive 
partner  rank  with  joint  creditors,  where  he  conducts  firm  business 
in  his  individual  name,  because  creditors  know  nothing  of  a  firm. 
Cammack  v.  Johnson,  i  Gr.  Ch.  83,  N.J.  (1839). 

Can  a  partnership  exist  without  a  firm  name  ?  Yes, 
and  suit  would  be  diredlly  against  the  partners,  as  co- 
contracflors.  Suit  must  alwa^'s  be  brought  against 
them,  even  where  they  have  a  firm  designation."^     If 

233 


§77-  Business  Contracis.  Pt.  2,  Ch.  5. 

no  name  had  been  adopted,  a  partner  could  seledl  one, 
and  use  it  as  the  trade-name  to  bind  his  co-partners.^ 

24.  McGregor  v.  Cleveland,  supra  \\\,  n.  6. 

25.  Austin  V.  Williams,  supra  ?44,  n.  7. 


§77. 

^\\t  proccbure  of  tlje  Can)  fttfrdjant  in  partncrsl^ip  cases  roas 
not  introbuccb  at  tl)c  Common  laro. 

PartnershiD,  introduced  into  the  Common  law  with 
the  advent  of  commerce,  was  said  to  be  a  part  of  the 
Law  Merchant,  and  to  be  governed  by  its  provisions. 
The  assertion  is  not  founded  on  fadl.  The  common 
lawyers  did  not  dream  of  adapting  the  process  to  any 
foreign  system,  or  think  it  worth  while  to  inquire 
what  the  Law  Merchant  was. 

The  simple  object  of  the  Civilians  was  to  obtain 
satisfaction  for  a  claim  against  a  firm,  and  they  natu- 
rally enforced  the  right  against  the  firm  assets,  and 
against  the  separate  partners.  The  remedies  did  not 
exclude  each  other,  but  were  concurrent,  or  cumula- 
tive.^ At  this  late  day,  the  common  lawyers  are  still 
groping  about,  in  search  of  a  remedy  which  will  ena- 
ble them  to  procure  satisfaction,  and  not  tie  them  up, 
like  mummies,  in  the  process.  For  this  purpose,  an 
effort  is  being  made  to  introduce  the  Civil  law  pro- 
cedure, but,  thus  far,  the  construction  given  to  the 
enactment  has  frustrated  its  purpose.'  No  desire  is 
evinced  to  ascertain  the  Civil  law  method,  and  to  in- 
terpret the  statutory  language,  in  accordance  with  the 
process  enacted  for  the  purpose  of  superceding  the 

234 


1 


Pt.  2,  Ch.  5.  Business  Contracts.  §77. 

Common  law  pradlice.  On  the  contrary,  the  Common 
law  formula  of  a  joint  contra6l  is  retained,  and  worked 
into  the  Civil  law  process,  which  is  thereby  rendered 
as  useless  as  the  old  method.^ 

I.  The  process  of  the  Civil  law  may  be  illustrated  by  the 
German  pracftice,  which,  like  ours,  regards  the  firm  as 
but  a  short  name  for  the  partners,  who  are  liable  to  the 
extent  of  their  resources.  The  judgment  in  a  suit 
against  the  firm  is,  in  the  first  instance,  limited  in  exe- 
cution to  the  joint  assets,  but  may  be  enlarged  and  ex- 
tended to  the  individual  partners  ;  when  execution  upon 
it  may  issue  against  their  separate  estates.  The  part- 
ners can  make  no  defence  to  the  judgment.  It  is  only 
when,  for  a  reason  peculiar  to  himself,  the  judgment 
would  not  afFe6l  a  partner  that  he  can  establish  an  ex- 
ception to  the  operation  of  the  judgment,  and  relieve 
himself  and  his  separate  estate  from  liability.'^  A  suit 
also  lies  against  the  partner,  or  partners,  and,  upon  a 
judgment,  execution  will  issue  dire6lly  against  the 
separate  estates.  The  remedies  against  the  firm,  and 
against  the  partners,  are  concurrent,  and  may  be  com- 
bined ;  they  are  not  self-destru(5live,  and  do  not  exclude 
each  other  by  merging  the  claim.  ^  The  facl  is  kept  in 
mind  that  the  obje6l  of  the  creditors  is  not  the  triumph 
of  a  judgment,  but  a  satisfaction  of  the  debt. 

a.  ,,S)er  ©(dubiger  hai  mit^in  tniltig  freie  2BaF)[  cb  er  junddift  einen  einsetnen 
„  (je jell )■  drafter  unter  feinem  9Jamen  obcr  cb  er  alle  unter  ber  ^-ivnia  ber  ©efell: 
„  fc^aft  betangen  i»i(I.  J^ut  er  ba§  l^'clUerc,  fo  laffen  fidi  biird)  bie  (itn= 
„  iaffung  unter  ber  ^-irnta  fdmmtlidie  (*'5eielljd)after  ein.  ^as  ti-rfenntnii^ 
„bringtatso  re§  jubicata  alien  Gefelljc^aftern  gegeniiber  f)en'pr.  Ser 
„  ©tdubiger,  Uu'lc^er  ein  obfieglid^eS  Urtf)eil  erf)dlt,  tann  tnitf)in  entliKber 
„  execution  in  ben  <oanb(ung§fonbf^  bcrlangen  Pber  eine  Mlage  gesen  ben 
„einselnen  Gefellfdiafter  anftellen,  nu'ld^e  i'njofern  al'o  actio  jubicati 
„  bejeid^net  merben  tann,  al-s  ber  Mlaggrunb  bas  bie  Cieiellfdiaft  tierurt^ei= 
„  lenbe  Grfenntnifg  ift.  3^er  niit  bie'fer  illage  belangte  ©eiellfdiafter  fann 
„  feine  ^saffititegitimation.  b.  f).  feinetSigenfdiaft  ats  Geiellfd) after,  beftreiten 
„  unb  bie  i^erjdbrungcieinrebe  a\\^:>  3(rt.  14(i  geltenb  madien,  aufjerbem  ftet)en 
„  i(;m  gegen  bie  ^subicat^'forberung  nnr  311  bie  (Sinreben  a\\^  jeineni  f^n^iellen 
„  berMltuife  gunt  ©Idubiger,  {.  il  bie  erceptio  compeniationis, 
„  Jjacti  etc."  (Sommentar  jum  2(IIgcmeinen  Seut|ct)en  .'oanbcl^gefeljbuc^, 
%xi.  Ill,  >/..!,  ^3p.  403-4.  2)ritte  3(uftage,  toon  Sr.  K-ricbericf)  SBon 
§ar;n,1879. 

b.  ,,  SBie  bemnac^  bieSlage  be'3  ©efellfcbaftf^g[dubiger§  gegen  bie  Coefellfdiaft 
„  alg  jo[d;e,  unb  bie  i^lage,  »»eldie  jenem  au§  einer  0efeUfd}aft6fd;uIb  gegen 
„ben  einjelnen  QJefeKfc^after  sufte^t,  ang  einanber  gef^atten  iperben  miiffen, 
„  fo  unterfd^eiben  fid)  im  galle  cincr  (Sonbentnatiou  aud)  bie  tSjccution^s 

235 


§77.  Business  Contracts.  Pt.  2,  Ch.  5, 

„  Dbjcctc,  inborn  bio  auf  cine  .^Kagc  ber  Icljtgcnanntcn  2trt  ergangene  iscrur= 
,,  tluilung  nur  auf  bcTo  '|U-iimtiicnnbgcn  bc5  bctrcffenben  Sociue,  bas  gegen 
„  bic  WcKUi'dtaftc-'fivnia  gefdllte  (irfcnntnif'o  allein  auf  bag  ©ocietdtgbermbgen 
„  junx  iNoUjugc  gcbrad)t  lucrbeu  tann. 

,,  X'od;  ift  c-31  inbglid;(;,  ba§  au^  ©incr  0e|eUfd;aft§d>ulb  jugleid^  mit  ber 
,,WcicIIfdmft  cin,^clnc  orbcr  alle  (^efellfd^after  ausgeflagt  tt>erben.  (Srge^it 
,,nun  auf  cine  folriie  foiwobt  an  einen  i!crtretcr  ber  Socictat  une  an  bie  ein  = 
„jclncn  cuuti  :,ugcitclltc  Mlagc  cin  (irfenntnifs,  lue(d)cg  juglcid)  mit  ber 
,,'jvirnta  bie  uiitucrflagtcn  WefcU|d)aftcr  conbcmnirt,  fo  tann  bie  ^'i^angs^ 
,,yoUftrerfung  auf  ben  iSocictdtgfonbs  fo  >Die  auf  bag  ^rinatoermbgen  ber 
,,  mityerurtbc'ihen  Wenoffcn  ol;ne  SCeitereg  Statt  l^aben."  9tenaub,  2)a^ 
„3iccbtber  (5onxntabitgeicafd)aften,  pp.  386-7. 

2.  "  Parties."  "Any  two  or  :nore  persons  claiming  or  being  liable 
"as  co-partners  may  sue  or  be  sued  in  the  name  of  their  respective 
•'firms,  if  an}' ;  and  any  party  to  an  action  may  in  such  case  apply  by 
"summons  to  a  judge  for  a  statement  of  the  names  of  the  persons  who 
"are  co-partners  in  any  such  firm,  to  be  furnished  in  such  manner, 
"and  verified  on  oath  or  otherwise,  as  the  judge  may  dire<5t."  Order 
"XVI.,  rule  lo.c 

"  Service  of  Writ."  "  Where  partners  are  sued  in  the  name  of 
"their  firm,  the  writ  shall  be  served  either  upon  any  one  or  more  of 
"  the  partners,  or  at  the  principal  place,  within  the  jurisdidtion,  of 
"the  business  of  the  partnership  upon  any  person  having  at  the  time 
"of  service  the  control  or  management  of  the  partnership  business 
"there."  Order  IX.,  rule  6. 

"Appearance."  "Where  partners  are  sued  in  the  name  of  their 
"firm,  they  shall  appear  individually  in  their  own  names,  but  all 
"  subsequent  proceedings  shall  nevertheless  continue  in  the  name  of 
"the firm."    Order  XII.,  rule  12. 

"Execution."  "Where  a  judgment  is  against  partners  in  the 
"  name  of  a  firm,  execution  may  issue  in  manner  following : 

"  (a)  Against  any  property  of  the  partners  as  such. 

"  (b)  Against  any  person  who  has  admitted  on  the  pleadings  that 
"he  is  or  has  been  adjudged  to  be  a  partner. 

"(c)  Against  any  person  who  has  been  served  as  a  partner  with 
"the  writ  of  summons,  and  has  failed  to  appear. 

"If  the  party  who  has  obtained  judgment  claims  to  be  entitled  to 
"issue  execution  against  any  other  person  as  being  a  member  of  the 
"firm,  he  may  apply  to  a  court  or  a  judge  for  leave  so  to  dod;  and 
"the  court  or  judge  may  give  such  leave  if  the  liability  be  not  dis- 
"  puted,  or,  if  such  liability  be  disputed,  may  order  that  the  liability 
"of  such  person  be  tried  and  determined  in  any  manner  in  which 
"any  issue  or  question  mav  be  tried  and  determined."  Order  XLII., 
rule  8.e 

3.  A  several  contracl  not  involved  infii-m  contraB.  A  accepted  drafts 
for  B  &  Co.,  and,  upon  the  firm's  failure,  recovered  judgment  for  the 
amount  advanced  to  pay  the  bills.  vSubsequently,  in  bankruptcy  pro- 
ceediiigs,  A  learned  that  C  was  a  partner,  and  after  receiving,  from 
the  joint  assets,  dividends,  brought  suit  against  him  for  the  debt,  less 
the  dividends  received.  C  claimed  that  the  judgment  merged  the 
cause  of  action. — No  recovery.  Joint  contradl,  which  limited  A  to  a 
single  remedy.  C,  if  an  undisclosed  principal,  not  liable,  unless  dis- 
covered. Kendall  V.  Hamilton,  4  Appeal  Cases  504  (1879). 

Judgment  as;ainst  firm  merges  claim  and  i-eleases  partner  not 
made  defendant.  A  sued  B  &  Co.  for  libel.  Defendant  appeared  as 
B,  trading  as  B  &  Co.     A  proceeded  against  B,  as  the  firm,  and  took 

236 


Pt.  2,  Ch.  5.  Business  Contracts.  ^yy. 

judgment  by  consent.  Hearing  that  C  was  B's  partner,  A  moved  to 
amend  judgment,  and  make  C  co-defendant. — Refused.  A  no  equity. 
Lord  Selborne  :  Judgment  by  consent  operates  as  unconscious  re- 
lease by  A  of  C.  Lord  Beackburn  :  A  might  set  aside  judgment 
and  start  pleadings  afresh.  Lord  FiTzGERAED  :  Judgment  fixes  B's 
liability,  which  could  not  be  re-judged.  Munster  v.  Cox,  10  Appeal 
Cases  680  (1885). 

Judgment  against  one  joint  contraFtor  extinguislies  ctaini  against 
co-contraRor.  A  sued  B  &  Co. ,  composed  of  B  and  C,  for  merchan- 
dise. After  deliver}'  of  goods,  firm  dissolved.  A,  not  knowing  of 
dissolution,  drew  on  B  &  Co.  for  price.  B  accepted  for  B  &  Co. 
Part  payment,  and  suit  for  balance,  and  judgment  obtained  by  de- 
fault. Unable  to  obtain  satisfacftion ,  A  sued  C,  who  set  up  judgment 
against  B  for  same  cause  as  a  bar. — ^Judgment  for  C.  Judgment 
merged  cause.  Chambefort  v.  Chapman,  19  Q.  B,  D.  229  (1887). 

Comment:  "Why  under  any  rational  system  of  law  should  an 
"unsatisfied  judgment  against  X  relieve  Y  from  a  joint  liability? 
"This  is  a  question  easier  to  ask  than  to  answer.  The  judges  who 
"  decided  Kendall  v.  Hamilton  did  not  profess  to  answer  it."  3  Law 
Review  483  (1887). 

Claim  still  single  and  judgniefit  a  merger.  A  sued  B,  who  applied, 
under  Order  XVI.,  r.  11,  for  joinder  of  C  and  D,  his  co-partners. 
Court  refused. — Reversed.  The  judgment  against  B  would  merge 
claim,  and  operate  to  release  C  and  D  under  joint  contrail  theory, 
which  still  subsists,  despite  the  Judicature  Acft,  and  the  Orders  under 
it.    Pilley  v.  Robinson,  20  O.  B.  D.  155  (1887). 

c.  Judgment  against firin  must  bind  all  its  members,  including  partner 
not  served  or  appearing.  A  sued  Jno.  B  &  Sons  for  wrongful  execu- 
tion upon  his  property,  and  effecfted  service  upon  Geo.  B.  All  partners 
appeared,  except  Jas.  B.  A  moved  for  judgment  against  Jas.  B,  for 
want  of  appearance. — Refused.  Judgment  must  follow  the  writ,  and 
go  against  all  partners.    Jackson  v.  Litchfield,  8  Q.  B.  D.  474  (1882). 

d.  Judgment  against  firm,  binds  only  partner  served.  A  brought  suit, 
immediately  after  B's  retirement,  against  firm,  which  continued  busi- 
ness under  old  name,  and,  after  service  upon  some  partners,  obtained 
judgment  by  default.  A  petitioned  to  put  B  in  bankruptcy,  as  part- 
ner, though  he  had  not  attempted  to  execute  judgment  against  B 
under  Order  XLH,  r.  8,  which  authorized  court  to  try  his  liability. — 
Dismissed.  No  judgment  afifedling  B.  Dissent :  Judgment  binds  all 
who  were  partners  when  the  debt  was  incurred.  Ex  parte  Young,  19 
Ch.  D.  124  (1881). 

e.  Judgment  against  firm  binds  a  partner  zvho  is  not  served,  except 
as  to  a  defence  peculiar  to  him.  B,  C  and  D  traded  as  B  &  C.  C  en- 
dorsed the  bill  in  suit  to  A,  for  a  transacflion  unconne6ted  with  firm 
business.  D  retired,  and  B  and  C  continued  business.  A  sued  B  & 
C.  Judge,  for  jury,  found  as  a  facft  that  A  meant  to  sue  B  &  C,  not  B, 
C  and  D,  trading  as  B  &  C. — Judgment  for  D.  Had  A  meant  to  in- 
clude D,  summons,  like  sci.  fa.  to  show  cause  why  execution  on 
judgment  should  not  issue  against  D.  He  could  make  a  defence  per- 
sonal to  himself,  though  not  to  original  a6lion.  Davis  v.  Morris,  10 
Q.  B.  D.  436  (1883). 

But  the  Common  law  remedy  is  not  superceded. 
AElion  lies  on  juds^ment  against  fir>n  to  charge  non-served  partner. 
A  sued  firm,  B  &  Co.,  and  recovered  judgment  for  price  of  merchan- 
dise.    A  sued  defendants  on  judgment,  alleging  their  joint  and  sev- 

237 


§78.  Business  Contracts  Pt.  2,  Ch.  5. 

eral  liability  for  debts  of  B  &  Co.  Defendants  demurred,  because 
Order  XLII,  r.  8,  provides  for  issue  to  try  partners'  liability  for  judg- 
ment.— Judgment  for  A  on  demurrer.  Order  does  not  supercede 
adlion  on  judgment,  in  which  defendants  might  deny  being  partners. 
Clark  V.  Cullen,  9  Q.  B.  D.  355  12. 


§78. 

(ill)e  contract  niaiie  bn  tl)e  partners  in  tkm  transactions  is  joint 
in  form,  but  scBcral  in  substance. 

The  basis  of  the  partnership  strudlure  is  the  con- 
tracl  which  the  partners  make  for  the  firm  in  trans- 
acting its  business.  What  is  the  charaAer  of  this 
contrail?  It  is  an  aggregate  of  contrails,  as  the  firm 
is  an  aggregate  of  partners.  The  joint  form  corres- 
ponds to  the  firm  which  exists  only  in  its  parts. 

The  severability  of  the  contract  appears  in  the  lia- 
bility upon  it  of  each  partner  to  the  extent  of  his  re- 
sources. The  liability  is  recognized  in  substantive 
law,  and  is  denied  only  in  procedure.  The  moment 
a  judgment  against  the  partners  is  recovered,  execu- 
tion may  issue  against  each,  any  or  all  of  them,  until 
satisfadlion  is  obtained.  The  execution  against  one  is 
no  answer  to  an  execution  against  the  others.'  Apart 
from  mesne  process,  the  liability  is  several  as  well  as 
joint.  In  equity,  and  in  bankruptcy,  where  there  is 
no  formal  procedure,  the  liability  of  each  partner's 
separate  estate  for  the  firm  debts,  is  enforced  without 
hesitp.tion.  One  separate  commission  does  not  ex- 
clude a  second,  nor  does  a  joint  commission  prevent 
recourse  to  the  individual  partner.^ 

I.  Finn  creditor's  right  to  proceed  against  separate  estate  will  not  be 
controlled  in  equity,  except  for  fraud.  C  obtained  judgment  against 
firm  A  &  B,  and  levied  on  partnership  land.     He  also  levied  on  A's 

238 


Pt.  2,  Ch.  5.  Business  Contracts.  (.79. 

land  lying  in  a  different  county,  which  A  had  conveyed  to  D,  as  se- 
curity for  a  loan.  A  and  D  enjoined  C,  on  the  ground  that  firm  land 
was  sufficient  to  satisfy  his  debt,  and  that  co-partners  colluded  with 
C  to  defraud  A. — Injunction  continued,  because  averment  of  fraud 
was  not  denied  by  co-partners.  But  creditor's  right  admitted  to 
proceed  against  separate,  as  well  as  joint,  estate  of  partners.  Wisham 
V.  Lippincott,  i  Stock.  353,  N.J.    (1S53). 

2.  "  Formerly  it  was  the  pra6lice  for  the  creditor  of  a  firm  of  several 
"partners  to  take  out  separate  commissions  against  each  partner,  as 
■'well  as  a  joint  commission  against  the  whole  firm ;  the  objecft  being 
"to  distribute  the  assets  of  the  firm  under  the  joint  commission,  and 
"the  separate  assets  of  each  partner  under  the  separate  commission 
"issued  against  him.  The  modern  practice,  however,  is  different; 
"for  now  under  a  joint  adjudication  against  a  firm,  not  only  are  the 
"assets  of  the  firm  distributed  amongst  its  joint  creditors,  but  the 
"separate  assets  of  each  partner  are  also  distributed  amongst  its  own 
"separate  creditors."  2  lyindley  1140;  The  L,aw  and  Pracflice  of  Bank- 
"ruptcy,  by  Orlando  F.  Bump,  5th  ed.  p.  53  et  seq.,  1872. 


§79. 


^  nctt)  formula  roaa  not  ticoiscb  to  cmbobg  tl^c  obligation  of 
partners. 

Upon  the  iutrodudlion  of  partnership  into  the  Com- 
mon law,  a  new  form  was  required,  to  express  the  new 
undertaking  and  embody  the  partners'  contradl.  But 
the  courts  preferred  to  take  what  they  had  at  hand. 
They  took  the  old  formula,  and  made  it  answer  for 
the  occasion,  without  introducing  any  variation,  or 
adapting  it  to  the  new  subjeA-matter.  The  joint  ob- 
ligation was  the  uncouth  form,  which  was  turned  to 
account  and  held  to  express  the  firm  contract.  This 
kind  of  obligation  never  did  correspond  to  any  busi- 
ness transadlion,^  and,  in  place  of  it,  the  continental 
Countries,  which  were  foremost  in  trade, have,  from  the 
earliest  times,  recognized  a  commercial  contract." 
The  commercial  contra(5l  has  at  last  become,  with  us, 
the  real  exponent  of  the  partners'  status. 

239 


§79.  Business  Contracts.  Pt.  2,  Ch.  5- 

1.  Speakiii},'  of  the  effedl,  Woodward,  J.,  said:  "The  technical  rule 
"of  the  common  law  *  never  had  regard  to  the  substance  of  the 
"  contraci  but  ouly  to  the  remedy  upon  it."  "Here  according  to  the 
"stricfl  rule  of  the  common  law  there  would  be  a  clear  right  without 
"a  remedy."  "There  never  was  any  equity  or  natural  justice  in 
"such  a  rule."  Bowman  v.  Kistler,  9  Cas    111-2,  Pa.  (1859). 

2.  The  proces.s  has  been  described  supra  ^j'j.  The  com- 
mercial contracft,  which  charges  each  partner  with  un- 
limited, or  in  solido]  liability,  existed  among  the  Ro- 
mans, but  was  not  the  ordinary  partnership  contrail.* 
In  modern  times  the  exception  has  become  the  rule. 
The  commercial  codes  of  Countries  which  follow  the 
Civil  law,  establish  an  in  solido  obligation.^ 

a.  The  civil  codes  describe  the  ordinary  partnership. 

Louisiana  C.  C.  2874:  "Ordinary  partners  are  not  bound  in  solido 
"for  the  debts  of  the  partnership,  and  no  one  of  them  can  bind  his 
"partners,  unless  they  have  given  him  authority  to  do  so,  either  spe- 
"  cially  or  by  the  articles  of  partnership." 

If  two  partners,  each  liable  to  plaintiff  for  half  the  debt.  A  sued  B 
for  work  on  his  plantation  and  on  his  steamer,  done  at  C's  request. 
The  evidence  showed  that  B  &  C  were  partners. — Recovered  half  the 
debt,  under  the  code.    Logan  v.  Cragin,  27  La.  An.  352  (1875). 

b.  The  commercial  codes  describe  the  trade  partnership,  which  also 
exists  at  the  Common  law. 

La.  C.  C.  274.  Ordinary  partnership.  "Commercial  partners  are 
"bound  in  st)lido  for  the  debts  of  the  partnership." 

„3iei  ben  ^panbclsobtigationen   jperben  bie  SJtitfdiuIbner  al§  folibarifd^ 
„»ermut^et,  t»enn  nidit  barin  cine  entgegenftcf)enbe  SNcreinbarung  getroffen 
„ift."  3  ^orc^arbt,  i^anbel^gefe^e  bes  GrbballS.  Italy  C.  C.  ^40,  p.  213. 
French  Com.  Code,  I22,  2  lb.  p,  533. 

„Sie  ('<5eie[I|dmfter  f)aftcn  fiir  alle  SerbinbUd)!eitcn  bet  ©eiellfd^aft 
„  foUbarifd;  unb  mit  i[;rem  ganjen  Ssennogen.  2  lb.  German  Empire  C. 
C.  gii2,  p.  330;  lb.  g28o,  p.  363. 

„2)ie  3Birfungen  ber  SoUbaritdt  sicifd^en  ben  ©Iciubigern  ftnb:  bafe 
„  jcber  ber  Wlaiibiger  ba§  9{ed)t  ^lai,  bie  Oeiammtjafilung  ber  ^^^orberung  gu 
„  DCrlangen."   5  lb.  Uruguay  C.  C,  §  267,  p.  39. 

:?ie  SBirfungen  ber  uilibariidien  i^aftung  jtinfdien  ben  ©(^ulbnern  ftnb: 

„  Safe  ber  GJldubiger  bas  ^Hec^t  f>at,  'tiiw  (yefammtbetrag  ber  g-orberung 
,,'oon  bemgenigen  5d;ulbner  suforbern,  iiu'Id^en  cr  irdMt,  nnb  tveld;er  »er^= 
„  fliditet  ift,  i^m  bag  ftan^^e  ^o  be,^al)Ien,  pf)ne  ta^  er  ba§  3ied}t  ber  Si^ei; 
„  hmg  unter  "iiw  iibrigen  t£d;ulbnern  beanf>.trud)cn  fann."  5  lb.  Argentine 
Republic,   'i  268,  p.  46. 

,,2)cr  ©Idubiger  fann  nad)  jeiner  SBal^I  Don  alien  ©olibarfc^itlbnern  ober 
„»on  einem  ber^'elben  ba§  Wanje  ober  nur  ein  Ihni  forbern.  2lud;  im  le^^ 
„  teren  ^allc  blciben  fdmmtUd}e  ©diulbner  fo  lange  ber)jf(td)tet,  bi§  bie  ganje 
,,5-orberung  getilgt  ift."  4  lb.  Switzerland,  C.^C,  'i  163,  p.  696. 

,,Xiejenigcn,  hield)e  ber  {yeielli'd)aft  nid)t  angel^oren  linb  il^re  5Ramen  in 
„  bie  GJei'eUfdiatt'jfirma  einfiigen,  twerben  ber  foltbarifd;en  .SDaUbarfeit  unter- 
„  roorfen,  unbe^c^abet  bet  ettua  ^la^  greifenben  ©trafe."  sib.  Spain,  C.  C. 
'i  126,  p.  25, 


240 


Pt.  2,  Ch.  5.  Business  Contracts.  §80: 

§80. 

®l)c  courts  Mi»  not  rc-mokl  tl)c  (Hoinmou  laui  process,  in 
orticr  to  aiiapt  it  to  firm  transactions,  anit,  at  last,  t\]t  legis- 
lature interDene^  to  rectitn  tl)c  procedure. 

The  firm  contrac?t,  however,  became  identified  with 
the  joint  contrail  of  the  common  law,  and  the  princi- 
ples of  partnership  were  worked  out  on  the  rack  of 
this  formula.  The  amalgamation,  as  it  admittedly- 
worked  injustice,  was  not  effedled  without  a  protest. 
A  great  commercial  lawyer,  like  Lord  Mansfield, 
who  could  not  bring  himself  to  the  convi(5lion  that  he 
was  not  a  moral  being,  but  only  an  intelle6lual  ma- 
chine to  grind  out  the  law  as  he  found  it,  good,  bad 
or  indifferent,  tried  to  re-model  the  formula  and  con- 
vert it  into  an  equitable  process.^  His  decision  started 
a  revolution  in  the  procedure,  but  professional  tradi- 
tion was  inveterate,  and  stayed  for  generations  the 
beneficent  ameliorations  which  he  foreshadowed. 

It  was  not  until  common  sense  compelled  the  legis- 
lature to  intervene,  and  to  keep  on  intervening,  that 
the  firm  contracfl  was  permitted  to  create  its  own  form.^ 

1.  Non-joinder  of  partner  as  defendajtt  waived  iinless  pleaded  in 
abateincfit.  A  sued  B,  who  non-suited  plaintiff  on  evidence  at  the 
trial  that  he  had  not  joined  B's  partner,  C,  as  co-defendant.  On  a 
rule  to  take  off  the  non-suit,  argument :  B  waived  defence  of  C's  non- 
joinder by  not  pleading  it  in  abatement. — New  trial  awarded.  Rice 
V.  Shute,  5  Burr.  261 1  (1770). 

2.  This  change  has  been  accomplished  by  statute. 

"In  trials  of  adlions  *  brought  by  partners  *  it  "shall  not  be  neces- 
"sary  for  the  plaintiff  in  order  to  maintain  anv  such  aAion,  to  prove 
'Hhe  co-partnership  of  the  individuals  named  in  such  adiion,  or  to 
"prove  the  Christian  or  surnames  of  such  partners  *  but  the  names 
"of  such  co-partners  •■  shall  be  presumed  to  be  truly  set  forth  * 
"provided  that  nothing  herein  contained  shall  prevent  the  defendant 
"  from  pleading  in  abatement,  as  heretofore,  or  of  proving  on  the 
"trial  that  more  persons  ought  to  have  been  made  plaintiffs."  Col- 
orado Stats,  of  1885,  ?5. 

241 


§8i.  Business  Contracts.  Ft.  2,  Ch.  5. 

"Any  one  of  the  associates  or  his  legal  representative  may  be  sued 
"  for  the  obligation  of  all."  Alabama  Code  of  1876,  ^.2904. 

"  In  all  cases  of  joint  obligations  and  joint  assumptions  of  co-part- 
"  ners  *  suit  may  be  brought  and  prosecuted  against  any  one  or  more 
"of  those  who  are  so  liable."    Kansas  Compiled  Laws  of  1885  (1078) 

U- 

"  Suits  may  be  brought  by  or  against  *  *  all  or  either  of  the  indi- 
"  vidual  members."  Iowa  Code  of  1884,  ^2553. 

Nor  does  the  judgment  merge  the  firm  claim  or  debt. 

"An  adtion  or  judgment  against  any  one  or  more  of  several  per- 
"sons  jointly  bound,  shall  not  be  a  bar  to  proceedings  against  the 
"other."  Id.  2550. 


§81. 


uTliE  joint  process  £jtinciuisl)ciJ  i\]t  several  liabilitji  of  tl)e  part- 
ners. 

Look  at  the  Common  law,  and  see  how  it  frustrates, 
at  every  turn,  the  design  of  the  partners.  They  were 
treated  as  making  a  joint  contradl.  The  law  admitted 
that  the  firm  contrail  was  the  several  contraA  of  each 
partner,  and  enforced  performance  against  any  part- 
ner. But,  though  each  partner  is  liable  for  the  whole 
debt,  the  creditor  was  not  permitted  to  sue  him  in  a 
separate  adlion.  Had  this  been  allowed,  subjeA  to 
the  defendant's  right  to  compel  a  joinder  of  the  co- 
partners, for  his  protection,  the  confusion,  which  pro- 
duced a  chronic  miscarriage  of  justice,  would  not  have 
arisen.  A  joint  process  was,  however,  required,  in 
order  to  make  the  adlion  correspond,  in  form,  to  the 
contradl,^  and  a  judgment  against  any  partner  on  ac- 
count of  the  form,  extinguished  the  claim  against  all. 

This  constru6lion  enabled  a  co-obligor  to  defeat  the 
claimant's  remedy  by  confessing  judgment.  If  the 
claimant  went  on  to  trial  against  the  other  obligors, 
and  obtained  judgment,  it  could  not  stand,  but  would 

242 


Pt.  2,  Ch.  5.  Business  Contracts.  §81. 

be  arrested,  because  the  cause  of  adlion,  being  joint, 
is  merged  by  a  judgment  against  a  single  obligor,  as 
his  defence  corresponds  to  the  claim,  and  covers  the 
total  amount  of  the  obligation."  Conversely,  the  ob- 
ligor's confession  of  judgment  to  a  partner  would 
merge  the  firm  claim,  and  for  the  same  reason.'^  The 
whole  debt  is  due  to  each  partner  who  represents  the 
firm. 

Not  only  must  the  suit  be  joint,  but  service  must 
be  effected  upon  all  the  obligors,  at  the  cost  of  releas- 
ing those  who  are  not  served.  In  England,  where  the 
plaintiff  had  sued  all  the  partners,  but  could  not  efife6t 
service  upon  all  of  them,  he  might  proceed  to  out- 
lawry against  such  as  were  not  served,  and  having 
thus  subjedled  their  goods  to  his  claim,  recover  judg- 
ment against  the  others.  In  Pennsylvania,  there 
never  was  any  process  of  outlawry.  If  only  one  part- 
ner could  be  found,  and  he  was  served,  the  others, 
after  judgment  against  him,  could  not  be  touched. 
The  pursuit  by  the  plaintiff  of  his  remedy  defeated 
his  right. ^ 

1.  Both  partners  must  be  joined  as  defendants  in  a  suit  for  value  of 
plaintiffs s  property  which  they  refuse  to  return.  A  sued  for  a  stove 
lent  to  B,  which  he  refused  to  return  on  demand.  B  set  up,  in  his 
answer,  the  non-joinder  of  his  partner,  C.  Judgment  for  A,  on  the 
ground  that  the  adlion  was  trover,  and  in  tort  plaintiff  could  sue 
either  wrong-doer. — Reversed.  Adtion  ex  contraBu,  because  plaintiff 
claims  the  value  of  the  stove  as  a  debt,  and  judgment  would  not  jus- 
tify defendant's  arrest  on  a.ca.  sa.  Slutts  v.  Chafee,  48  Wis.  617  (1880). 

2.  Judgment  confessed  by  partfter  bars  recovery  against  co-partner.  A 
sued  B  &  C  on  a  joint  contradl.  B  confessed  judgment  for  12,631.19, 
and  A  obtained  verdidl  against  C,  who  went  to  trial,  for  ^1,522.88,  and 
entered  judgment.  A's  argument:  C  waived  eflfecSl  of  B's  confessed 
judgment  by  going  to  trial,  and  difference  of  amounts  no  reason 
against  A's  claim. — Arrested.  Judgment  against  B  final,  and  merged 
cause  of  aAion,  which  was  joint.  Two  judgments  couldn't  stand, 
either  both  separate  or  one  joint  and  other  separate;  nor  could  joint 
judgment  be  for  different  amounts.  B  entitled  to  C's  defence.  Wil- 
liams v.  McFall,  2  S.  &  R.  280,  Pa.  (1816). 

Judgment  on  a  firm  claim  must  be  against  all  the  partners.     B,  C 
&  D  formed  a  partnership,  in  January,  1869,  for  four  years,  to  manu- 

243 


§82.  Business  Contracts.  Pt.  2,  Ch.  5. 

fa<5lure  wine,  and  traded  in  B's  individual  name.  A  sold  the  firm 
casks.  Aj)ril,  1873,  B  paid  part,  and  gave  his  note  lor  the  balance, 
of  the  debt.  April,  1S74,  A  found  out  that  C  and  I)  were  partners  of 
B,  and  sued  tlie  three  for  the  firm  debt.  Judgment  was  entered 
against  B,  by  default,  on  the  note,  for  I791.77,  and,  after  a  trial  on 
the  merits,  against  C  and  D  on  the  claim.  Appeal :  Judgment  against 
B  merged  the  cause  of  a(5lion,  and  discharged  C  and  D. — Reversed. 
Two  judgments,  for  different  amounts,  on  the  same  claim  cannot 
stand.  Judgmeut  against  B  entered  without  authority,  and  void, 
because  on  a  joint  claim.  But  judgment  against  C  and  D  void,  be- 
cause B  not  included  in  it.    Curry  v.  White,  51  Cal.  185  (1885). 

3.  Jiido^mcJit  confessed  to  partner  merges  firm  claim.  B  confessed 
judgment  to  A,  for  price  of  goods  bought  of  A's  firm.  B  moved  to 
set  aside  judgment  and  execution,  because  A's  partners  not  joined. 
— Refused.  B  discharged  from  liability  to  them.  Chapin  v.  Clemit- 
son,  I  Barb.  311,  N.  Y.  (1847). 

4.  The  procedure  frustrates  the  purpose  for  which  it  ex- 
ists, and  annihilates  the  rights  it  was  devised  to  prote(5l. 

Judgment  recovered  against  partner.,  after  failure  to  effeB  service 
on  co-partner,  releases  hitn.  A  sued  B  &  C  on  a  joint  bond.  B  was 
served,  but  C  returned  7ion  est  inventus.  Judgment  obtained  against 
B.  A  subsequently  sued  C,  who  pleaded  merger  of  bond  in  judg- 
ment.— Barred.  Neither  obligor  could  be  sued  on  the  bond,  which 
was  extinguished  by  the  judgment.  Return  enabled  A  to  go  on 
against  B,  without  proceeding  to  outlawry  against  C.  as  in  England, 
where  his  estate  would  go  in  satisfadlion.  A  lost  his  remedy  by  pur- 
suit of  it.  Downey  v.  F.  &  M.  Bank,  13  S.  &  R.  288,  Pa.  (1825). 


§82. 


(Jlje  legislature  of  Pennsiilnania  partiallti  corrcctetr  tl^is  abuse 
of  leijal  process,  bii  preDenting,  in  joint  actions,  tl)e  judgment 
against  tl)e  partners  serrcb  from  merging  tl)e  claim  against 
otljers. 

At  an  early  date,  the  legislatures  of  various  states 
set  about  to  correct  this  abuse  of  legal  process.^  A 
statute  of  Pennsylvania,  enadled,^  se(5lion  i :  "  In  * 
suits  against  co-partners  '''  if  the  writ  or  process  * 
is  not  served  on  all  the  defendants,  judgment  may 
be  obtained  against  those  ser\'ed,  but  it  shall  not  be 
a  bar  to  recovery  in  another  suit  against  defendants 
not  served."    By  section  2,  a  confessed  is  assimilated 

244 


Pt.  2,  Ch.  5.  Business  Contracts.  §82. 

to  an  adverse  judgment,  and  does  not  prevent  recovery 
against  the  non-confessing  partner,  A  statute  of 
Michigan  made  a  similar  provision.'' 

1.  "No  judgment  rendered  against  a  part  only  of  the  defendants  in 
"an  action  upon  a  joint  contracSl  shall  be  a  bar  to  any  future  action 
"on  said  contracfl  against  such  of  the  defendants  upon  whom  or 
"  whose  estate  the  suit  in  the  original  adlion  shall  not  have  been 
"served."  Rhode  Island  Public  Stats,  of  1882,  ^29. 

"If  the  name  of  one  or  more  partners  shall,  for  any  cause  have 
"been  omitted  in  any  adlion  in  which  judgment  shall  have  passed 
"  against  the  defendants  named  in  the  summons,  and  such  omission 
"shall  not  have  been  pleaded  in  such  acftion,  the  plaintiff,  in  case 
"the judgment  therein  shall  remain  unsatisfied,  may  by  adlion  re- 
"  cover  of  such  partner  separately,  upon  proving  his  joint  liability, 
"  notwithstanding  he  may  not  have  been  named  in  the  original  ac- 
"tion;  but  the  plaintiff  shall  have  satisfadlion  of  only  one  judgment 
"rendered  for  the  same  cause  of  action."  N.  C.  Code  of  1883,  pp.  83, 

"84(4). 

"  When  any  writ  against  joint  and  several  obligors  shall  be  returned 
"  as  to  one  or  more,  and  non  est  as  to  the  others,  the  clerk  may  renew 
"the  writ  against  those  upon  whom  it  has  not  been  served,  and  upon 
"service  upon  the  other  obligors  and  return  thereof,  the  obligors  may 
"pray  the  court  to  consolidate  the  actions,  and  the  court  may  so  con- 
"solidate  such  adlions  that  no  delay  shall  be  caused  thereby;  but 
"judgment  shall  be  entered  against  the  obligor  last  summoned  at  the 
"same term  as  against  the  obligors  first  summoned,  and  in  no  case 
"shall  delay  be  occasioned  by  such  consolidation."  Maryland  Re- 
"  vised  Code  of  1878,  <;57. 

"A  judgment  rendered  against  one  or  more  members  of  a  partner- 
"ship,  *  *  less  than  the  whole  number  of  partners,  *  shall  not  work 
"an  extinguishment  or  merger  of  the  cause  of  acflion  on  which  said 
"judgment  may  have  been  rendered,  as  respecfts  the  liability  of  the 
"partners  *  not  bound  by  such  judgment;  and  they  shall  remain 
"liable  to  be  sued  as  if  their  original  responsibility  had  been  joint 
"and  several;  provided,  that  but  one  satisfa<flion  of  the  debt  or  de- 
"mand  shall  be  made."   lb.  ^60. 

"Suits  may  be  brought  by  or  against  a  partnership  as  such,  or 
"against  all  or  either  of  the  individual  members  thereof,  and  a  judg- 
"ment  against  the  firm,  as  such,  may  be  enforced  against  the  part- 
"  nership  property  or  that  of  such  members  as  have  appeared  or  been 
"served  with  notice.  But  a  new  a(5lion  may  be  brought  against  the 
"  other  members  on  the  original  cause  of  aclion. "  Iowa  Code  of  1884, 
I  2553. 

"When  a  judgment  shall  be  recovered  against  one  or  more  of  sev- 
"  eral  persons  jointly  indebted  upon  a  contradl,  by  proceeding  as  pro- 
"  vided  in  sedlion  157'S  those  who  were  not  originally  summoned  to 
"answer  the  complaint  may  be  summoned  to  sliow  cause  why  they 
"  should  not  be  bound  by  the  judgment,  in  the  same  manner  as  if 
"they  had  been  originally  summoned."  S.  C.  General  Stats,  of  1882, 
§377- 
a.  \  157  made  judgment  in  joint  adlion  bind  partnership  property,  and 
that  of  served  partner,  severed  judgment,  and  charged  non-served 
partner  in  a  separate  adlion  upon  proof  of  his  joint  liability. 

2.  Adl  6  April,  1830,  V.  L.  277. 

245 


§83.  Business  Contracts.  Pt.  2,  Ch.  5. 

3.  "  I.  In  adlions  against  two  or  more  persons  jointly  indebted  upon 
"any  joint  obligation,  contradl,  or  liability,  if  the  process  issued 
"against  all  of  the  defendants  shall  have  been  duly  served  upon 
"either  of  them,  the  defendant  so  served  shall  answer  to  the  plaintiff; 
"and  in  such  case  the  judgment,  if  rendered  in  favor  of  the  plaintiff, 
"shall  be  against  all  the  defendants,  in  the  same  manner  as  if  all  had 
' '  been  served  with  process. 

"2.  Such  judgment  shall  be  conclusive  evidence  of  the  liability  of 
"  the  defendant  who  was  personally  served  with  process  in  the  suit, 
"  or  who  appeared  therein  ;  but  against  everj'  other  defendant,  it  shall 
"be  evidence  only  of  the  extent  of  the  plaintiff's  demand  after  the 
"liability  of  such  defendant  shall  have  been  established  by  other 
"evidence."  Compiled  Laws  of  Michigan,  1857,  ch.  133.  Re-ena6ted 
"Mich.  Annotated  Stats,  of  18S2,  ^^.  7730-1. 

Judgment  against  some  partners  not  a  bar  to  suit  against  others 
if  they  were  Jiot  served.  A  sued  B,  C  &  D,  partners,  on  a  firm  note, 
in  U.  S.  C.  C,  but  obtained  service  only  on  C.  Defendant  offered  in 
evidence  judgment  in  State  court  against  the  three  for  amount  of 
note.  But  only  B  had  not  been  served  in  the  State  proceedings. — 
Judgment  not  a  bar.  Michigan  statute  limits  judgment  to  defendant 
who  is  served  with  process.    Mason  v.  Eldred,  6  Wall.  231  (1879). 


§83. 


(Jl)e  courts  of  Ipcnnsiilcau'ia  rfstricteb  i\\t  remedial  statute  to 
^otnt  actions,  anb,  ucept  in  suci)  actions,  permitted  tl)£  juiignunt 
against  a  partner  to  titinguisl)  tl)e  claim  against  l)is  co-partner. 

The  Pennsylvania  a6l  was  restri6led,  by  judicial  in- 
terpretation, to  the  specific  mischief  pointed  out,  and 
limited,  in  its  remedial  operation,  to  joint  a6lions.  If 
an  adlion  was  brought  against  one  partner,  or  against 
any  number  less  than  all,  the  judgment  would  be  a 
bar  to  the  plaintiff's  recovery  against  the  co-partners. 
The  a6l  aided  a  plaintiff  who  observed  the  form,  and 
did  his  best  to  obtain  judgment  against  all.^  He  was 
no  longer  barred  in  his  pursuit  of  them,  because  they 
succeeded  in  evading  him.  But,  at  that  point  the 
statutory  relief  ended.  If  the  plaintiff  severed,  the 
adl  did  not  apply.  Taking  a  partner's  confessed  judg- 
ment for  the  firm  debt,  merged  the  claim.^   A  specialty 

246 


Pt.  2,  Ch.  5.  Business  Contracts.  §83. 

was  equally  a  merger  of  the  claim.  A  sealed  note, 
given  by  one  partner,  and  accepted  by  the  creditor  for 
his  claim,  would  bar  his  subsequent  recourse  to  the 
other  partner.^ 

If  the  plaintiff  brought  a  joint  adlion,  he  might  pro- 
ceed, if  any  defendants  accepted  service,  to  j  udgment 
against  them,  without  securing  service  against  all. 
The  effort  to  serve  was  sufSciently  shown  by  placing 
the  writ  in  the  sheriff's  hands  without  any  return  be- 
ing made  by  him,  no  prevention  by  the  plaintiff  of 
service  by  the  sheriff  being  shown. ^ 

1 .  Accepting  service  does  tiot  make  judgment  in  joint  aElion  a  bar  to  sub- 
sequent stdt  against  non-served  partner.  A's  summous  against  B,  C 
&  D,  on  their  sealed  note  for  a  firm  debt,  was  accepted  by  B  and  C, 
but  no  return  made  by  sheriff  as  to  D.  A  general  award  for  A.  He 
subsequently  sued  D,  who  objected  that  specialty  merged  claim  in  a 
joint  debt  which  was  discharged  by  an  award  based  on  the  volunteer 
acceptance  of  B  and  C  without  any  attempt  to  serve  D. — Recovery. 
No  evidence  that  A  prevented  service  on  D  in  order  to  maintain  sev- 
eral adlions  on  the  joint  obligation.  Moore  v.  Hepburn,  5  Barr  399, 
Pa.  (1847). 

2.  Takijig  confessed  judgment  from  partner  merges  claim  against  co- 
partner. A  took  B,  a  partner's,  confessed  judgment  for  the  firm's 
debt,  and  also  his  bond  and  warrant,  which  A  entered  up  in  a  differ- 
ent State.  Not  getting  full  satisfaAion,  A  sued  C,  surviving  partner, 
who  pleaded  the  judgment  and  bond  in  bar. — Claim  merged.  Adl 
1830  remedied  failure  to  get  judgment  against  all  defendants  in  a.joittt 
adtion,  but  did  not  change  law  in  separate  suits.  Lewis  v.  Williams, 
6  Wh.  263,  Pa.  (1841). 

3.  Creditor,  by  taking  partner's  bo)id  for  firm  debt,  releases  co-paHner. 
B  &  C  agreed,  in  writing,  that  B  shoukl  buy  wheat  with  money  fur- 
nished by  C;  that  B  should  grind  the  wheat,  and  sell  the  flour;  that 
the  expenses  should  "be  dedu<5led  from  the  proceeds,  and  the  balance 
equally  divided  for  profit  or  loss."  B  bought  wheat,  and  gave  A  the 
following  paper:  "Due  A  for  wheat  to  the  amount  of  11441.87^. 
received  by  me,  B. "  Afterwards,  B  gave  A  his  note,  under  seal,  for 
the  said  sum.  On  this  note  under  seal,  payments  to  the  amount  of 
$300  were  indorsed.  A  sued  B  &  C,  in  assumpsit,  jointly.  Reference 
to  arbitrators,  who  reported  in  favor  of  A.  C  appealed  from  the 
award  ;  B  did  not.  Jury  was  sworn  as  to  C  alone.  The  above  instru- 
ments were  put  in  evidence,  together  with  proof  of  repeated  declara- 
tions of  B  and  acfts  of  C,  indicating  that  they  were  partners.  VerdiA 
for  A,  and  judgment  accordingly. — Reversed.  Accepting  a  specialty 
from,  or  obtaining  judgment  against,  one  partner  for  a  firm  debt,  ex- 
tinguishes all  claim  against  the  other  partners,  whether  dormant 
partners  or  not.   Anderson  v.  Levan,  i  W.  &  S.  334,  Pa.  (1841). 

4.  If  judgment  confessed  by  partner,  death  of  co-partner  discharges  his 
estate.     A's  executor  brought  debt  on  joint  and  several  bonds  against 

247 


^y^.  HusiNESS  Contracts.  It.  2,  Ch.  5. 

liolh  obligors,  15  &  C.  B  confessed  judgment,  and,  pending  suit,  C 
died.  .\  ])rought  in  his  executors  on  sci.  fa.  Defence  :  C's  death 
discharged  his  estate. — Judgment  for  executors.  Plaintiff  eledled 
joint  remedv,  which  was  confined,  by  C's  death,  to  B,  the  survivor. 
Walter  v.  C;inrich,  2  Watts  204,  Pa.  (1834). 

Moore  v.  Hepburn,  supra  n.  i. 


§84. 


^ltl)oiial)  tl]c  plaintiff  ^i^  not  know  tl)erc  mas  anotl)er  part- 
ner, auti  uias  kept  from  knowing  it  bn  tl)c  precautions  of  tl)e 
partners  tl)emselncs,  none  tl)c  less  bocs  tl)e  iu^9mmt  against 
tl)e  ostensible  partner  operate  anb  ntinguisl)  tl)£  tlaim. 

Is  there  a  saving  where  the  plaintiff  could  not  bring 
a  joint  action?  For  instance,  he  would  not  know  of 
a  secret  partner's  existence,  and  could  not  join  him 
as  a  defendant.  The  Mikado's  law  serves  as  the 
exemplar.  '  The  fool  of  a  law '  says  nothing  about  the 
knowledge  of  a  claimant,  or  about  his  intention.  The 
law  works  on  its  own  hook.  It  does  not  complicate 
its  movements  with  the  idiosyncrasies  of  the  human 
will.  If  the  plaintiff  did  not  know  of  the  dormant 
partner's  existence,  and  brought  suit  against  the 
known  partners,  his  claim  was  none  the  less  merged 
in  the  judgment,  and  the  dormant  partner  escaped  all 
liability.  If  the  plaintiff  could  sue  again  whenever 
he  discovered  a  dormant  partner,  the  bar  of  the  stat- 
ute of  limitations  might  be  impaired!' 

When  a  partner  was  out  of  the  jurisdidlion,  the 
plaintiff  could  not  join  him  as  co-defendant  in  the  first 
a(?tion.  If  a  subsequent  suit  could  not  be  brought,  and 
the  absent  partner  was  a  citizen  of  a  different  state, 
another  principle  of  partnership  law  was  subverted. 

248 


Pt.  2,  Ch.  5.  Business  Contracts.  §84. 

The  separate  estate  of  the  foreign  partner  was  not 
made  available  for  the  firm  debts.^ 

If  the  suit  is  joint,  but  is  brought  out  of  the  State 
(Pa.),  the  judgment  against  the  partner  served  would 
not  bar  a  subsequent  suit  in  the  State  (Pa.)  against 
all  the  partners.  For  if  the  others  could  not  after- 
wards be  sued  in  the  State  (Pa.),  a  foreign  judgment 
would  have  greater  effe(5l  than  a  domestic  judgment.'' 
As  the  defendant  in  judgment  had  denied  the  foreign 
jurisdi^lion,  the  plaintiff  was  entitled  to  proceed  de 
novo  in  the  State  (Pa.) .  If  the  law  were  reversed,  and 
a  domestic  j  udgment  merged  the  claim,  but  a  foreign 
judgment  did  not,  the  foreign  judgment  would  bar  a 
subsequent  suit  in  the  domestic  forum.  The  judg- 
ment of  a  sister  state  is  assimilated  to  a  domestic  judg- 
ment, and  is  given  equal  effect.'' 

1.  Judgment  against  partner  pivz'eitts  subsequent  suit  on  the  claim.  A 
sued  B  and  C  on  promissory  notes,  and  obtained  judgment.  Subse- 
quently, ascertaining  that  D  and  E  were  also  members  of  the  firm, 
he  sued  all  four.  D  alone  was  arrested,  and  pleaded  the  judgment 
in  bar. — Judgment  for  D.  Joint  contradt  basis  of  suit.  Only  plea 
which  goes  to  personal  discharge  of  a  defendant,  e.  g.,  infancy,  dis- 
charge in  bankruptcy,  or  insolvency,  or  death  of  a  party,  severs  the 
plaintiff's  claim.  The  judgment  deprives  plaintiff  of  his  right  of 
acftion  against  judgment  debtors,  and  precludes  suit  against  co-debt- 
ors, who  can  be  sued  only  jointly  with  them.  Robertson  v.  Smith,  i8 
Johns.  459,  N.  Y.  (1821). 

Judgment  recovered  against  ostensible  partner  bars  claim,  upon 
discovery  against  the  dormant  partner.  A  sued  Nathan  Smith  on 
note  given  for  price  of  merchandise,  and  signed  "  N.  Smith."  Judg- 
ment obtained,  but  no  satisfacflion.  A  subsequently  discovered  that 
Newberry  Smith  was  a  dormant  partner,  and  sued  him  for  the  price. 
Defence :  Judgment  against  Nathan  a  bar,  and  note  taken  in  satisfac- 
tion of  claim.  Forms  of  pleading  waived  by  parties,  and  cause  sub- 
mitted for  decision  on  its  merits. — No  equity  in  A's  claim,  or  new 
cause  of  acStion  would  accrue  upon  discovery  of  dormant  partner,  and 
statute  of  limitations  would  not  bar  the  claim.  Smith  v.  Black,  9  S. 
&  R.  142,  Pa.  (1S22). 

2.  vStatute provides  for  this  contingency :  "That  no  plea  in  abatement 
"  for  the  non-joinder  of  any  person  as  co-defendant  shall  be  allowed 
"  in  any  court  of  common  law,  unless  it  shall  be  stated  in  such  plea 
"that  such  person  is  resident  within  the  jurisdidlion  of  the  court." 
3  &  4  William  IV.,  c.  42. 

Defendant's  absence  from  J urisdiBion  prevents  judgment  against 
co-defendant  from  merging  joint  claim.     A,  holder  of  B  &  C's  joint 

249 


§85- 


Business  Contracts. 


Pt.  2,  Ch.  5. 


note,  sued  them  before  a  justice,  aud  effedled  service  on  B.  C,  a  non- 
resident of  the  county,  was  not  found.  Judgment  against  B  being 
unsatisfied,  A  sued  B  &  C,  i,  to  make  C  party  to  judgment,  and,  2, 
enter  judgment  against  him  on  note.  C  appealed  to  C.  P.,  and  setup 
to  I :  Acflion  brought  before  days  of  grace  expired ;  to  2,  cause 
merged  in  judgment. — Judgment  for  A.  Technical,  admitted  no 
substantive,  defence.  C's  absence  from  jurisdidlion  made  his  non- 
joinder a  necessity,  and  judgment  did  not  merge  claim,  upon  which, 
notwithstanding  judgment,  action  could  be  brought  by  Rev.  Stats. 
§  5366.  =*  Defendant  not  summoned  made  party  to  judgment  by  action. 
Yoho  V.  McGovern,  42  O.  St.  11  (1884). 

"^5366.  When  judgment  is  rendered  in  this  State  on  ajointcon- 
"tradl  or  instrument,  parties  to  the  action  who  are  not  summoned  * 
"*  may  be  made  parties  thereto  by  a6tion  in  the  same  court  if  they 
"be  summoned  in  the  State." 

Iwreign  judgment  against  partner  don '  t  bar  domestic  aBion  against 
co-partners.  A  attached  steamboat,  at  New  Orleans,  for  supplies  fur- 
nished at  B,  the  captain's,  request,  and  recovered  judgment  against 
B  and  the  other  four  Pa.  co-owners,  whom  B  represented  by  La.  law. 
A  subsequently  sued  all  five,  at  Pittsburgh,  for  the  supplies.  Two 
were  served  and  made  defence:  Claim  merged  in  judgment  against 
B. — Not  merged.  La.  Court  had  no  jurisdiction,  except  over  B,  and 
if  its  judgment  merged  the  claim,  more  efFe<5l  would  be  given  to  a 
foreign  judgment  in  Pa.  than  to  a  domestic  judgment.  Campbell  v. 
Steele,   i  Jones  394,  Pa.  (1849). 

Whether  judgfnent  against  a  partner  releases  co-partner  depends  on 
law  of  the  forum.  B,  C  &  D  drew  on  A,  without  funds.  A  paid, 
and  sued,  and  got  judgment  against  B,  in  Mo.,  where  separate  judg- 
ment on  joint  debt  is  no  bar  to  adlion  against  the  others.  A  recov- 
ered a  portion  of  claim,  and,  for  the  balance,  sued  all  in  N.  Y.,  where 
judgment  against  one  joint-debtor  releases  the  others. — Defence : 
Released  by  Mo.  judgment. — ^Judgment  for  defendants.  Mo.  judg- 
ment no  greater  effe6l  than  N.  Y.  judgment.  Suydam  v.  Barber,  6 
Duer34,  N.  Y.  (1856). 


§85. 

^\\t  claim,  ill  consequence  of  its  being  iLtentifieb  mitl]  tl^e  joint 
process  at  lain,  lost  its  cl)aiacter  in  equity  as  a  rigljt  against 
eacl)  of  tl)e  fiavtners. 

In  equity,  liow  does  the  claimant  stand?  All  con- 
trads  are  joint  and  several  in  equity.'  The  loss  of 
his  claim  against  the  dormant  partner  resulted  from 
the  technical  procedure  of  the  law,  and  not  from  any 
remissness  of  the  plaintiff.     He  brought  his  a6lion  in 


i 


Pt.  2,  Ch.  5.  Business  Contracts.  §86. 

compliance  with  tlie  law,  and  in  the  only  mode  he 
could  sue  at  all.  It  is  the  fun6lion  of  equity  to  sup- 
plement the  defedlive  operation  of  legal  process  for 
the  relief  of  the  vi(?tim.  The  answer  to  his  petition 
was  startling.  The  plaintiff  has  no  equity."  He 
elected,  unconsciously,  it  is  true,  to  proceed  against 
the  ostensible  partner,  but  he  has  exerted  his  right, 
and  he  is  bound  by  his  choice.     The  law  is  equity.^ 

At  first,  the  contrail  was  admitted  to  be  joint  and 
several,  at  least,  in  equity;  but  after  the  judgment 
against  a  partner  was  held  to  extinguish  the  claim,  it 
seemed  easier  to  recant  the  principle,  even  in  equity, 
than  to  impeach  the  verity  of  the  record.^ 

1.  This  principle  of  equity  is  now  generally  adopted  at 
law,  and  in  most  of  the  States  is  enforced  by  statute. 

"All  contrails  which  by  common  law  are  joint  only,  shall  be  con 
"strued  to  be  joint  and  several."  Rev.  St.  Mo.  1879,  ?  658. 

Dakota  Codes,  1884,  ^951;  Illinois  Statutes  of  1887,  ^5;  Kansas 
Compiled  Laws  of  1885  (1075),  ^  i. 

Joint  contrafl  also  several.  Judgment  for  A  against  B  &  C,  part- 
ners, in  Illinois  Court.  A  sued  C  on  the  judgment  in  U.  S.  C.  C. 
Demurrer. — Acftion  lay.  Missouri  statute  made  joint  contradl  joint 
and  several.     Belleville  Sav.  Bank  v.  Winslow,  30  F.  488  (1887). 

2.  Dornta?it  paHner  not  sued  competent,  because  judgment  tvould 
release  hiin.  A  brought  suit  on  a  note  given  by  B  &  C.  On  trial, 
obje(5led  to  testimony  of  D,  a  dormant  partner. — Competent.  Judg- 
ment against  B  &  C  would  extinguish  original  debt;  judgment  for 
defendants  would  bar  subsequent  suit,  and  equity  would  not  relieve 
plaintiff,  because  he  did  not  know  that  D  was  a  dormant  partner. 
Consequa  v.  Willing,  i  Peters  301  (1816). 

3.  Judgment  against  one  partner  will  not  be  vacated  in  order  to  let 
plaintijf  charge  another  with  him  as  a  partner.  A  &  Co.  obtained 
judgment  against  B,  but  obtained  nothing  by  execution.  They  ap- 
plied to  vacate  judgment,  in  order  to  proceed  also  against  C,  as  B's 
partner. — Refused.    Wilkins  v.  Budd,   i  Hal.  153,  N.J. ^(1822). 

4.  Supra  ?77,  n.  3. 


§86. 

^\]t  bcati)  of  a  partner  rcleaseii  Ijts  estate  at  latu,  autr  maibc 
it  onhj  a  surctn  far  tl)e  plaintiff's  daini  in  cquitn. 

251 


§86.  Business  Contracts.  Pt.  2,  Ch.  5. 

The  death  of  a  partner  might  prevent  the  claimant 
from  bringing  a  joint  a6lion.  The  procedure  again 
defeated  the  right.  The  law  adhered  to  the  joint  pro- 
cess, and  could  not  frame  a  joint  a6lion  which  would 
lie  against  the  living  and  the  representatives  of  a  de- 
ceased partner.'  The  breach  of  his  contrail  charged 
the  partner's  estate,  but  the  absence  of  a  remedy  made 
the  law  deny  this  elementary  right."  The  claimant 
must  sue  the  living  partners,  and  look  only  to  them 
for  satisfa(5lion.'  As  the  remedy  at  law  was  inade- 
quate, owing  to  its  defedlive  procedure,  and  excluded 
the  claimant  from  access  to  his  debtor's  estate,  he  was 
driven  to  re-assert  his  right  in  equity,  where  the  pro- 
cedure does  not  run  away  with  the  right.  Equity  did 
not  stickle  at  the  forms  of  procedure,  but  it  imposed 
terms  upon  the  claimant.^  He  was  entitled  to  relief 
against  the  deceased  partner's  estate,  but,  as  the  claim 
in  equity  was  based  upon  an  inadequacy  of  the  remedy 
at  law,  the  claimant  must  exhaust  his  legal  redress.^ 
Unless  he  proved  the  insolvency  of  the  surviving  part- 
ners and  an  absence  of  firm  assets,  or  exhausted  his 
remedies  at  law,  he  did  not  qualify  himself  to  demand 
relief  in  equity." 

I.  Suing  executor  of  deceased,  with  surviving,  partner,  error.  A  sued 
B  et  at.,  trading  as  a  Brick  Co.,  and  joined  D,  administrator  of  C,  a 
deceased  partner,  on  the  Co. 's  sealed  note.  Defendants,  inter  alia, 
assigned  as  error  the  joinder  of  C's  executors.— Misjoinder.  Error, 
but  S.  C.  amended  record,  by  striking  off  administrators  as  co-de- 
fendants-. Objedlion  not  having  been  made  below,  when  plaintiffs 
could  have  amended  under  A(5l  4  Mav,  1852,  P.  L.  574,  S.  C.  made 
amendment.    Hoskinsou  v.  Eliot,  12  Smith  393,  Pa.  (1869). 

No  joint  remedy  against  surviving  and  executor  of  deceased  part- 
ner. No  resort  to  deceased  partner' s  estate  until  remedy  against  sur- 
vivor exhausted,  or  his  insolvency  shown.  B  &  C  made'a  firm  note  to 
A,  who  sued  B  and  D,  executor  of  C.  Complaint  did  not  aver  insol- 
vency of  B,  nor  return  of  execution  unsatisfied.  D's  defence:  Com- 
plaint shows  no  cause  of  action  against  decedent's  estate.— Judgment 
for  D.  Complaint  must  show  insolvency  of  survivor,  or  remedy  ex- 
hausted against  him,  because  the  firm  fund  in  the  hands  of  the  sur- 

252 


J 


Pt.  2,  Ch.  5.  Business  Contracts.  §86. 

vivor  is  primarily  liable  for  firm  debts.  The  surviving  and  executor 
of  deceased  partner  cannot  be  made  co-defendants  in  a  suit  at  law 
under  the  code.  The  remedy  is  against  the  deceased  partner's  estate 
only  in  equity.  Voorhis  v.  Childs,  17  N.  Y.  355  (1858). 

2.  LowRiE,  C.  J.:  "It  was  only  because  the  remedies  were  defe<5live 
"that  it  (decedent's  estate)  was  before  (the  statute,  11  April,  1848,  ^4 
"//{/ra  g 88)  exempt."   loCas.  412. 

3.  The  cause  of  a6lion  against  the  deceased  partner's 
estate  does  not  accrue,  or  the  statute  of  limitations  be- 
gin to  run,  until  the  remedies  against  the  surviving 
partner  have  been  pursued. 

Short  statute  of  limitatiojis  don't  bar  Jinn  creditot-^s  suit  against 
deceased  partner's  estate.  Statute  provided  that  upon  executor's  ad- 
vertisement, creditors  must  present  their  claims  within  six  months, 
and,  if  disputed,  bring  suit  within  six  months.  A  was  firm  creditor 
of  B  &  C.  He  only  presented  his  claim,  without  suing  the  survivor, 
or  pro\'ing  him  insolvent  to  C's  executors,  who  equivocally  disputed 
it,  and  did  not  include  it  in  their  account,  which  the  surrogate  con- 
firmed. A  excepted.  Defence:  No  suit  within  six  months. — Ex- 
ception sustained.  Claim  must  be  definitely  rejedled.  Statute  runs 
only  against  absolute  claims.  A's  claim  contingent  until  insolvency 
of  survivor  shown,  or  remedy  against  him  exhausted.  A  sufficient 
amount  should  be  set  apart  to  meet  the  claim  should  it  become  a 
charge  against  C's  estate.  Hoyt  v.  Bennett,  59  N.  Y.  538  (1872). 

4.  Surety's  estate  not  charged  in  equity  on  account  of  principal's  in- 
solvency. A  sued  executors  of  C,  in  1814,  for  balance  unpaid  by  B 
of  specialty  debt.  B  received  the  loan,  and  C  was  surety  for  its  re- 
payment. C  died  in  1807,  and  B  became  insolvent. — No  equity  to 
charge  C's  estate.   Weaver  v.  Shryock,  6  S.  &  R.  262,  Pa.  (1820). 

5.  Deceased  partner's  estate  liable  icpon  return  of  executioft  against 
surviving  partner  unsatisfied,  or  by  proof  of  insolvency.  B  &  C,  part- 
ners. C  died,  and  A  recovered  judgment  for  a  firm  debt  against  B, 
as  surviving  partner.  Execution  was  returned  unsatisfied.  A  sued 
C's  executrix.  Defence:  B  had  property. — Recovered.  Exhausting 
legal  remedy  equivalent  to  proof  of  insolvency.  Sheriff's  return  con- 
clusive. Pope  V.  Cole,  55  N.  Y.  124  (1873). 

6.  foinder  of  a  deceased  partner's  representatizre,  as  defendant,  with 
survivor,  will,  perhaps,  be  allowed,  if  the  firm  is  insolvent ;  certainly 
if  both  firm  and  survivor  are  insolvent.  A  made  advances  to  B  &  C, 
on  cotton  shipped  by  the  firm.  He  sold  the  cotton  for  the  advances. 
I  January,  1872,  settlement  of  account  showed  balance  of  $62. 54  due 
B  &  C.  27  June,  1872,  B  died.  Though  no  provision  had  been  made 
for  it,  C  continued  the  business  until  29  November,  1875,  when  the 
firm  was  proved  to  be  insolvent,  and  C  was  so  in  fadt.  A  sued  D,  B's 
executor,  and  C  for  balance  of  account,  and  obtained  judgment.  Ex- 
ceptions :  Representative  of  deceased,  cannot  be  joined  with  surviving 
partner. — Not  error.  Code  admits  any  joinder  which  could  be  made 
in  equity.  Insolvency  of  surviving  partner,  and  of  the  firm,  is  suffi- 
cient to  join  deceased  partner's  representative  as  co-defendant,  even 
if  insolvency  of  the  firm  alone  is  not  suflScient.  Anderson  v.  Pollard, 
62  Geo.  46  (187S). 


253 


^S-j.  Business  Contracts.  Pt.  2,  Ch.  5. 

§87. 

(5l)c  Licatl)  of  a  partner  pcnbing  suit  against  t[)£  firm  also 
took  auuiij  tl)c  plaintiff's  rigljt  to  procwb  against  l)is  estate. 

The  remedy  survived  only  against  the  living  part- 
ners. The  death  could  not  be  suggested  of  record, 
and  a  sci.fa.  issued  against  the  executors,  to  make 
them  parties  to  the  original  suit.^  The  plaintiff  could 
not  join  the  deceased  partner's  representatives,  even 
for  conformity.^  By  unnecessarily  joining  them, 
plaintiff  would  not  render  surviving  partner  incompe- 
tent to  testify  because  plaintiff  would  be  excluded.^ 

1.  If  sni-'ivins;  partner  cotifesses  judgment,  deceased's  estate  is  dis- 
charged. A  sued  both  B  &  C  on  a  joint  and  several  bail  bond.  B 
died,  iu  1823,  pending  suit,  and  sci.  fa.  against  his  administrators. 
Defence:  C  liable  alone  as  surviving  obligor.  In  1840,  C  confessed 
judgment  for  claim,  with  interest  from  1822.  No  satisfa<5lion. — B's 
estate  discharged.   Finney  v.  Cochran,  i  W.  &  S.  112,  Pa.  (1841). 

2.  Firm  creditor  must  sue  surviving  partner,  if  solvent,  B&Cmade 
a  note  to  D,  and  assigned  to  A.  C  died.  B  and  D  became  his  ad- 
ministrators. A  sued  B  and  D,  but  did  not  serve  D.  Both  defend- 
ants appeared.  Defence :  A  should  first  sue  B,  as  survivor.  Reply : 
Judgment  asked  against  B  alone;  D  joined  merely  for  conformity, 
and  his  appearance  irregular,  without  service. — B,  being  solvent,  no 
cause  of  action  against  C"s  estate,  and  A  must  amend,  by  striking 
off  D,  who  had  the  right  to  appear  without  service.  Higgins  v.  Rock- 
well, 2  Duer  650,  N.  Y.   (1853). 

3.  Executors  of  deceased  partners  unnecessary  parties  ;  suit  should  be 
against  surviving , partners.  Surviving  partner  not  disqualified  by 
joinder  of  deceased  partner' s  executors  as  co-defendants.  A  brought 
ejedlment  against  B,  C  &  D,  partners.  Both  parties  claimed  title  by 
sheriff  sales  of  E's  leasehold.  A  alleged  that  first  sale,  to  defendants, 
was  fraudulent,  and  second  sale,  to  plaintiff,  passed  the  title.  A  died, 
and  his  administrators  were  substituted;  B  died,  and  his  executors 
were  substituted.  Defendants  called  C  to  disprove  representations 
at  first  sheriff's  sale,  which  took  place  before  the  death  of  either  A 
or  B,  to  buy  in  the  title  for  E.— Incompetent,  not  because  A  an  as- 
signor and  his  administrators  assignees  under  proviso  to  ?,  i  of  A61 
15  April,  1869;  Eis  assignor  of  both,  plaintiff  and  defendants;  but 
because  the  cause  of  adlion  arose  from  a  tort,  or  contradl,  in  A's  life- 
time, and,  therefore,  his  administrators  sue  in  their  representative 
capacity,  and  as  "next  in  interest,"  under  KS.  13  April,  1807,  §3. 
B's  executors  not  being  necessary  parties  to  the  ejedlment  against 
the  surviving  partners,' the  substitution  did  not  render  C  incompe- 
tent.   Oram  v.  Rothermel,  2  Outerbridge  300,  Pa.  (1881). 

254 


I 


Pr.  2,  Ch.  5.  Business  Contracts.  §88. 

§88. 

M5  of  Ipcnns^lrania  procilie  against  a  failure  of  tl)c  process 
bji  tljc  bmtl)  of  a  partner  penbing  suit. 

The  AS.  of  II  April,  1848,  §  4,  enadls:  "  In  suit  or 
"  suits  which  may  hereafter  be  brought  against  the 
"  executors  or  administrators  of  a  deceased  co-partner, 
"  for  the  debt  of  a  firm,  it  shall  not  be  necessary  to  aver 
"  on  the  record  or  prove  on  the  trial,  that  the  surviv- 
"  ing  partner  or  partners  is  or  are  insolvent  to  enable 
"  the  plaintiff  to  recover."^ 

The  language  does  not  mean  that  burden  of  proof 
is  shifted  from  the  plaintiff,  and  that  the  representa- 
tives of  the  deceased  partner  may  set  up  the  solvency 
of  the  surviving  partner  as  a  defence  to  the  suit.^  On 
the  contrary,  the  statute  gives  a  dire(5l  and  immediate 
remedy  against  any  or  all  of  the  partners  or  their  es- 
tates.^ 

1.  P.    Iv.   536. 

2.  Statute  gives  firm  creditor  direB  remedy  against  deceased  partner' s 
estate.  A  sued  D,  administratrix  of  B,  who  had  given  A  the  firm 
notes  of  B  &  C.  A  had  sued  C,  as  surviving  partner,  but  the  verdidl 
■was  for  C. — Judgment  for  A.  Under  adl  remedy  alternative,  in  ac- 
cordance with  the  "general  principle  of  partnership  relation,  which 
makes  the  estate  of  each  partner  responsible  for  partnership  debts." 
Brewster  v.  Sterrett,  8  Casey  115,  Pa.  (1858). 

3.  Remedy  against  surviving  and  deceased  partner  cumulative.  B  & 
C,  partners.  A  recovered  judgment  against  C,  surviving  partner,  and 
upon  distribution  of  B's  estate  in  Orphans'  Court,  claimed  payment. 
Judgment  not  disputed  as  liquidation  of  claim  before  auditors  and 

court  below. — Entitled.  Remedies  made  cumulative  in  order  to  cor- 
real defecft  of  Common  law  procedure.  Moore's  Appeal,  10  Casey  411, 
Pa.  (1859). 

The  death  of  a  partner  no  longer  exempt.s  his  estate 
from  liability  for  the  firm  debts  where  his  co-partner  is 
solvent,  nor  does  it  merely  shift  the  burden  of  proof 
upon  his  representatives,  who  can  exempt  his  estate  by 
proving  the  surviving  partner's  solvency;  but  the  de- 
ceased partner's  estate  is  liable  in  the  first  instance,  at 
the  creditor's  option,  for  the  amount  of  his  debt. 

255 


58S.  BusiNKSS  Contracts  Pt.  2,  Ch.  5. 

Diurasnt  partner's  estate  liable  for  fir^n  debts.  B,  C  &  D,  partners, 
employed  nephew  A,  at  wages,  for  17  years.  B  died;  C  &  D  paid 
amount  due  A  for  ser\'ices. — B's  estate  liable  for  its  third.  Moist's 
Appeal,  24  Smith  166,  Pa.  (1873). 

Deceaseil  partner's  estate  liable  for  firm  debts  in  first  instance.  B 
took  C  into  partnership.  C  became  joint  owner  of  the  assets  of  the 
business,  and  jointly  liable  for  B's  debts.  B  &  C  gave  D  a  note  for 
bis  claim  of  $2,666.64.  C  sold  out  his  interest  to  E,  who  succeeded 
to  C's  liabilities.  F  bought  out  B,  succeeding  to  his  liabilities,  and 
continued  the  business  with  E.  E  settled  with  A,  to  w4iom  D  had 
endorsed  the  note,  by  giving  four  notes  of  E  &  F,  also  signed  by  B 
&  C,  for  the  original  note,  which  was  to  be  surrendered  when  the 
four  notes  were  signed  by  G.  He  never  signed,  and  A  proved  the 
debt  against  F's  estate.  Two  of  the  notes  were  allowed  and  paid, 
but  the  others  were  contested. — Judgment  for  A.  He  was  not  bound 
to  exhaust  the  firm's  assets  in  E's  hands  before  proceeding  against 
F's  estate.  B's  debt  became  a  joint  obligation  upon  his  taking  C  in 
partnership,  and  continued  joint  through  the  various  changes.  Sil- 
verman V.  Chase,  90  111.  37  (1878). 

A  subsequent  statute  enadls:  "That  in  no  case  * 
"on  any  joint  contrail  *  shall  the  courts  *  entertain 
"  any  plea  or  defence  upon  the  part  of  any  heir  *  ex- 
"  ecutor  or  *  administrator  that  one  or  more  of  said  * 
"  contradlors  *  has  deceased  since  the  commencement 
"of  *  suit;  but  the  same  shall  be  proceeded  in  to 
"judgment  and  execution  against  the  estate  of  said 
"decedent,  as  though  said  suit  *  had  been  com- 
"  menced  against  said  decedent  alone. "^ 

This  a6l  was  not  limited  in  its  efFe(5l  to  the  mischief 
of  a  joint  a6lion;  which  would  be  cured  by  giving  the 
plaintiff  a  new  suit  against  the  deceased  partner's  rep- 
resentatives. For  why  put  the  plaintiff  to  the  delay 
and  expense  of  another  suit?  If  no  adlion  corresponds 
to  the  right,  let  the  courts  frame  aclions  to  enforce  the 
rights  which  they  establish.^  The  process  of  suggest- 
ing the  death  of  a  party  on  the  record,  and  of  substi- 
tuting his  representatives,  is  familiar  pradlice,  and 
dispenses  with  the  circuity  of  an  additional  suit.  The 
embarrassment  of  the  situation  was  imaginary,  and 
the  joint  suit  proceeds  as  if  no  defendant  had  died." 


256 


Pt.  2,  Cii.  5.  Business  Contracts.  §88. 

Similar  ena6lments  were  made  in  different  States, 
to  preserve  the  remedy  against  the  estate  of  a  partner, 
if  he  died  before  suit  had  been  brought,  or  judgment 
obtained  against  him/ 

In  equity,  joint  process  against  both  is  feasible,  and 
the  claim  no  longer  survives  against  the  living  part- 
ner even  as  a  principal  with  the  decedent's  estate  as 
surety,  but  founds  a  dire6l  remedy  against  both,* 

4.  Acl  of  22  March,  iS6i,  P.  L.  i86. 

5.  "It  shall  be  the  duty  of  the  Supreme  Court,  at  their  sessions  in 
"banc,  from  time  to  time,  to  devise  and  establish,  by  rule  of  court, 
"such  new  writs  and  forms  of  proceedings,  as  in  their  opinion  shall  be 
"necessary  or  convenient  to  the  full,  direct,  and  uniform  execution 
"of  the  powers  and  jurisdi6lion  possessed  by  the  said  Court,  or  by 
"the  Courts  of  Common  Pleas,  District  Courts,  Orphans'  Courts  or 
"Registers'  Courts."    AA  i6  June,  1836,  ^3,  P.  L.  786. 

Mr.  Justice  Gordon  :  "If  any  serious  difficulty  should  be  found  to 
"occur  from  the  ordinary  forms  of  the  writs  now  in  use,  this  Court 
*'  can,  under  the  3d  sedlion  of  the  &&.  of  June,  1836,  provide  such  new 
"or  modified  forms  as  may  be  required  to  meet  the  exigency.  We 
"think,  however,  this  will  not  be  found  to  be  necessary."  Dingman 
V.  Amsink,  27  Smith  118,  Pa.  (1874). 

6.  y1  partner's  death  after  suit  brought  is  110  bar  to  a  joint  judgment 
against  his  administrators  and  the  surviving  partner.  A,  the  holder, 
brought  assumpsit  against  the  makers  of  a  joint  promissory  note, 
signed  with  the  firm  name  of  B  &  C.  Alter  service  upon  both  par- 
ties, B  died,  and  his  administrators  were  substituted.  Judgment 
against  B's  administrators  and  C. — Not  error.  A<fl  22  March,  1861, 
P.  L.  186,  not  only  recognized  the  several  liability  of  joint  debtors, 
and  provided  a  separate  remedy  after  joint  process,  but  worked  out 
the  independent  remedies  through  a  joint  judgment  against  the  sur- 
vivor and  the  deceased's  estate.  Sci.fa.  siir  mortgage,  or  to  revive 
judgment,  issues  against  living  and  the  representatives  of  deceased 
defendants.  Ac?l  June,  1836,  \  3,  P.  L.  786,  would  give  a  new  writ 
if  required.  Execution  against  a  decedent's  estate  is  regulated  by 
A6t  24  February,  1834,  and  if  his  real  estate  is  sought  to  be  charged, 
the  widow  and  heirs  must  be  brought  in  by  \  34.  Dingman  v.  Am- 
sink, 27  Smith  114,  Pa.  (1S74). 

7.  "The  representatives  of  one  jointly  bound  with  another  for  the 
"payment  of  any  debt  or  for  performance  or  forbearance  of  any  adl 
"or  for  any  other  thing,  and  dying  in  the  life-time  of  the  latter,  may 
"  be  charged  by  virtue  of  such  obligation  in  the  same  manner  as  such 
"representative  might  have  been  charged  if  the  obligors  had  been 
"bound  severally  as  well  as  jointly  :  Provided,  that  the  plaintiff  shall 
"  first  pursue  the  surviving  debtor  to  final  judgment  and  execution." 
Rhode  Island  Public  Stats,  of  1882,  ^  28. 

"In  any  adlion  founded  on  any  *  contraeft  or  liability  of  co-part- 
"  ners,  it  shall  be  lawful  to  sue  any  one  or  more  of  the  parties  liable 
"  on  such  *  contract  or  liability  ;  and  separate  suIlS  may  be  brought 

257 


§88.  Business  Contracts.  Pt..2,  Ch.  5. 

"against  the  representatives  of  such  of  the  parties  as  have  died,  or 
"joint  suits  mav  lie  brought  against  the  representatives  of  such  de- 
"  ceased  parlv  and  those  who  are  aUve  and  bound  therein."  Miss. 
"  Revised  Code  of  1880,  g  1 134. 

"The  representatives  of  one  jointly  bound  with  another  for  the 
"  pavinent  of  a  debt,  or  for  the  performance  or  forbearance  of  any  adl, 
"or  for  any  other  thing,  and  dying  in  the  life-time  of  the  latter,  may 
"be  diarged  by  virtue  of  such  obligation,  in  the  same  manner  as 
"such  representatives  might  have  been  charged,  if  the  obligors 
"had  been  bound  severally  as  well  as  jointly."  N.J.  Revision  of 
1709-1877,  ?.3.  ^    .   .  ,  ,        , 

"All  joint  obligations  and  promises,  are  made  joint  and  several,  and 
"the  debt  or  obligation  shall  survive  against  the  heirs  and  personal 
"representatives  of  deceased  obligors,  as  well  as  against  the  surviv- 
"ors,  and  suits  may  be  brought  and  prosecuted  on  the  same,  against 
"all  or  any  part  of  the  original  obligors,  and  all  or  any  part  of  the 
"representatives  of  deceased  obligors,  as  if  such  obligations  and  as- 
"  sumptions  were  joint  and  several."   Tenn.  Code  of  1884,  ?>  3486. 

•'  If  one  of  the  several  obligors  or  promisors  jointly  holden  by  a 
"coiitracfl  in  writing  dies,  the  representatives  of  such  deceased  per- 
"son,  and  the  surviving  obligors  or  promisors,  maybe  charged  by 
"virtue  of  such  contracft  in  the  same  manner  as  if  it  had  been  joint 
"and  several."  Vt.  Revised  Laws  of  1880,  §  935. 

After  proceedings  against  firm  as  if  insolvent,  the  Statute  adds  the 
proviso:  "  Nothing  herein  invalidates  the  right  of  claimants  to  re- 
"  cover  from  the  surviving  partner,  or  the  estate  of  the  deceased 
"partner  any  balances  due  them  after  the  partnership  property  is 
"exhausted."  Maine  Revised  Stats,  of  1883,  p.  571,  ^3. 

"  Whenever  two  or  more  persons  are  sued  as  joint  defendants,  and 
"  on  the  trial  the  plaintiff  fails  to  prove  a  joint  cause  of  adlion  against 
"  all,  but  proves  a  cause  of  acftion  against  one  or  more  of  the  defend- 
"  ants  judgment  may  be  rendered  against  him  or  them  against  whom 
"the  cause  of  acSliou  is  pending."  Minnesota  Laws  1873,  c.  87;  Gen. 
St.  1S78,  c.  66,  >/.  266;   Wisconsin  Revised  Stats,  of  1878,  l  2885. 

"  111  case  of  the  death  of  one  or  more  of  the  joint  obligors  or  prom- 
"isors,  the  joint  debt  or  contraA  shall  and  may  survive  against  the 
"heirs,  executors  and  administrators  of  the  deceased  obligor  or 
"promisor  as  well  as  against  the  survivors."  Kansas  Compiled 
Laws  of  18S5  (1076),  \  2. 

"When  all  the  obligors  or  promisors  shall  die,  the  debt  or  con- 
"tracl  shall  .survive  again.st  the  heirs,  executors  and  administrators 
"of  all  the  deceased  joint  obligors  and  promisors."  lb.  (1077)  ^3. 

"Where  two  or  more  persons  are  jointly  bound  by  bond,  promis- 
||sory  note,  or  any  other  writing,  whether  sealed  or  unsealed,  to  pay 
''  money  or  do  any  other  tiling,  and  one  or  more  of  such  persons  shall 
I'die,  his  or  their  executors  and  heirs  shall  be  bound  in  the  same 
'/"tanner  and  to  the  same  extent  as  if  the  person  so  dying  had  been 
'bound  .severally  as  well  asjointly."  M'd  Revised  Code  of  1878,  ^51. 
"  If  a  joint  obligor  be  dead  when  the  suit  is  brought,  his  representa- 
tive inay  be  sued."  lb.  <!  53. 
^"  If  either  of  the  obligors,  against  whom  a  joint  a<5lion  shall  be 
^^  brought,  .shall  die  pending  the  same,  the  plaintiff  may  suggest  such 
^^death,  and  the  court  shall  cause  the  suggestion  to  be  entered  of 
^^  record,  and  shall  dire6l  the  clerk  to  docket  an  adlion  as  of  the  same 
^^  term  m  wliicli  tlie  suggestion  is  entered,  in  the  name  of  the  plaintiff 
^^ against  the  obligor  so  dying;  and  in  such  a(5lion  the  same  proceed- 
ings shall  be  had  to  make  the  executor  or  administrator  of  the  de- 

258 


Pt.  2,  Ch.  5.  Business  Contracts.  §89. 

"ceased  obligor  a  party  thereto,  as  if  the  original  a<5lion  had  been 
"  brought  separately  against  all  the  obligors."  lb.  ^  54. 

8.  The  remedy  in  equity  corresponds  to  the  right.  A  sued  B's  executors 
for  B  &  C's  debt,  and,  upon  C's  administration  of  B's  estate,  proved 
for  /"5,i24,  135.  A,d.  A  dividend  of  5  per  cent,  was  declared,  but  be- 
fore payment  A  sued  executors  of  C,  testifying  that  C  was  B's  partner. 
Defence:  A's  testimony  incompetent  against  deceased's  adversary; 
proof  against  separate  estate  res  adjudicate!,  and  bars  recourse  to  sur- 
viving partner. — A  competent.  Proof  did  not  extinguish  claim,  but 
right  against  C's  estate  preserved  subject  to  his  separate  creditors. 
In  re  Hodgson;  Beckett  v.  Ramsdale.  31  Ch.  D.  177  (1855). 


§S9. 


^  statute  of  Pcnnstilcania  seccrcb  tl)e  iu^c^mcnt,  so  tl)at  it 
binbs  tl)£  rcpresmtatiut'S  of  tl)£  Jbecmseb,  as  uicU  as  tlje  surrining^ 
partner. 

The  death  of  one  partner  after  judgment  against 
both,  releases  his  personal  estate  from  liability  for  the 
plaintiff's  claim,  although  it  has  been  liquidated  and 
established  by  the  judgment/  A  sci.  fa.  would  not  lie 
against  the  personal  representatives  of  the  deceased 
judgment-debtor,  although  it  was  suggested  in  the 
writ  that  the  surviving  defendant  was  insolvent,  and 
that  the  plaintiff  had  no  remedy/ 

In  Pennsylvania,  an  a(5l  was  passed  to  rectify  the 
procedure  and  make  it  conform  to  the  right : 

Sedlion  3.  "Where  a  judgment  shall  hereafter  be 
"  obtained  against  two  or  more  co-partners  *  the  death 
"  of  one  or  more  of  the  defendants  shall  not  discharge 
"  his  or  their  estate  or  estates,  real  or  personal,  from 
''  the  payment  thereof;  but  the  same  shall  be  payable 
1 "  by  his  or  their  executors  or  administrators,  as  if  the 
"judgment  had  been  several  against  the  deceased 
■'  alone." 

259 


]Si).  Business  Contracts.  Pt.  2,  Cii.  5. 

Se(5lion  5.  "  Where  a  judgment  shall  be  hereafter 
*'  recovered  against  one  or  more  of  several  partners, 
"  without  any  plea  in  abatement,  that  all  the  parties 
*'  to  the  instrument  or  contrail  on  which  the  suit  is 
"  founded  are  not  made  parties  thereto  such  judgment 
"  shall  not  be  a  bar  to  a  recovery  in  any  subsequent 
"  suit  or  suits  against  any  person  or  persons  who 
"  might  have  been  joined  in  the  a6lion  in  which  such 
"judgment  was  obtained,  whether  the  same  shall  be 
"obtained  amicably  or  by  adversary  process."^ 

Other  States  have  also  provided  that  a  judgment 
shall  bind  a  partner's  estate  in  spite  of  his  death/ 

1.  Walter  v.  Ginrich,  supra  \  83,  n.  3.  There  is  no  reason  for  any  dis- 
tin<5lion  between  the  deceased  partner's  real  and  personal  estate.  The 
judgment  should  survive  against  both,  or  against  neither.  Common- 
wealth V.  Mateer,  16  S.  &  R.  419,  Pa.  (1827). 

2.  Death  of  partner  after  jjidgment  discharges  his  personal  estate, 
though  lien  continues  on  his  real  estate.  Sci.fa.,  in  1845,  by  Pa.,  for 
A's  administrator  against  administrators  of  C,  surety  on  administra- 
tion bond,  who  had  died  since  judgment  in  1824,  against  B  &  C, 
which  was  recovered  by  creditor  of  B  for  his  devastavit.  B,  the  prin- 
cipal in  the  bohd,  and  sole  surviving  obligor,  was  insolvent. — C's 
personal  estate  discharged  by  his  death,  and  lien  against  his  real 
estate  outlawed.  Stoner  v.  Stroman,  9  W.  &  8.  85,  Pa.  (1845). 

3.  Aa  II  April,  1848,  P.  L.  536. 

4.  "Joint  Debtor  Dying.  Estate  How  Liable."  "  When  two  or 
"more  persons  are  indebted  on  any  joint  contra6l,  or  upon  a  judg- 
"ment  founded  on  a  joint  contradl,  and  either  of  them  dies,  his 
"estate  is  liable  therefor,  and  the  amount  thereof  may  be  allowed 
"  by  the  commissioners,  as  if  the  contradl  had  been  joint  and  several, 
"or  as  if  the  judgment  had  been  against  him  alone."  Minn.  Stats,  of 
1878,  <Ji9;  Wis.  ena(5lment  substantially  the  same.  Revised  Stats,  of 
1878,  <!  3848. 

"  If  any  person  jointly  bound  with  another  in  any  contrail  or  by 
"judgment,  shall  die  in  the  life-time  of  such  other  obligor,  his  heir, 
"devisee,  or  representative  may  be  charged  in  the  same  manner  as 
"  if  the  contradl  or  judgment  had  been  separate  against  the  decedent." 
Kentucky,  Gen'l  Stats!  of  188 1,  §  8. 

"  If  any  of  the  obligors  against  whom  a  joint  adlion  was  brought, 
''and  judgment  obtained  thereon,  shall  die  after  judgment,  the 
'I  plaintiff  may  issue  a  scire  facias  on  said  judgment  against  the  ex- 
'^'ccutors  or  administrators  of  the  deceased  defendant,  and  suchjudg- 
"meiit  shall  be  had  on  the  scire  facias  as  if  the  judgment  had  been 
"  rendered  in  a  separate  adlion."  Maryland  Revised  Code  of  1876,  iS5- 
"  "^Y^^"  ^^°  ^^  more  persons  shall  be  indebted  on  anv  joint  con- 
tradl, or  upon  a  judgment  founded  on  a  joint  contra^i  and  either 

260 


Pt.  2,  Ch.  5.  Business  Contracts.  §90. 

"of  them  shall  die,  his  estate  shall  be  liable  therefor,  and  it  may  be 
"  allowed  by  the  commissioners,  as  if  the  contracflhad  been  joint  and 
"several,  or  as  if  the  judgment  had  been  against  him  alone,  and  the 
"other  parties  to  such  joint  contrail  may  be  compelled  to  contribute 
"or  to  pay  the  same,  if  they  would  have  been  liable  to  do  so  upon 
"payment  thereof  by  the  deceased."  Mich.  Annotated  Stats,  of  1882, 
p.  1543.  §  5906. 


§90. 


(Jl)c  statutes  recognise  \\)t  stvtrai  liabilities  of  tl^e  partners 
untierlping  tl)e  joint  form  of  tl)e  contract,  ani»  make  tl)e  pro- 
cedure conform  to  tl)e  liabilitn  mljid)  it  enforces. 

The  judgment  stands  against  the  defendant,  and,  as 
he  is  liable  for  the  whole  debt  individually,  the  co- 
partner is  not  prejudiced  by  limiting  the  judgment 
to  the  defendant.  The  release  of  the  co-partner  by 
merger  was  a  fi(5lion  of  procedure.  Nothing  but  sat- 
isfaction of  the  claim  exonerates  him,  and  he  cannot 
complain,  because  he  is  compelled  to  pay  his  debt. 
The  cause  of  a6lion  is  severed  with  the  judgment 
which  establishes  it.'  The  technical  crochet,  how- 
ever, has  taken  firm  hold  of  the  Professional  mind, 
and  it  is  difficult  to  eradicate  the  notion  that  a  part- 
ner has  a  right  to  repudiate  his^  debt  in  consequence 
of  the  creditor's  litigation  with  his  co-partner.^ 

The  release  of  a  joint  debtor,  or  a  compromise  with 
him,  enured  to  the  benefit  of  his  co-debtors,  on  the 
joint  contrail  theor};',  and  in  analogy  to  the  procedure 
by  which  the  claim  would  be  enforced.''  Statutes  have 
also  been  passed  to  extirpate  this  outlying  vestige  of 
the  conceit.'' 

The  fiction,  to  maintain  itself,  creates  an  artificial 
course  of  reasoning,  which  the  Profession  calls  legal 

261 


t 


§Qo.  Business  Contracts.  Pt.  2,  Ch.  5. 

reasoning,  as  if  the  law  had  appropriated  a  special  in- 
telle(5liial  process  for  its  pradlitioners.     The  creditor 
asks  for  payment  from  his  debtors,  and  the  Profession 
tells  him  a  judgment,  or,  in  other  words,  the  entry  of 
his  claim  on  the  record  of  a  court,  against  one  of  his 
debtors,   is   payment  by   the    others.       The   creditor 
wonders  how  the  procedure,  which  is  but  the  means 
to  procure  payment  from  several  debtors,  who  are  each 
admittedly  liable  for  the  whole  amount,  can  pervert 
the  lawyer's  faculty  of  reason,  and  make  him  think 
he  is  talking  sense.    The  Profession  is  like  the  parent 
who,  when  his  son  asked  for  bread,  gave  him  a  stone. 
The  parable  is  an  answer  to  the  casuistry  which,  in 
the  name  of  justice,  substitutes  a  sham  for  perform- 
ance. 

1.  statutory  severance  of  judgment  severs  the  cause  of  aElion.  A  sued 
executors  of  B,  co-maker  wth  C  &  D  of  promissory  note  for  f  1,200. 
Defence :  B  co-surety  ■with  C  for  D,  and  no  equity  against  B's  estate, 
although  C  &  D  insolvent. — Recover^-.  A(5l  1848  made  joint  judgment- 
debtor's  estate  liable,  and  cause  of  acftion  severed  to  correspond  with 
judgment.  Bowman  v.  Kistler,  9  Casey  106,  Pa.  (1859). 

2.  Supra  \  77,  n.  3. 

3.  Release  of  non-served  partner  extinguishes  judgment  against  co- 
partner for  firm  debt  to  cxtetit  of  partner' s  quota.  B  &  C, partners,  in 
Indiana,  contra6led  debt  to  A,  in  Philadelphia.  In  a6lion  brought  in 
Pennsylvania,  judgment  taken  against  B  for  want  of  appearance.  Re- 
turn: "  Nihil  habef'  as  to  C.  Subsequent  suit  against  C  in  Indiana, 
and  A  released  C.  B's  defence:  Release  operated  as  satisfaction  of 
judgment  against  him. — Release  extinguished  moiety  of  judgment- 
debt.    Greenwald  v.  Raster,  5  Norris  45,  Pa.  (1878). 

Partner  and  firm  creditor  may  stipulate  that  release  shall  operate 
not  to  discharge  co-partner.  A  released  B  and  C,  on  payment  of  part 
due  by  B,  C  <S:  D,  partners,  but  reserved  right  against  D,  whom  he 
subsequently  sued  for  balance. — Recovered.  Apart  from  Ci\al  Code, 
'i  1543,  A  might  release  B  &  C.  Northern  Ins.  Co.  v.  Potter,  63  Cal. 
157  (.1883). 

Vide  note  to  Bailey  v.  Edwards,  1 16  English  Common  Law  Reports 
761,  p.  775  (1866). 

4.  Pennsylvania  A<51  of  22  March,  1862,  H  1-5,  P.  L.  167;  Kansas  Com- 
piled Laws  of  1885,  Release  (1079),  ?5;  Compromise  f-^626-9  1-3)  '^A  1-4; 
Michigan  Annotated  vStatutes  of  1882,  l\  7783-6;  California  Civil  Code 
§1543  ;^  Minnesota  Statutes  of  1878,  I  37 ;  Mississippi  Revised  Code  of 
1880,  ?ioo3;  New  Jersey  vSupplement  to  Revision  of  1 877-S6,  ??i-4; 
Ohio  Re\-ised  Statutes  of  1884,  'i\  3162-5  ;  Rhode  Island  Public  Statutes 

262 


Pt.  2,  Ch.  5-  Business  Contracts.  §91. 

of  1SS2,  ^^,  1-6;  South  Carolina  Laws  of  1883,  §§1-3;  Vermont  Revised 
Laws  of  1880,  U  936-7  ;  Virginia  Code  of  1873,  U  H-'^5- 


^91. 


^[)t  debitor  mas  put  to  l)ts  election  bettueen  a  joint  anb  a  sev- 
eral rcniebji,  but  1)£  is,  on  principle,  entitleii  to  eitl)£r,  or  botl),  for 
tl)c  satisfaction  of  Ijis  claim. 

Thedistindtion  between  a  joint  and  a  j  oint  and  several 
contrail  has  been  almost  obliterated.  The  Supreme 
Court  of  Pennsylvania,  at  one  time,  said  that  there 
were  no  more  joint  contrails,  and  that  all  joint  con- 
tra(fl:s  had  become  joint  and  several.^  This  statement, 
perhaps,  is  not  strictly  accurate.  The  claim  of  co- 
obligees,  whether  partners  or  not,  is  still  joint,  and, 
while  it  is  now  possible  to  recover  against  one  upon 
proof  of  a  promise  by  two,"  it  is  impossible  to  recover 
against  one  upon  proof  of  his  individual  promise  when 
sued  in  conjun6lion  with  another.  But  if  the  state- 
ment were  true  in  its  entirety,  the  change  would  still 
not  meet  the  requirement  of  the  partnership  promise. 
I  The  joint  and  several  is  fully  as  technical  as  the  joint 
i|  contrail,  and  comes  but  little  nearer  an  adequate  ex- 
pression of  the  firm  undertaking. 

The  difficulty  of  the  subjedl  arises  from  the  Common 
law  abstradlion  of  a  joint  obligation.  In  a  common 
sense  view,  if  three  promise  to  pay  one  hundred  dol- 
lars, there  is  the  promise  of  A,  the  promise  of  B,  and 
the  promise  of  C,  to  make  this  payment.  Each  guar- 
antees to  the  promisee  the  receipt  of  the  sum.  The 
j.j  Common  lawyers  were  not  satisfied  with  so  simple  an 
I    explanation,  but  conjured  up  the  abstradlion  of  a  sin- 

!  26: 


§91.  Business  Contracts.  Pt.  2,  Ch.  5. 

gle  promise  made  by  the  three,  and  different  from  a 
promise  by  each  of  the  three  to  pay  the  single  sum. 
Owing  to  this  substantive  difference  between  the  joint 
obligation  and  the  separate  obligations  of  the  promis- 
sors,  it  was  held  that  the  proof  of  a  joint  contradl  in  a 
suit  against  one  established  a  variance,  and  put  the 
plaintiff  out  of  court.  In  consequence  of  this  theory, 
the  whole  claim  was  merged  in  a  judgment  against 
one  of  several  debtors,  and  the  co-debtors  were  thereby 
released,  because  there  could  be  but  one  judgment 
upon  one  and  the  same  obligation.  A  release  of  one 
co-debtor  by  contrail  had  the  same  effe6l,  and  for  the 
same  reason. 

The  same  mental  process  is  observed  among  the 
civilians,  and  the  best  definition  of  the  joint  contrail, 
as  a  common  feature  of  both  systems  of  jurisprudence, 
is  given  by  RibbEntrop,  namely :  "A  unitary  ob- 
ligation with  a  plurality  of  subjedlive  relations.'" 
The  theory  of  a  joint  and  several  contrail  retains  this 
abstraction  in  its  integrity,  and  simply  adds  the 
separate  promise  of  each  partner  as  an  additional  and 
alternative  security.  These  separate  promises  are 
alternative  to  each  other  and  to  the  joint  promise.  If 
the  plaintiff  sued  one  obligor  on  a  joint  and  several 
contrail,  the  defendant  could  not  plead  in  bar  the  non- 
joinder of  his  co-obligors,  because  of  his  separate  pro- 
mise, but  if,  after  judgment,  the  plaintiff  failed  to 
obtain  satisfa6lion,  the  others  were  released,  on  the 
ground  that  the  plaintiff  had  made  his  eleClion.  The 
result  is  that  where  the  plaintiff,  out  of  abundant 
caution,  has  taken  the  promise  of  three  to  pay  him 
the  sum,  the  fanciful  interpretation  put  by  the  law 
upon  his  contraft  deprives   him  of  the  security  for 

264 


PT.  2,  Ch.  5.  Business  Contracts.  ^91. 

which  he  bargained.  It  is  no  answer  to  say  that  he 
might  have  sued  them  all  jointly,  for  that  is  to  make 
a  substantive  right  depend  upon  the  form  of  pro- 
cedure, and  why  should  he  be  compelled  to  sue  jointly 
when  he  has,  in  fa6l,  a  contrail  with  each.  In  a  suit 
against  one,  the  defendant's  only  privilege  is  to  plead 
in  abatement  the  non-joinder  of  his  co-obligors,  which 
does  not  effe(fl  the  substantive  right.  If  the  first  de- 
fendant has  waived  that  privilege,  the  second  defen- 
dant would  lose  it  as  to  the  first  one,  because  its  pur- 
pose had  been  already  accomplished  in  the  judgment 
against  the  first.^ 

The  difiiculty  is  by  no  means  insuperable.  The 
law  does,  in  the  case  of  torts,  recognize  and  enforce 
an  aggregate  of  obligations  for  the  same  performance  ; 
co-tort  feasors  are  liable  jointly,  separately,  and  suc- 
cessively, and  all  that  is  necessary  is  to  apply  to  con- 
trails the  principles  which  govern  in  the  case  of  torts. 
The  theory  of  the  law  will  then  conform  to  the  nature 
of  the  transaction. 

1.  Change  oj  note  from  joint  to  joint  and  several  immaterial.  Ad- 
ministrator of  A  sued  B  &  C,  as  makers  of  a  joint  and  several  prom- 
issory note.  B  was  served,  but  C  was  not.  B's  defence :  Note 
originally  joint,  and  the  words  of  severalty,  "or  either  of  us,"  inter- 
lined after  signature. — Recovery.  Alteration  immaterial,  as  Acts  '30 
and  '48  have  converted  joint  obligations  into  joint  and  several  obli- 
gations.   Miller  v.  Reed,  3  Casey  244,  Pa.  (1856). 

2.  Separate  judgment  good  though  claim  joint.  A  sued  B  &  C,  on  notes 
signed  with  firm  name.  C's  defence  :  B  gave  notes  for  his  individual 
debt  to  A.— Judgment  against  B  alone.  A  appealed. — Affirmed. 
Separate  judgment  good  against  B,  although  claim  joint.  Roberts  v. 
Pepple,  55  Mich.  367  (1884). 

"If  all  the  defendants  have  been  served,  judgment  may  be  taken 
"against  any  or  either  of  them  severally,  when  the  plaintiff  would  be 
"entitled  to  judgment  against  such  defendant  or  defendants,  if  the 
"  action  had  been  against  them,  or  any  of  them  alone."  Civil  Code 
of  Oregon,  ^59,  sub-division  3.  Identical  provision:  Wisconsin 
Revised  vStatutes  of  1878,  'i  2884,  sub  ^  2. 

Joint  contract  covers  several  claims.  A  sued  B,  C  &  D,  trading  as 
B  &  C,  for  merchandise.  C  claimed  that  he  contributed  capital  and 
conducted  business  for   his   infant  son,  D.      A  dismissed   acflion  as 

265 


§g2.  Business  Contracts.  Pt.  2,  Ch.  5. 

aeaiust  D,  and  court,  on  C's  application,  against  him. — Error.  C  liable 
as  partner  with  B.  Suit  on  joint  contract  made  by  three  don't  pre- 
vent judgment  against  two  of  them.      Miles  v.  Wenn,  27  Minn.  56 

Several  liability  enforced  in  joint  action.  A  obtained  verdidl 
ao-ainst  B  C,  et  al.,  for  effecting  sale  of  their  land,  but  B  was  dead  at 
the  time,  and  his  executors  had  been  substituted  as  defendants. — 
Judgment  for  B  C,  et  al.,  notwithstanding  verdicft. — New  trial.  Code 
permits  judgment  in  joint  a6lion  against  defendants  upon  a  separate 
claim.     Fish  v.  Henarie,  13  Pac.  Rep'r.  193,  Or.  (1886). 

3.  S)ie9iahir  befGorrealobligationen,  Don  2)r.  Hermann  gritting;    (Sin= 
'  leitung,  ^^  2,  1859. 

"2)'a^  gjbmifc^e  ^Uedjt  annerfennt  bte  9}lijglic^feit  ine^rfacf)er  birecter  fub-- 
jectittcr  5Bcsic^ung  cmcr  Cbtigation."  Ueber  iitti§  Gonteftation,  ''!>..  52,  a. 
lion  3)v.  ^•.  y.  .Heller,  1827;  ^m  Set^re  tiow  ben  Correal Dbltgationen, 
^,5;  oonSr.  Weorg  ^sutius  Jtibbentrop,  1831. 

"Sa  fid;  bie  (Sorrealobligation  nl^  ein  einjigeS  objectibeg  obltgatorifcil)e§ 
3iec^tiocrt)dltnit;,  aber  init '50Je^rf)eit  ber  fubjectiben  SBejie^ungen."  ^rof. 
Sr.  ^:iinntfrf)art,  Kritifd)eistertelial)rffci^ri|t  fiir  ©efe|gebung unb  Died^tSs 
l»i[fenfd)aft,  29  SBanb,  513,  514  (1887). 

Xie^rbud;  ber  ''^anbecten,  't  213,  i)on  S.  2lrnbt§,  9i.  b.  2trne§burg, 
13th 'edition,  1886. 

Sie  (Sorrealobligationen,  ^.<d,et  seq.,  bon^oS.  Seonj  S[BeibeI(1873). 

Institutes  of  Justinian,  i  vol.  472-477.  By  J.  B.  Moyle,  B.C.L., 
M.  A.  (1883). 

See,  in  opposition  to  the  theory :  Les  Obligations  en  droit  Roman ; 
Par  P.  Van  Wetter,  2  vol.  290,  f,  54  (1882). 

Roman  Law,  2d  edition,  pp.  551,  et  seq.  By  W.  A.  Hunter,  M.  A., 
LL.D  (1885). 

4.  Kendall  v.  Hamilton  (dissent  of  Lord  Penzance),  supra  \  77,  n.  3. 


§92, 


forti  ftlansfielli  iicmonstratcb  tljat  tl)e  iotnt  contract  tuas  scl- 
eral, bij  pennittinci  a  Licfcniiant  to  pleaii  vx  abatement  tl)e  non- 
joiuLicr  of  1)15  co-promissor,  ant)  bti  timninci  tijat  l)is  non-joinkr 
tuas  a  bar  to  tl)e  seoeral  action. 

How  did  the  change  come  about  which  converted 
the  joint  contrail  of  the  Common  law  into  the  joint, 
though  severable,  contrail  of  partners  with  third  per- 
sons ?  Prior  to  Rice  v.  Shute,^  a  plea  in  abatement 
could  not  be  sustained  in  assumpsit,  though  allowed 
in  debt,  and  proof  of  a  joint  contract  put  the  plaintiff 

266 


Pt.  2,  Ch.  5.  Business  Contracts.  §92. 

out  of  court.  Much  less  was  the  failure  to  plead  in 
abatement  a  severance  of  the  joint  contrail  into 
several  contra6ls,  so  as  to  enable  the  plaintiff  to  re- 
cover upon  one  instead  of  upon  all,  as  a  unit  without 
parts. 

The  change  came  about  by  following  the  course 
which  had  always  prevailed  in  the  acftion  of  debt. 
There  non-joinder  of  any  one  liable  with  the  defendant 
was  pleadable  in  abatement.  The  debt  being  the  re- 
sult of  an  obligation,  was  viewed  apart  from  its  source 
in  contrail,  and,  if  demanded  from  the  debtor,  should 
be  paid  by  him,  unless  he  saw  fit  to  turn  the  plain- 
tiff's suit  into  a  means  of  enforcing  contribution  from 
his  co-debtor  in  advance,  instead  of  by  a  subsequent 
suit.  The  absence  of  a  plea  in  abatement  indicated  a 
willingness  to  rely  upon  a  subsequent  suit  for  contri- 
bution, and  the  judgment  merged  the  cause  of  adlion, 
which  was  always  single. 

If  only  one  partner  was  sued  in  assumpsit,  he  could 
not  plead  his  co-partner's  non-joinder  in  abatement 
before  Rice  v.  Shute,  in  1770,  because  a  joint  contra6l 
was  a  totally  distin(5l  cause  of  a(5liou,  and  the  plea 
went  to  the  merits.  It  was  bad,  as  amounting  to  the 
general  issue,  and  should  be  a  plea  in  bar.  Proof  of 
the  joint  contra6l  would  defeat  the  plaintiff's  recovery. 
A  joint  contraA  is  a  unit  without  parts,  and  not  an 
aggregate  of  parts.  Though  the  contrail  were  joint 
and  several,  suit  against  one  would  be  an  eledlion 
which  would  make  the  contrail  several  and  preclude 
any  subsequent  a(?tion  upon  it  as  joint.  Lord  Mans- 
field's adoption  of  a  plea  in  abatement  broke  down 
the  Common  law  notion  of  a  joint  contradl,  and  proved 
that  it  contained  an  aggregate  of  contradls.     The  part- 

267 


§^3-  Business  Contracts.  Pt.  2,  Ch.  5, 

ucr  might,  in  the  first  instance,  make  the  plaintiff,  be- 
cause he  had  dealt  with  the  firm,  join  all  its  members. 
But  the  firm  is  not  a  person  and  makes  no  contrail.  It 
is  the  partners  who  contract,  and  each  partner  contrails 
to  pay  the  whole  debt.  Unless  a  plea  in  abatement 
is  put  in,  the  plaintiff  may  proceed  against  any  partner 
and  recover  judgment  on  his  contract.  This  rule 
needed  further  development,  for  while  Lord  ManSFIELD 
clearly  indicated  the  principle  on  which  the  theory  of 
contradls  was  to  be  remodeled,  the  decision  in  Rice  v. 
Shute  itself  was  merely  an  entering  wedge.  If  the 
reasoning  of  Lord  Mansfield  is  admitted,  it  follows, 
as  an  inevitable  conclusion,  that  a  co-partner  may  not 
plead  in  a  subsequent  suit  the  judgment  in  bar,  be- 
cause it  merged  only  the  contrail  of  the  defendant  in 
the  original  suit,  or  in  abatement,  because  he  cannot 
give  the  plaintiff  a  better  writ. 

I.    Supra  \  80,  n.  I. 


§93. 


(Eliicf  Justice  fHarsljall  carric^  out  tl]c  prhuiplc,  anii  l)ell)  tliat 
tl)c  juLiiinicut  against  a  partner  mas  seceral,  an^  bib  not  imrgc 
tl]c  claim  against  l)is  co^partncr. 

Chief  Justice  Marshall  carried  forward  the  revolu- 
tion in  the  theory  begun  by  Lord  MansfiELD.  The 
claimant,  who  brought  a  separate  suit  against  one 
partner,  on  a  firm  contrail,  and  obtained  judgment, 
subsequently  brought  a  joint  suit  against  both.  Mar- 
shall decided  that  the  judgment  on  the  contract  of  one 
partner  could  not  merge  the  contradl  of  his  co-partner, 

268  J 


I 


Pt.  2,  Ch.  5.  Business  Contracts.  §94. 

unless    the   judgment    included    the    co-partner    and 
bound  him. 

I.  Judgment  against  parlner  does  not  merge  fin>i  contract,  but  enforces 
partner's  several  liability  on  it.  A,  who  sued  B  singly  on  a  note  made 
by  B  &  C,  trading  as  B,  and  obtained  judgment,  sued  B  &  C  jointly  on 
the  note.  C  pleaded  the  judgment  in  bar. — Judgment  for  A.  Judgment 
on  B's  contra6t  did  not  merge  C's  contract.  Sheehy  v.  Mandeville,  6 
Cranch  253  (1810). 

The  judgment  against  a  partner  on  a  firm  claim,  does  not  convert  it 
into  a  separate  claim.  The  contra<5l  was  with  the  firm,  and  not  with 
the  partner  in  his  individual  capacity. 

Contra:  Firm's  claim  for  iuiproveme7it  on  land  of  partner.  B  &  C 
were  partners.  Firm  expended  money,  for  its  own  purposes,  in  im- 
provement of  B's  land.  B  confessed  judgment  to  A  for  a  firm  debt. 
Firm  assigned  for  creditors,  and  assignee  sought  to  restrain  A  from 
selling,  without  notice  of  firm's  equitable  lien  for  improvements. — A 
enjoined.  Firm  debt  merged  in  judgment,  which  covered  only  B's 
separate  title.  Whether  lien  embraced  all  the  improvements,  or 
limited  to  C's  quota,  not  decided.  Averill  v.  Loucks,  6  Barb.  19, 
N.  Y.   (1849.) 


§94. 


ull)c  mabcrn  prarclmrc  abmits  tl)c  scccral  catiscs  of  action,  anb 
so  far  Irom  forcing  a  junction  in  a  singk  action,  requires  a  ncu) 
action  against  partners  tuljo  were  not  scvdcii  in  tl)£  original  suit. 

The  cause  of  a6lion  is  no  longer  joint.  The  prac- 
tice shows  that  the  old  fi(5lion  has  been  superceded 
and  replaced  by  a  new  principle.  If  service  had  been 
effected  upon  some  partners,  the  former  process  was 
to  bring  in  the  others  by  an  alias  or  a  pluries  writ,  in 
order  to  make  them  parties  to  the  original  proceeding, 
and  in  order  to  enter  a  single  judgment  against  all.' 
Now  that  the  judgment  does  not  bar  subsequent  pro- 
ceedings upon  the  contrail,  it  was  conceived  that  an 
alias  or  pluries  should  bring  in  the  other  partners  in 
order  to  let  them  into  a  defence  under  the  original 
process.     On  the  contrary,  a  new  writ  issues,  as  if 

269 


§g4.  Business  Contracts.  Pt.  2,  Ch.  5. 

based  upon  an  independent  cause  of  aAion."  The 
separate  suit  shows  that  the  firm  contradl  is  severable 
and  not  joint. 

1.  How  did  the  plaintiff  declare  when  all  the  partners 
were  not  served?  He  declared  against  those  who  had 
been  served.  The  declaration  set  forth  the  cause  of 
adlion,  and  the  judgment  was  based  upon  the  declara- 
tion. If  the  declaration  was  against  more  defendants 
than  the  judgment/''  or  the  judgment  against  more  de- 
fendants than  the  declaration,"^ the  error  was  fatal,  except 
under  statutory  provisions.*^    . 

a.  Judgment  against  three  and  declaration  against  six,  bad  on  error. 
A  brouj^ht  adlion  of  debt  on  bond  against  six.  By  sheriff's  return, 
three  were  summoned.  Declaration  general  against  all,  and  judgment 
by  default.  Amendment  and  judgment  entered  against  three. — Error. 
Judgment  on  joint  claim  couldn't  stand,  except  against  all.  Declara- 
tion should  be  against  three  who  were  summoned,  with  averment  of 
process  against  rest,  who  could  not  be  found.  Latshaw  v.  Steinman,  1 1 
S.  &  R.  357,  Pa.  (1824). 

b.  Judgment  against  two,  with  declaration  against  but  one,  bad  on  error. 
A  issued  capias  against  B  &  C,  but  sheriff  failed  to  find  C.  Declara- 
tion against  B,  and  alias  against  C,  who  also  entered  bail.  Reference 
to  arbitrators,  who  made  award  for  A. — Judgment  on  award  reversed, 
because  declaration  was  against  B,  and  no  claim  on  the  record  against 
C.  Stewart  v.  Abrams,  7  Watts  448,  Pa.  (1838). 

c.  On  a  declaration  against  dejendants,  judg',nent  may  be  entered 
against  two  served.  A  sued  and  declared  against  B,  C  &  D  on  a  firm 
contract.  D  not  served.  Evidence  failed  to  prove  D  a  co-contraclor. 
Judgment  obtained  against  B  and  C,  who  appealed. — Affirmed.  A 
variance  at  Common  law.  Code  permits  judgment  against  any  defend- 
ants served,  who  are  proved  liable,  and  by  inference  against  those 
sen'ed  when  others  are  not  proved  liable.  Pruyn  v.  Black,  21  N.  Y. 
300(1860). 

2.  Judgment  against  partner  served,  and  second  action  against  co-part- 
ners. A  sued  B,  C  &  D,  joint  makers  of  a  note.  B  was  served,  but  C 
&  D  returned  'not  found.'  Declaration  and  judgment  by  default  for 
amount  of  note  and  interest  against  B.  Alias  and  plurics  summons 
against  C  &  D,  who  averred  material  alteration,  by  adding  "with  inter- 
est" after  note  was  made.  Evidence  to  show  defendant's  assent  ex- 
cluded.— Error.  New  suit  should  be  brought  against  non-served  de- 
fendants. Statute  contemplates  judgment  in  first  aclion  before  second 
brought.  Myers  v.  Nell,  4  W.  N.  229,  Pa.  (1877). 

After  judgment  against  partners  served,  "a  new  adlion  may  be 
brought  against  the  other  members  on  the  original  cause  of  adlion." 
Iowa  Code  of  1884,  \  2553. 


f 


27c 


Pt.  2,  Ch.  5.  Business  Contracts.  §95. 

§95. 

®l)e  stmvai  liability  of  a  partner,  so  long  rcputiiateu,  is  iicu) 
a  recogni^cb  constituent  of  tl)e  firm  liabilitu,  ani)  tl)ere  is  no  joint 
liabilitn  iuLiepcnbent  of  it. 

The  joint  contrail  at  the  Commou  law  was  not 
made  up  of  the  partners'  several  contrails,  but  was 
independent  of,  and  not  connected  with  1:hem.  The 
judgment  confessed  for  the  whole  sum,  by  a  single 
partner  against  himself,  or  recovered  against  him, 
would  not  merge  the  firm  debt  and  prevent  a  joint 
atftion.^  The  judgment  would  be  several,  unless  given 
in  the  course  of  a  joint  suit,  and  would  not,  therefore, 
be  co-extensive  with  the  firm  debt."  The  separate  con- 
tract was  a  different  undertaking,  not  included  in  the 
general  contrail  of  the  firm.  The  relinquishment, 
therefore,  of  the  joint  contrail  furnished  a  considera- 
tion for  the  several  contrail  of  a  partner.^  At  present, 
the  opposite  is  true.  The  several  obligation  of  a  part- 
ner is  no  longer  a  separate  and  independent  liability, 
apart  from  the  joint  obligation  of  the  firm,  but  forms 
part  of  that  obligation,  and  is  included  in  it.''  The 
promise  of  a  creditor  to  release  the  outgoing  and  look 
to  the  continuing  partners  for  payment,  is  not  binding 
for  want  of  consideration.  The  creditor  had  the  sev- 
eral liability  of  the  continuing  partner  already  in  the 
joint  obligation.^  In  fa(5l,  every  joint  contraA  is  an 
aggregate  of  the  several  contrails  of  the  partners. 

I.  Judgment  against  single  partner  for  firm  debt  is  several,  and  will 
not  stand  for  firm  debt.  A  sued  B  &  C,  partners,  before  magistrate. 
Service  effecSled  only  upon  B,  and  judgment  rendered  against  him.  On 
appeal,  trial  ended  in  verdict  and  judgment  against  B. — Reversed. 
Judgment  erroneous.  B  not  a  party  to  suit,  which  was  joint  against 
E  &  C.  Craig  v.  Smith,  15  Pac.  Rep'r  337,  Col.  (18S7). 

271 


ij^^.  Business  Contracts.  Pt.  2,  Ch.  5. 

2,     The  partner  represents  his  co-partners,  or  the  joint 
title,  and  tlie  judgment  recovered  against  him,  entitles 
the  creditor  to  seize  and  sell  the  firm  property.      The 
question  is  :  Does  the  execution  correspond  to  the  judg- 
ment, or  to  the  claim?     In  an  adverse  judgment,  the 
declaration  must  be  against  the  partner  served,  although 
for  a  partnership  debt.''     The  judgment  would  appear 
onlv  against  him,    and   if  it  included   the  co-partner, 
would  be  wrong.''    A  confessed  judgment  by  one  partner 
is  void  as  to  his  co-partner,   who  may  have  the  entry 
against  him  stricken  off  the  record.*^    The  claim,  and 
not  the  judgment  upon  it,  is  the  groundwork  of  the  exe- 
cution.    The  judgment  in  Ross  v.  Howell'' entitled  the 
creditor  to  proceed,  by  execution,  against  the  firm  assets. 
The  co-partner  had  no  grievance,    because   the  claim 
was  for  a  firm  obligation,  and  not  for  the  separate  debt 
of  the  partner.      Had  the  claim  been  for  the  individual 
debt  of  the  partner,  the  co-partner  could  apply  to  open 
the  judgment,  and  be  let   into  a  defence,   in  order  to 
disprove  a  debt  due  by  the  firm,  and  redlify  the  cause 
of  a(5lion,  even  after  it  had!been  merged  in  a  judgment. 
He  never  had  his  day  in  court  to  make  a  defence  to  the 
claim.      But  as  the  judgment  does  not  bind  his  separate 
estate  under  the  Pennsylvania  pra6lice,  and  as  the  part- 
ner may  admit  a  debt  against  the  firm,  his  confession  of 
judgment  will  be  conclusive  that  the  firm  owes  the  debt 
claimed  by  the  plaintiff. 

a.  Latshaw  v.  Steinman,  supra  |  94,  11.  a. 

b.  Stewart  v.  Abrams,  supra  \  94,  n.  b. 

I.  If  partner  confessed  judf;ment  a_^ainst  firm,  co-partner  may  have 
his  name  stricken  off,  in  order  to  prevent  execution  a_e:ainst  his  sepa- 
rate estate.  C  &  D  were  partners.  C,  in  an  amicable  action,  confessed 
judgment  against  himself  and  D  for  a  firm  debt,  and  in  favor  of  A  & 
B.  Upon  the  affidavit  of  D,  the  court  below  set  aside  the  judgment, 
on  the  ground  that  one  partner  had  no  power  to  confess  judgment 
against  the  firm,  and  that  it  was  void  as  to  D,  and  therefore  void  as  to 
C  also.  On  writ  of  error,  it  was  argued  that  one  partner  might  employ 
counsel,  and  authorize  him  to  confess  a  judgment  against  the  firm. 
Was  a  warrant  to  confess,  anything  but  an  equivalent? — Order  of  court 
below,  setting  aside  the  judgment,  reversed,  aud  the  name  of  D  ordered 
to  be  stricken  out  of  the  record,  so  that  the  judgment  should  remain 
against  C  alone.  C  had  transcended  a  partner's  implied  power.  Bitzer 
v.  Shunk,  I.  W.  &  S.  340,  Pa.  (1841) 

d.  f  udff men t  against  partner  for  firm  debt  binds  firm,  but  not  co- 
partner's separate  estate.  B,  the  co-partner  of  C,  gave  A  a  judgment 
note  for  a  debt  of  B  &  C.  A  entered  up  the  judgment,  and  levied  on 
firm  property.     C  claimed  that  execution  should  correspond  to  the 

272 


Pt.  2,  Ch.  5.  Business  Contracts.  §96. 

judgment  which  B  had  confessed. — C  could  not  prevent  A  from  taking 
the  firm  stock  in  execution  on  his  judgment  against  B.  Ross  v.  Howell 
3  Norris  129,  Pa.  (1877). 

3.  Judgmefit  against  partner  donH  merge  cause  of  aBion  against  firm. 
A  brought  assumpsit  against  firm  B  &  C  on  book  account.  Defendants 
put  in  evidence  B's  judgment  note,  for  which  A  receipted  as  in  full,  if 
paid,  for  the  account.  A  sued  B  &  C  after  entering  judgment  on  the 
warrant. — Judgment  no  bar  to  adlion,  not  being  co-extensive  with 
claim  against  both,  and  receipt  disproving  intention  to  receive  judg- 
ment as  satisfa6lion.  A61  6  April,  1S30,  no  application,  because  judg- 
ment not  entered  in  a  joint  suit.  Wallace  v.  Fairman,  4  Watts  378,  Pa. 
(1835). 

4.  A  co-partner  who  is  not  served  with  the  partner  de- 
fendant is  not  within  the  Pennsylvania  a6l  of  27  March, 
1865,  P.  L.  38,  which  allows  a  partner  to  compel  his 
adversary,  or  the  adverse  beneficiary  of  the  suit,  to 
testify,  although  a  suit  was  on  a  firm  contrail,  because 
the  Pennsylvania  a6ls  of  Assembly  have  severed  the 
cause  of  adlion  involved  in  a  firm  contradl. 

Partner  not  served  not  interested  in  suit.  A  sued  B,  executor  of  C, 
for  debt  contradled  by  C,  D  &  E.  Plaintiff  offered  D's  deposition  in 
evidence,  to  prove  partnership. — Incompetent,  on  ground  of  interest, 
and  not  made  competent  by  acl  27  March,  1865,  as  adverse  beneficiary 
of  a6lion.  Hogeboom  v.  Gibbs,  7  Norris,  235,  Pa.  (1878). 

5.  Promise  to  release  outgoing  partner  nudum  paElunt.  B  &  C  dis- 
solved, and  C  continued  the  business.  A,  who  received  notice  of  dis- 
solution and  continuance,  promised  B  to  release  him,  and  rely  on  C's 
agreement  to  pay  the  debt. — No  consideration  for  A's  promise.  Wals- 
trom  v.  Hopkins,  7  Out.  118,  Pa.  (1883). 


§96. 

®l)c  firm  b^ing  a  pl)ras£,  not  a  person,  its  contract  is  notl^mig 
but  o\\  aggregate  of  tl)e  contracts  iul)icl)  tl)c  partners  make. 

The  fa(5l  is,  that  the  joiutness  of  the  contradl  is 
nothing  but  a  form.  The  only  contrails  that  have  a 
5ubstantive  existence,  are  the  individual  contracfls  of 
;he  partners.  A  partner  who  sued  to  enforce  an  in- 
lividual  claim,  might  be  met  b}^  a  counter-claim 
Lgainst  his  firm.      If  the   firm   debt  was   not  in  tbe 

273 


§g6.  Business  Contracts,  Pt.  2,  Ch.  5. 

same  right,  that  is,  was   not  a   several   debt  of  the 
plaintiff,  it  would  not  be  a  set-off  against  the  demand/ 

The  partners  may  apportion  the  liabilities  between 
them,  and  the  agreement  being  in  anticipation  of  the, 
contribution  enforced  by  law,  will  be  upheld  as  a  con- 
trail, and  an  aAion  will  lie  upon  it  during  the  part- 
nership.' 

The  Scotch  avoided  the  English  pitfall  by  adopting 
the  French  practice,  and  did  not  follow  the  Common 
law  formula,  based  on  the  joint  contradl.^ 

1.  Deceased  partner' s  debt  set-off  against  firm  in  suit  by  surviving  part- 
ner. The  administrator  of  A,  surviving  partner  of  B,  sued  D,  who 
pleaded  set-off  against  A  &  B. — Certificate  for  D.  Firm  debt  absolute 
liability  of  deceased  partner's  estate,  and  might  be  set-off  against  his 
separate  claim.  Blair  v.  Wood,  12  Out.  278,  Pa.  (1885). 

2.  Partners''  contraB  with  each  other,  to  divide  the  firm  debt  a7id  each 
pay  his  apportioned  part,  eti/orced  at  law.  A,  B,  and  four  others, 
were  railroad  contra6lors,  in  partnership.  The  firm  owed  ^20,000. 
The  debt  was  apportioned  among  the  partners :  each  agreed  to  pay 
his  portion,  and  indemnify  his  partners  to  that  extent.  B's  share  of 
the  debt  was  fs.ooo,  which  he  refused,  and  which  A  was  compelled, 
to  pay.  A  sued  to  recover  the  payment  made  on  B's  account,  on  his 
contract. — ^Recovered.  Though  the  contradl  related  to  the  partners' 
liability  for  a  firm  debt,  and  the  consideration  was  their  separate  es- 
tate liability,  the  law  enforced  the  contradt,  because  it  did  not  involve 
a  partnership  account.    Edwards  v.  Remington,   51  Wis.  336  (1881). 

If  a  partner  contraRs  to  pay  half  a  firm  debt,  co-partner  may  en- 
force the  payment  at  law.  A  &  B,  in  settlement  of  the  partnership 
business,  divided  everything  but  the  r^^sult  of  a  lawsuit,  which  they 
agreed  to  share  equally.  A,  who  paid  ihe  judgment  and  costs,  sued 
B  for  his  half — Recovered.  Partners  may,  by  contracft,  sever  an  item 
from  the  partnership  account,  and  sue  at  law  for  a  breach.  Gauger  v. 
Pautz,  45  Wis.  449  (1S78). 

An  apportionment  is  the  Civil  law  rule  in  non-commercial  partner- 
ship. Supra  \  79,  n.  2, 


3.  A  Treatise  on  the  Law  of  Partnership  and  Joint  Stock  Compa 
according  t)  the  Law  of  Scotland,  by  Francis  Wii<i<iam  Cook, 
vocate,  1  vol.  p.  541 ;  1866. 


lanies, 
Ad- 


* 


274 


Pt.  2,  Ch.  6.  Firm  Property.  §97. 

CHAPTER  VI. 

THE  TITLE  TO  FIRM  PROPERTY. 

§97. 

Ca-otoim'sljip  puts  a  restriction  upon  tlje  otoncra,  ta^-extmsm 
raitl)  tl)e  association  of  title. 

The  partners'  title  to  firm  property  is  co-ownersliip 
in  its  most  complete  form. 

The  simplest  form  of  co-ownership  is  a  tenancy  in 
common,  where  each  tenant  has  a  separate  and  com- 
plete title  to  an  undivided  purpart.  No  single  co-owner 
has  any  right  of  disposition  of  the  common  property 
as  a  whole,  nor  any  right  to  its  exclusive  enjoyment. 
But  he  has  absolute  control  over  his  own  interest,  and 
an  independent  right  to  his  proportion  of  the  fruits 
of  the  property. 

The  law  affords  numerous  examples  of  modifications 
of  this  simple  form,  in  all  of  which  the  tendancy  is 
towards  a  distindlion  of  the  individual  rights.  Owner- 
ship consists  of  the  exclusive  right  to  enjoyment,  and 
the  exclusive  right  of  disposition.  A  man's  right  of 
dominion  is  destroyed  p7^o  tanto  whenever  another  is 
admitted  to  share  the  enjoyment  in,  or  exert  rights  of 
disposition  over,  the  property.  An  easement  limits 
the  enjoyment,  and  a  mortgage  impairs  the  right  of 
disposition. 

The  destru6lion  of  individual  rights  in  the  compli- 
cated forms  of  co-ownership  consists  in  this :  that  the 
prerogatives  of  the  several  owners  interlock,  and  each 

275 


§07.  Firm  Property.  Pt.  2,  Ch.  6. 

obtains  a  qualified  dominion  over  the  purparts  of  the 
others.  The  case  of  executors  is  an  illustration,  where 
each  executor  may  exert  the  full  right  of  disposition 
over  the  property.  But  the  interlacing  of  individual 
rights,  it  is  obvious,  must  have  a  limit,  for  should  it 
cover  the  whole  scope  of  ownership,  the  confliAing 
rights  would  be  self-destru(ftive.  Co-ownership  would  -^ 
be  replaced  by  a  kind  of  lottery,  in  which  the  most 
expeditious  would  take  the  whole. 

Passing  from  the  analytical  to  the  historical  point 
of  view,  it  will  appear  that  the  process  of  developement 
has  been  from  the  complex  form  of  co-ownership,  in 
which  individual  rights  are  imperfectly  recognized,  to 
the  simple  form  in  which  each  individual  owner's  right 
of  property  is  complete  in  itself,  and  untrammeled  by 
that  of  the  others. 

Two  methods  existed,  at  the  Common  law,  for  sev- 
eral persons  to  hold  property  together.  They  might 
be  joint  tenants,  or  tenants  in  common.  Both  hold 
by  joint  possession,  but  tenants  in  common  have  sepa- 
rate titles,  while  joint  tenants  hold  by  a  single  title. 
The  terms  are  antiquated,  and  out  of  place,  in  speaking 
of  personal  property,  and  especially  of  merchandise, 
because  they  recall  the  technical  incidents  of  Feudal 
estates;  but  when  stripped  of  the  technical  husk,  joint 
tenancy  defines,  with  exadlitude,  the  combination  of 
co-proprietorship  with  co-possession,  which  is  the  gist 
of  the  partnership  title,  and  makes  history  reveal  the 
origin  and  growth  of  the  modern  relation. 


276 


Pt.  2,  Ch.  6.  Firm   Property.  §98. 

§98. 

Joint  tenancy  represents  tl]e  transition  from  tlie  familij,  or 
tribal,  title  of  printitmc  lau)  to  tl)e  inbioiliual  title  ot  nioiicrn 
times. 

In  the  earliest  period  there  was,  practically,  no  sepa- 
rate ownership.^  The  property  rights  of  the  individual 
were  enj  oyed  only  in  and  through  the  family  of  which 
he  was  a  member.  The  joint  tenancy  of  the  Feudal 
law,  was  a  lingering  trace  of  this  primitive  notion,  and 
enabled  persons  to  hold  property  in  private  ownership, 
without  at  once  breaking  with  the  tradition  of  com- 
munal holdings."  When  the  law  passed  into  its  ana- 
lytical stage,  and  it  became  necessary  to  define  the 
legal  conception  of  the  joint  tenancy,  the  influence  of 
its  origin  is  seen  in  the  theory  of  a  single,  title  for  the 
several  tenants.  As  at  first  the  law  denied  to  the  indi- 
vidual separate  and  exclusive  property  rights,  so,  at  a 
later  date,  the  jurist  denied  to  the  joint  tenant  a  sepa- 
rate and  distin6l  title.  In  joint  tenancy,  at  the  Com- 
mon law,  there  were  many  owners  and  one  title.  The 
tribal  relationship  excluded  private  property,  and  with 
it  the  devolution  of  property  by  inheritance.  Joint 
tenancy  accomplished  the  same  thing  among  the  co- 
tenants  by  the  principle  of  survivorship,  which  was  the 
result  of  the  single  title.  This  theory  of  a  single  title 
was  an  abstraction,  which  neither  embodies  the  facets 
nor  meets  the  requirements  of  logic.  As  the  institu- 
tion of  private  property  became  universal,  different 
habits  of  thought  were  developed,  and  tenancy  in  com- 
mon appeared  as  a  modification  of  joint  tenancy,  more 
consistent  with  prevailing  ideas.  In  tenancy  in  com- 
mon there  were  many  owners,  each  of  whom  had  a 

277 


§99- 


Firm    Property. 


Pt.  2,  Ch.  6. 


right  of  enjoyment  covering  the  whole  property,  but 
with  a  separate  and  distin6t  title.  As  a  consequence 
of  the  several  titles,  the  right  of  survivorship  was  want- 
ing in  this  form  of  co-ownership.  Neither  of  these 
forms  was  serviceable  for  anything  more  than  for  the 
holding  of  property,  and  could  not,  without  modifica- 
tion, meet  the  requirements  of  the  partnership  rela- 
tion. Partnership  demands  a  theory  of  ownership 
which  secures  to  each  co-owner  the  right  to  dispose  of 
the  whole  property.  Neither  tenancy  in  common  nor 
joint  tenancy  could  furnish  this  essential  prerogative. 

1.  Ancient  Law,  by  Sir  Henry  Sumner  Maine,  K.  C.  S.  I,  LLD.,  pp. 
260  ^/.  5^^.  6th  ed. ;  1876. 

2.  Elements  of  Law,  by  Wilwam  Marelby,  D.  C.  L.,  3d  ed.,  §516, 
■  1885. 


§99. 

dlljc  partner's  titk  is  an  abaptation  of  joint  ttnancji  to  com- 
mercial purposes. 

.  To  meet  the  requirements  of  partnership,  the  Pro- 
fession took  up  the  institution  of  joint  tenancy,  with 
which  it  was  acquainted,  and  adapted  it  to  the  novel 
relation.  Common  lawyers  were  familiar  with  the 
process  of  moulding  feudal  estates  to  meet  the  require- 
ments of  a  new  legal  situation. 

The  adaptation  of  joint  tenancy  to  commercial  pur- 
poses involved  an  abridgement  of  some  of  its  incidents, 
and  an  enlargement  of  others.  Survivorship  contin- 
ued to  be  recognized,'  but  only  until  the  close  of  liqui- 
dation." Although  the  separate  title  of  the  partner 
was  recognized,  it  could  not  be  made  effe6live  until 

278 


m 


Pt.  2,  Ch.  6.  Firm   Property.  §99. 

after  dissolution.  During  the  continuance  of  the  firm, 
each  partner  has  an  estate  in  the  property,  which  ena- 
bles him  to  convey  a  good  title  to  any  portion  of  the 
firm  stock,  without  reference  to  the  title  of  his  co- 
partner. This  power  of  sale  is  not  the  result  of  any 
relation  of  principal  and  agent  between  the  partners, 
but  is  an  incident  of  the  estate.  This  makes  the  part- 
nership title  an  example  of  co-ownership  in  its  most 
complete  form. 

Starting  with  this  fundamental  conception,  the  law 
of  partnership  is  a  developement  of  the  joint  estate. 
From  this  notion  of  the  joint  estate  the  partner  de- 
rives his  powers,  and  the  creditors  derive  their  rights. 
The  prominence  given  to  the  estate  in  the  partnership 
plan  prepared  the  way  for  the  derivative  rule  that  the 
creditors  of  the  firm  were  entitled  to  a  preference  over 
separate  creditors  in  the  distribution  of  firm  assets.  It 
was  the  firm  property  embarked  in  trade,  which  was 
the  legal  debtor,  just  as  a  landed  estate  when  sub- 
jedled  to  the  claims  of  creditors  became,  in  contempla- 
tion of  law,  an  independent  debtor.  The  right  of  the 
firm  creditors  cannot  be  explained  by  any  theory  of 
destination,  for  that  is  an  equitable  do6lrine,  and  in- 
sufficient to  explain  a  Common  law  right.  It  has 
sometimes  been  asserted  that  the  creditors'  privilege 
is  the  result  of  equitable  do6lrines.  But,  in  reality,  it 
it  is  simply  an  instance,  in  which  equity  has  followed 
the  law.  There  is  nothing  abnormal  in  making  the 
firm  estate  the  starting  point  of  partnership  law.  The 
Common  lawyers  habitually  measured  a  man's  ca- 
pacity by  his  estate.  According  to  their  habits  of 
thought,  the  estate  was  the  principal,  and  the  indi- 
vidual the  accessory.     It  is  not  difficult  to  understand 

279 


^loo.  Firm   Property.  Pt.  2,  Ch.  6. 

this  mental  bent,  when  it  is  remembered  that  their  legal 
and  social  struAure  was  nothing  but  methodized  land 
tenures. 

1.  Ris^ht  o/aflion  accrues  to  surviving  joint  tenant.  A  and  B,  execu- 
tors of  C,  brought  writ  of  account  against  D,  bailiff  of  C.  D's  defence : 
Non-joinder  of  executors  of  C's  co-tenant  E.  D  argued :  '  If  two  mer- 
chandise in  common,  and  one  dies  his  executors  shall  have  a  moiety.' 
Plaintiffs  replied,  that  a  chattel  in  possession  was  not  a  chattel  in  ac- 
tion, which  could  be  severed,  and  executors  of  deceased  could  not 
join  survivor. — The  writ  was  adjudged  good.  The  judge,  correAing 
counsel's  statement  of  the  law  Merchant,  said :  "This  is  the  law  of 
"  two  merchants,  who  have  goods  in  common  :  If  one  dies  the  other 
"shall  have  the  whole  by  survivorship."  38  Edward  III.,  p.  7  Ac- 
compt :  1365. 

2.  Lord  El,DON  speaks  of  the  determination  of  a  partnership  "by  the 
"death  of  one  partner,  in  which  case  the  law  says,  that  the  property 
"sur\aves  to  the  others.  It  survives  as  to  the  legal  title  in  many 
"cases;  but  not  as  to  the  beneficial  interest,"  Crawshay  v.  Collins, 
"supra  §43,  n.  a:  15  Vesey  227  (1808). 


100. 


Qll)c  rigl)ts  of  crebitors  kpcnb  upon  X\]t  joint  estate  of  \\)i 
partners. 

It  is  important  to  distinguish  between  the  partner's' 
joint  tenancy  or  tenancy  in  common,  in  order  to  ascer- 
tain the  rights  of  third  persons,  by  seeing  whether  they 
deal  with  joint  owners,  or  with  separate  owners. 

If  the  possessors  have  separate  titles,  that  is  to  say, 
are  tenants  in  common,  the  possession,  though  joint,  is 
by  construction  of  law,  the  possession  of  each  for  a 
moiety.  Then  one  who  has  possession  of  the  prop- 
erty holds  half  for  himself  and  half  for  his  co-part- 
ner. The  possession  is  according  to  the  titles.'  The 
consequence  of  this  severance  would  be  that  each 
partner  would  dispose  of  his  own  title  and  deal  with 

280 


t 


Pt.  2,  Ch.  6.  Firm   Property.  §ioo. 

it  alone  in  His  firm  transactions.  If  he  should  adl  for 
his  co-partner's  share,  it  would  be  as  his  representa- 
tive. The  effect  of  individualizing  the  partners  as  to 
their  titles  in  firm  transa(5lions  affects  creditors.  The 
separate  creditors  of  each  partner  would  be  brought 
to  the  rank  of  firm  creditors,  or,  rather,  firm  creditors 
would  be  put  into  the  position  of  separate  creditors  of 
each  partner.^     It  would  happen  in  this  wise : 

The  law  recognizes  no  capacities  in  an  individual. 
A  partner  binds  himself  by  a  firm  contract  in  his  sep- 
arate estate.  He  becomes  a  debtor  as  an  individual 
as  well  as  a  partner.  Conversely,  on  the  hypothesis 
of  a  tenancy  in  common,  if  he  contrails  on  his  indi- 
vidual account,  he  charges  his  property  in  the  firm. 
If  this  property  is  owned  in  severalty,  though  occu- 
pied in  common,  the  separate  creditor  is  entitled  to 
seize  it  by  execution,  and  have  the  purparts  set  out, 
so  that  he  can  be  satisfied  out  of  his  debtor's  property. 
Both  joint  and  separate  creditors  have  the  same  right 
of  access  to  the  partner's  quota  in  the  firm  and  to  his 
separate  estate.  They  would  come  in  pro  rata  upon 
each  fund.^ 

On  the  other  hand,  the  joint  ownership  of  firm  prop- 
erty changes  the  rights  of  third  persons.  Neither  part- 
ner has  the  right  to  deal  with  any  portion  of  the  firm 
property,  except  in  a  firm  transaction.  A  separate 
creditor,  too,  has  no  claim  to  any  specific  piece  of  firm 
property,  for  his  debtor  has  no  tangible  interest  in 
severalty.'*  The  firm  property  belongs,  in  the  first 
instance,  to  the  firm  creditors,  and  they  also  have  an 
equal  right  against  each  partner's  separate  estate,  with 
his  separate  creditors.  But  how  does  the  right  of  the 
partners   to  effect   a  joint   ownership,  which  prefers 

281 


§ioo.  Firm   Property.  Pt.  2,  Ch.  6. 

joint  creditors  and  cuts  out  separate  creditors,  arise? 
It  is  by   the   Common    law,    which   created  a  joint 
tenancy.     This  species  of  estate  survived  the  Feudal 
system,  and  was  adapted  to  commercial  uses.^     By 
means  of  it  the  refusal  to  recognize  the  right  to  trade 
in  the  capacity  of  a  partner  was  circumvented,  and  a 
substitute  for  it  was  devised.    Wherever  an  individual 
is  doing  business  in  any  particular  capacity,  or  rela- 
tion, as  partner,  executor,  trustee  or  guardian,  there 
are  two  methods  of  measuring  his  liability.     He  may 
upon  one  theory  of  law,  be  held  personally  liable  to  the 
full  extent  of  his  resources  for  all  adls  done  by  him 
in  that  capacity,  or  his  responsibility  may  be  limited 
to  the  fund  over  which  he  has  control,  as  an  incident 
to  his  relation.     The  latter  was  the  persona  of  the 
Roman  law,  and  involved  a  preference  upon  the  par- 
ticular fund  in  favor  of  those   who  had   dealt  with 
him  in  his  special  relation.     The  Common  law,  in  all 
cases,  took  the  first  view,  and  refused  to  recognize  any 
limited  liability  whatever.     This  is  what  is  meant  by 
saying,  the  Common  law  refused  to  recognize  '  a6ling 
in  a  capacity.'     As  the  individual's  liability  could  not 
be  limited  to  the  particular  fund,   it   followed,   con- 
versely, that  he  could  create  no  preference  upon  that 
fund  to  creditors  who  had  dealt  with  him  in  his  special 
capacity.     These  creditors  stood  upon  the  ^ame  foot- 
ing with  all  his  other  creditors.     Some  alternative  had 
to  be  devised  to  give  the  joint  creditors  of  a  partner- 
ship a  preference  upon  the  firm  fund.     The  indivisi- 
bility of  a  person  at  law  made  it  necessary  in  lieu  of  the 
legal  conception  of  2.  persona  or  capacity  to  find  out 
an  equivalent ;  which  was  done  in  part  by  the  expedient 
of  joint  tenancy.     The  Feudal  lawyers  went  to  work, 


Pt.  2,  Ch.  6.  Firm    Property.  §ioo. 

in  a  back-handed  way,  and  started  from  the  point  of 
view  of  title.  Instead  of  controlling  property  by  the 
person  who  exerts  his  capacity,  they  controlled  the 
person  by  the  property  which  he  possessed.  They 
looked  at  the  estate  as  the  principal,  at  the  tenant  as 
accessor}^,  and  they  ascertained  and  defined  his  capa- 
city by  his  interest  in  the  land.  Estates  arise  at  law 
according  to  the  interests  to  be  subserved.  A  joint 
tenancy  resulted  from  the  union  of  the  partners,  and 
took  its  chara6ler  from  the  purpose  of  the  joinder. 
The  contrail  creates  the  relation  of  partnership,  and 
invests  the  partners  with  an  estate  by  entireties  during 
the  continuance  of  the  firm,  that  is  to  say,  until  the 
final  settlement  of  their  account.*^  The  relation,  though 
founded  upon  contrail,  exists  by  virtue  of  the  vested 
interests  when  once  established,  independent  of  the 
contradl,  which  served  as  the  occasion  and  means  of 
its  establishment.  Each  partner  has  a  vested  right, 
which  no  dissolution  can  destroy,  to  apply  the  firm 
property  to  the  payment  of  the  firm  debts,  and  the 
priority  of  firm  creditors  upon  partnership  funds  is 
nothing  more  than  the  sequestration  of  this  vested 
right  in  their  interest.  The  title  is  joint  in  its  most 
complete  form,  as  explained  above,  but  neither  partner 
can  dispose  of  the  joint  property  or  any  portion  of  it, 
or  of  his  individual  interest,  except  in  subordination 
to  the  obligations  of  his  relation,  and  in  accordance 
with  the  rules  by  which  it  is  governed.  The  separate 
creditors  are  bound  to  recognize  the  nature  of  the 
property,  and  their  execution  would  not  hold  more 
than  the  debtor  could  convey. 

A  separate  execution  and  levy  upon  the  firm  prop- 
erty create  no  lien  upon  the  partner's  interest.     The 

2S3 


§ioo.  Firm  Property.  Pt.  2,  Ch.  6. 

separate  creditor  seizes  the  firm  property  that  he  may 
satisfy  the  technical  requirements  of  the  writ,  but  he 
sells  only  the  partner's  share  in  the  firm  business. 
His  share  in  the  firm  business  is  his  portion  of  what 
remains  upon  dissolution  after  all  the  debts  are  paid. 
This  share  of  the  partner  is  a  property  right,  which 
he  holds  in  severalty,  and,  therefore,  an  asset  for  the 
payment  of  his  separate  debts.  But  it  is  not  a  right 
of  ownership  in  severalty,  and  hence  the  interest 
which  he  has  as  co-owner  of  the  firm  property  eludes 
the  grasp  of  his  separate  creditor,  and  is  exclusively 
reserved  to  answer  the  claim  of  the  firm  creditors  until 
dissolution  has  destroyed  the  joint  estate.  It  is  not 
stri(5lly  true  to  say  that  a  partner  has  no  tangible  in- 
terest as  owner  in  the  firm  property.  It  is  tangible 
for  firm  creditors,  and  is,  in  reality,  the  basis  of  their 
preference.  He  is  undoubtedly  a  co-owner,  logically 
speaking,  and  his  right  and  interest  as  co-owner  must 
be  separate  and  peculiar  to  himself  (§53).  All  that 
is  meant  by  the  phrase  is  that  a  partner's  interest,  as 
owner  in  the  firm  propert}^,  is  not  available  for  his 
separate  creditors  during  the  continuance  of  the  firm. 
The  partners,  in  making  their  contributions,  create 
for  the  firm  a  new  estate.  Each  partner  loses  a  part 
of  his  exclusive  dominion  over  his  contribution,  and 
his  co-partners  acquire  in  it  new  rights  of  ownership. 
The  partners  assume  the  position  and  exercise  the 
powers  of  co-proprietors  over  an  integral  stock.  They 
still  own  the  property  as  individuals,  because  the  firm 
is  not  distindl  from  the  members  who  compose  it,  but 
the  nature  of  their  estate  is  changed.  The  single 
partner  has  no  longer  any  right  to  the  separate  enjoy- 
ment and  control  of  his  contribution,  or  of  any  por- 

284 

II 


Pt.  2,  Ch.  6.  Firm    Property.  §ioo. 

tion  of  the  firm  property.  His  rights  as  owner  are 
modified  and  controlled  by  the  rights  of  his  co-pro- 
prietors, which  extend  to  every  portion  of  the  stock. 
It  is  this  want  of  absohite  and  independent  owner- 
ship which  withdraws  his  interest  as  co-proprietor 
from  the  grasp  of  his  separate  creditors.  Were  he 
absolute  owner  of  his  aliquot,  though  undivided,  in- 
terest, his  separate  creditor  might  sell  it  on  execu- 
tion, and  the  purchaser  would  succeed  the  partner  as 
co-proprietor.  This  is  the  case  of  a  tenant  in  com- 
mon. Furthermore,  the  purchaser  would  hold  the  title 
free  from  the  firm  debts,  which  would  then  assume  the 
position  of  a  lien,  and  from  the  claims  of  the  co-part- 
ners, because,  in  the  absence  of  a  statutory  provision, 
a  judicial  sale  discharges  all  liens,  and  charges  them 
upon  the  debtor's  title.'  But  the  sale  of  a  separate  part- 
ner's interest  does  not  pass  a  title  free  from  the  claims 
of  the  partners  and  of  the  firm  creditors.  Hence  it  is 
evident  that  the  partners  have  something  more  than 
an  equity,  and  the  creditors  something  more  than  a 
lien.  By  virtue  of  their  rights  as  co-propietors,  the 
partners  hold  the  firm  stock  for  firm  purposes  in  defi- 
ance of  the  separate  creditor's  attack.  Being  them- 
selves, equally  with  the  debtor  partner,  owners  of 
every  portion  of  the  firm  stock,  it  is  impossible  for  a 
separate  creditor  to  sell  the  debtor  partner's  interest 
{in  the  stock  itself  without  infringing  upon  their  title. 
The  separate  creditor  may  take  the  only  property 
right  of  which  the  partner  remains  separate  and  ab- 
solute master,  /.  ^.,  his  share  upon  dissolution.  But 
the  firm  stock  is  impregnable  to  his  attack,  because 
sheltered  by  the  title  of  the  co-partners.** 


285 


§ioo.  Firm   Property.  Pt.  2,  Ch.  6. 

1.  Tenancy  in  common  enforced  by  execution  splits  partners'  title  into 
tnoicties.  B  issued  a  separate  execution  against  C,  which  ^vas  fol- 
lowed by  a  joint  execution  against  C  and  D,  but  E,  the  sheriff,  made 
no  second  levy  under  the  joint  writ.  Subsequently,  C  and  D  became 
bankrupt,  and  A,  their  assignee,  sued  E  for  selling  D's  moiety  under 
the  joint  writ.  Defence:  vStock  already  seized. — The  seizure,  in 
order  to  sell  C's  moiety,  did  not  take  D's  moiety,  which  remained 
by  coustrudlion  of  law  in  D's  possession.  Johnson  v.  Evans,  7  M. 
&  G.  240  (1844). 

2.  The  Civil  lawyers  are  not  less  perplexed  than  the 
Common  lawyers  to  find  out  how  to  give  the  firm  cred- 
itors a  preference  upon  the  joint  assets.  The  French 
resort  to  the  fidlion  of  making  the  firm  a  person.  The 
legal  person  contra(5ls  debts,  and  charges  its  assets  for 
payment.  If  the  fidlion  had  a  legal  basis  for  its  existence, 
and  was  consistently  carried  out,  a  partnership  would 
become  a  corporation,  i.  The  firm  creditors  would  take 
the  firm  property,  and  no  separate  creditor  would  have  a 
claim  against  it.  2.  The  firm  creditors  would  have  no 
claim  against  the  partner's  separate  estate,  which  would 
be  liable  only  to  their  individual  creditors.  3.  The  firm 
might  be  bankrupt,  without  involving  the  partners  in  the 
proceedings.  4.  The  firm  might  be  solvent,  although  all 
the  partners  were  bankrupt.  5.  The  partnership  would 
not  be  dissolved  by  a  change  of  partners. 

,,2ol(  nun  bie  :i3ef;auptung,  bie  <oa"i'Cl'^^9e|cIl[d)aft  fet  eine  juriftifdic 
,,~i<cri'on,  iriicnb  ireld^en  iSinn  l^abcn,  fo  niiitfcn  awA)  bie  ©runbfd^e  unb 
„  /voUicruni-^cn,  Uicldie  fid)  notf>t»enbici  aus  bent  3Befen  bcr  juri[tifd;en  ^cr= 
„  \o\\  cri|cbcn,  aiif  ftc  ^^Inipenbung  finben.  93tan  ntiifete  bemgemd^  auf  \oU 
„  genbe  .V)au>.'»tu-it3C  fommen: 

1)  "Sie  Socictdtsglaubiger  batten  ftcb  su  ibrer  Sefriebigung  allerbtngS 
„an_ba'5  £octetdte.gut,  unb  fdilieBcn  bafon  bie  (^(dubiger  ber  ein^^elnen 
,,  r^efellfd'iafter  au^;  aber,  nne  fdicn  oben  nngcbeutet,  int  gleidicm  2lugen= 
,,b[\d  unb  nu'icrtrcnnlid;  Hon  biefent  £afie,  ergiebt  fid)  and): 

:^)  ,,3^te  -lU-iiuitgldubigci-  bcfricbigcn  fid),  ntit  3(uefd,duf5  ber  ©ocietatS-- 
,,gldubiger,  au'j  bcm  'l^riiiatHcrmbgen  ber  ein:elnen  Slffcciec;. 

B)  „3)ie  (^)eKUi"d.)aft  fann  in  CSoncurc^  gcratbcn,  obne  bafi  iiber  bie  ein» 
„jelncn  C^5eKlI'd)aftcr  ber  tSoneure  auc'bridU,  bn  bie'i2d)u(ben  ber  0efe[f= 
,,fc^aft  bie  Diitgiieber,  i\v.<^  bcnen  fie  beftebt,  nid)t  beriil)ren. 

4)  „:j}ie  ^5efellfd)aft  fann  [olyent  bleiben  unb  fortbeftef)en,  lt>enn  auc^ 
„al(e  ftefellfdnnter  in  (Soncurs  fallen. 

o)  „Xie  (^Sefellfdnxft  beftebt  al§  bie  gleic^e  mit  ifjren  2lctit)en  unb  ^affiben 
„fort,  UH'nn  fd)on  ibre  5Jtitg(ieber  ficb  Hercinbern. 

.,'$'0n  ber  im  gegenirdrtigen  5^anbel5red)te  befannten  unb  f^jejiell  au§5 
„gebitbeten  .'banbelegefellfd^aft  gelten  abix,  allgentetn  anerfannt,  ganj 
„anbere  33eftimmungen,  unb  biefe  Wrunbfdtie  ant  fie  anliienben,  bie^e  \^x 
„inneritet'5  SBefen  3crnid)ten  unb  fie  ,^u  eineni  Dbllig  anbern  ^nftitute 
„umgcfta[ten."a 

a.  T^a§  TNcrbdltnifi  ber  Societdtegldubiger  ya  ben  ^ribatgldubtgern  tm  Gon-- 
curte  ber  pffcnen  .'oanbelegefeIlfd)aft,  pp.  7-8.,  Don  ^o^anneg'^urlemann, 
(Santons^jrocurator,  ^iiri'd),  1846. 

286 


Pt.  2,  Ch.  6.  Firm  Property.  §ioo. 

What  is  the  polarity  of  mind  of  a  lawyer  who  advo- 
cates making  a  partnership  by  tnrns  a  corporation  and  a 
number  of  individuals?"  If  he  comprehended  the  ele- 
mental distindlion  of  kind,  he  would  not  expose  his  con- 
fusion by  making  the  suggestion,  but  he  would  disguise 
the  proposition  in  the  jargon  of  lawyers,  who  speak  of  a 
man  quo  viodo  a  horse. 

h.  The  Law  of  Partnership,  ch.  x.  §  i.,  by  Theophilus  Parsons, 
LL.D. 

3.  The  firm  creditors  are  entitled  to  no  privilege,  unless 
a  legal  basis  exists  for  the  preference.  The  Civil  law 
does  not  furnish  any  legal  ground  for  the  privilege. 
The  result  is  a  pro  rata  distribution  among  all  the 
creditors,  joint  and  separate,  of  each  partner. 

„  G^  frdgt  fid;,  \xm\\  gef)brt  ba§  Okfellfd^aftegut?  Sarauf  fann  nttf)t 
„  anbers  geantluortet  tverben,  als  ben  (ycfcUfcfiaftern  pro  rata.  SBer 
„l^aftct  fiir  @ei'el(jd)att5ic^ulben?  Slntinort:  bie  ©efellfc^aftcr.  Siefe 
,,I;aften  alkn  (Srebitoren  mit  if)ren  fdmmtUdien  9ktit)en,  liegen  biefe 
„Jr>o  fie  Juollen.  Ser  fragL  Ssorjug  mufe  fo  al§  ^sri»ilegium  aufgefa^t 
„  tDerben.  Siefe  2(uffaffung  tft  baburd)  bebingt,  "tia^  im  gcineinen  beutfd;en 
,,9?ed)t,  unb  ber  9fatur  ber  'Badji  nadi,  bic  &.  feine  jur.  ^^Mn-foii  ift,  unb 
,,  dVi  fo[d)e  alfo  fcin  iCermogen  unb  fcine  Sc^ulbcn  l^at.  ^ebe  anbere  3tufs 
„faffung  bc§  fragl.  S^orsugeg,  fie  mag  nun  in  SBorte  gefteibet  inerbcn,  icie 
„fie  iPoKe,  fiifirt  wieber  baf)in,  bafs  bie  &.  ail  eigne  ^Jserfon  9ied;te  unb 
,,  iser^)ftidjtungen  getrennt  Don  benjenigen  i^rev  3)JitgIicber  bahz/'^ 
c.    i^iirtemann,  Sag  3Ser!^aItni§,  p.  88. 

4.  Partner's  titte  as  joint  tenant  runs  through  the  firm  stock.  A 
brought  trespass  against  sheriff  and  plaintiff  in  execution  against 
B's  interest  in  A  &  B's  livery  stables  for  taking  possession  of  the 
stock  by  means  of  a  sheriff's  sale.  The  defendants  pleaded  "not 
guilt}',"  and  denied  A's  right  to  recover  without  B's  joinder.^ — -A 
recovered;  his  title  good  to  all  the  firm  property,  and  unless  B's 
non-joinder  pleaded  in  abatement  the  objecftion  is  waived.  Deal  v. 
Bogue,  8  Harris,  228,  Pa.   (1853). 

5.  Interest  710  bar  in.  suit  against  surviving  paiiner.  Deceased  part- 
ner not  an  assignor.  B  &  C,  partners.  B  died.  A  sued  C,  as  sur- 
viving partner,  for  money  lent,  aud  testified  that  the  loan  was  made 
to  B  for  the  firm.  Defence  :  A  incompetent,  because  C  is  assignee 
of  B,  deceased,  and  is  deprived  of  his  testimony. — A  competent.  C 
not  assignee  of  B,  but  original  joint  tenant,  with  him,  of  the  firm 
property.     Tremper  v.  Conklin,  44  N.  Y.  61   (1870). 

6.  The  joint  estate  does  not  come  to  an  end  until  a  set- 
tlement of  the  account  between  the  partners  has  been 
completed,  and  the  separate  interests  of  the  partners 
have  been  ascertained.  The  Common  law  process  of 
execution  was  inadequate  to  bring  about  the  ascertain- 
ment of  a  partner's  share  in  the  joint  property.  A  sum- 
mary remedy  was  at  first  permitted.  ' '  If  there  were  two 
partners,    and  a  *  creditor  of  one  got  judgment  and 

287 


§ioo.  Firm    Propp:rty.  Pt.  2,  Ch.  6. 

execution  against  him,  and  levied  it  upon  the  partner- 
ship property,  of  which  the  sheriff  (although  he  seized 
the  whole)  sold  one-half.  If  there  were  three,  he  sold 
one-third;  if  four,  one-quarter. " '^  Lord  MansfieLD 
corredled  and  supplemented  the  process  by  making  an 
account  in  equity  incident  to  the  execution.  His  prac- 
tice has  become  the  law.  ^  The  share  may  now  be  sold 
without  ascertainment,  when  the  purchaser  buys  the 
right  to  an  account,  or  a  pig  in  the  poke,*"  or  the  share 
may  be  ascertained  in  advance,  and  the  sale  will  be 
made  to  a  purchaser  who  knows  what  he  is  buying.  '^ 

a.  A  Treatise  on  the  Law  of  Partnership,  p.  342,  2d  ed.,  1870,  by  The- 
OPHILUS  Parsons,  LL.D.,  who  reviews  the  history  of  the  proceedings 
on  a  separate  execution,  and  cites  the  authorities. 

5.  Separate  execution  does  not  seize  specific  articles  of  firm  property. 
A  recoveredjudgment  against  B  and  C,  and  levied  on  articles  belong- 
ing to  C  &  D.  D  interpleaded,  and  jurj',  under  instru6tions  from 
court,  gave  A  1-2  the  property,  and  assessed  its  value  at  II150.  Subse- 
quently, C  sold  all  to  D,  for  antecedent  debt. — Error.  C  had  no  title 
to  any  specific  articles.   Tait  v.  Mvurphy,   2  S.  Rep'r  317  (1887). 

c.  Purchaser  of  parttier^s  interest  gets  nothing  but  a  right  to  an 
account.  A  bought  at  sheriff's  sale  B's  interest  in  newspaper  estab- 
lishment of  B  &  Co.,  and  let  it  to  B,  reserving  rent.  On  B's  default 
in  payment  of  the  rent,  and  his  refusal  to  deliver  iip  possession,  A 
brought  a  bill  which  court  sustained,  and  also  issued  a  habere  fa., 
and  afterwards  a  writ  of  assistance,  which  the  sheriff  executed. — A 
entitled  to  no  part  of  firm  property,  and  proceedings  below  without 
any  warrant  in  law.     Durborrow's  Appeal,  3  Norris  404,  Pa.  (1877). 

d.  Partner's  share  cannot  be  sold  until  ascertained.  C  levied  on  stock 
of  A,  B  &  Co.  for  B's  debt.  A  enjoined  C  from  selling  until  B's  inter- 
est could  be  ascertained  in  Chancery. — Firm  title  a  unit,  and,  until 
liquidation,  no  ascertainment  of  partner's  quota.  No  sale  in  chancery 
of  unknown  purpart.  Place  v.  Sweetzer,  16  Ohio  142  (1847) ;  Nixon  v. 
Nash,  12  O.  St.  647  (1861). 

7.  Sale  against  heir  within  seven  years  discharges  lien  against  an- 
cestor's estate.  B  left  his  estate,  by  will,  to  children,  C,  D,  E,  F  and 
G.  F  died  in  1807,  lea\ang  debts,  which  H,  his  executrix,  paid.  She 
applied,  in  1810,  to  O.  C,  which  made  sale  of  F's  interest,  for  the  pay- 
ment of  his  debts  to  I.  G  also  died,  without  issue,  before  1808.  In 
1808,  the  interests  of  C,  D  and  E  had  been  sold  separately,  at  sheriff's 
sale,  to  A,  upon  judgments  recovered  against  each  of  them.  The  lien 
of  E's  debts  was  discharged  by  the  sheriff's  sale.  Luce  v.  Snively,  4 
Watts  396,  Pa.  (1835). 

The  difference  of  estate  is  necessary  to  prevent  the 
sale  from  discharging  liens. 

Sheriff's  sal;  against  heir  passes  no  title  aqainst  subseqtient  Or- 
phans' Court  sale  of  ancestor's  estate.  Walker  died  in  1856.  His 
property  descended  to  his  son  Samuel,  against  whom  judgment  was 
recovered,  and  the  property  sold  at  sheriff's  sale.  In  i860,  the  same 
property  was  sold  under  decree  of  O.  C— Purchaser  at  sheriff's  sale 
had  no  claim  to  the  land  as  against  one  who  bought  at  the  O.  C.  sale. 
If  heir  takes  estate  subjecSl  to  debts  of  the  decedent,  the  heir  becomes 


I: 


Ft.  2,  Ch.  6.  Firm  Property.  §ioi, 

the  debtor  instead  of  the  ancestor,  and  the  creditors  are  co-ordinated. 
Horner  V.  Hasbrouck,  5  \A'right  169,  Pa.  (1861). 

8.  Although  sale  of  moiety  is  fraudulent,  sheriff  can't  sell  article. 
Undivided  title  protefls  both  parts.  C,  a  dealer  in  kindlingwood, 
became  indebted  before  March,  and  sold  out  his  business  to  A  &  B, 
making  two  bills  of  sale.  B  paid  for  his  half  in  cash,  A,  C's  son, 
in  notes.  Creditors  of  C  obtained  judgment  in  June  and  levied  on 
horse.  Sheriff  sold  and  delivered  jiossession.  A  &  B  obtained 
judgment  in  trespass  against  sheriff.- — Affirmed.  Sheriff  could  not 
sell,  at  best,  anything  but  A's  interest,  as  B  paid  full  value,  and 
delivery  of  horse  charged  him.  Plaintiff  had  joint  interest,  which 
sustained  adlion,  though  only  in  a  moiety.  Farrell  v.  Colwell,  i  Vr. 
123,  N.J.  (1862). 

Partner  in  possession  of  firm  assets  after  dissolution,  a  trustee,  and 
cannot  buy  at  his  own  sale,  even  through  another.  A  and  B  dissolved 
in  1861.  They  owned  an  uninsured  share  in  the  bark  "Ocean 
Rover,"  destroyed  in  1862  by  the  "Alabama."  In  1865,  after  A's 
insolvency,  B,  as  solvent  partner,  sold  the  firm  assets  at  aucflion.  A 
bid  for  the  share,  but  it  was  bought,  at  B's  request,  by  C,  who,  undei 
a  secret  agreement,  resold  to  B.  The  government  awarded  1^1564 
compensation  for  the  loss.  A  claimed  half  the  award. — Recovered. 
B,  a  trustee  of  the  late  firm's  assets,  and  could  not  hold  under  a  pur- 
chase made  by  another  for  him.  Jones  v.  Dexter,  130  Mass.  380 
(1881). 


§101. 

Ipartncrsljip  is  a  status. 

By  status  is  meant,  in  general,  the  sum  of  the  rights 
and  duties  of  an  individual  in  a  given,  political  or  social 
relation.  It  may  be,  and  generally  is,  independent  of 
contradl,  or  it  ma}^  arise  through  the  consent  of  the 
individual.  A  man's  status  as  a  citizen,  or  as  a  father, 
does  not  depend  upon  contrail.  His  status  as  a  hus- 
band, or  a  partner,  is  the  result  of  his  consent.  As 
status  is  the  result,  which  the  law  attaches  to  certain 
political  or  social  fa6ls  conne6led  with  the  individual, 
it  cannot,  stridlly  speaking,  be  dissolved  at  will,  be- 
cause the  individual  cannot  change  the  fa6ls  upon 
which  his  status  depends.  The  citizen  cannot  alter 
birthplace,  nor  the  father  overcome    the  fadl  of  his 

289 


§ioi.  Firm   Property.  Pt.  2,  Ch.  6. 

paternity.  The  law  may  and  often  does  provide  for 
the  abrogation  of  the  status  upon  the  subsequent  con- 
junclion  of  a  different  state  of  fadls. 

As  the  consent  of  the  individual  may  be  an  essen- 
tial fa6l  in  the  creation  of  the  status,  so,  too,  his 
change  of  purpose  may  be  the  effecflual  fa6l  in  bring- 
ing about  its  abrogation.  But  this  is  a  matter  of  spe- 
cial legal  provision.  Marriage  cannot  be  dissolved  at 
will.  Partnership  may  be  dissolved  at  will.  But 
though  partnership  may  be  dissolved  at  will  and  the 
relation  brought  to  a  close  through  the  a6l  of  the  indi 
vidual,  yet  the  status,  with  all  its  attendant  duties 
and  prerogatives,  subsists  until  it  is  terminated  in  a 
manner  consistent  with  its  original  purpose.^  While 
the  partner  may  dissolve  the  firm  at  will,  and  compel 
immediate  liquidation,  he  cannot,  before  the  final  set- 
tlement of  accounts,  impair  any  of  the  prerogatives  of 
his  co-partners,  or  devest  himself  of  any  duty  by  the 
simple  withdrawal  of  his  consent  to  the  continuance 
of  the  relation.  Herein  is  the  difference  between 
partnership  and  agency.  Agency  is  not  a  status,  but 
a  contradlual  relation.  The  prerogatives  of  an  agent 
depend  upon  the  continuing  consent  of  his  principal, 
and  cease  the  instant  that  consent  is  withdrawn. 

The  elevation  of  partnership  into  a  status,  is  due 
to  the  presence  of  a  firm  estate.  Since  the  rights  and 
obligations  of  partners  as  individuals  are  measured 
by  the  estate,  which  is  an  extraneous  fa6l,  the  notion 
of  this  contractual  relation  is  necessarily  subordinated 
to  the  idea  of  status.^ 

The  partners  being  merged  as  individuals  in  the 
firm  estate,  are  enabled  to  trade  in  a  distin(51:  capacity. 
The  estate  is  set  apart  and  dealt  with  by  its  proprie- 

290 


Pt.  2,  Ch.  6.  Firm   Property.  §ioi. 

tors  as  a  separate  fund.  Any  transaction  by  either 
partner,  not  connected  with  the  estate,  does  not  bind 
it,  or  enable  the  creditors  to  proceed  against  it.  The 
partners,  when  ailing  for  the  iirm,  are  isolated  by  the 
estate  from  other  transa(5lions,  and  the  isolation  is 
equivalent  to  giving  them  capacity  to  trade  as  part- 
ners, \he.  persona  of  the  Roman  law.  The  only  quali- 
fication is,  that  in  adling  as  partners  they  bind  their 
separate  estates,  and  the  firm  creditor  is  not  confined 
to  the  firm  fund.  The  withdrawal  of  the  partnership 
property  from  the  partner's  general  estate  could  not 
be  accomplished  by  contraA  between  the  partners.^ 
The  contrail  serves  as  the  occasion  for  the  creation 
of  a  status,  as  in  marriage,  but  the  relation,  when 
created,  establishes  rights  and  duties  which  are  para- 
mount to  the  contrail.  It  is  the  recognition  by  the 
law  of  the  estate,  that  severs  the  partner  from  himself 
as  a  man. 

I.  Partner's  right  to  wind  up  business.  A  bought  out  a  partner's  in- 
terest, and  was  admitted,  by  continuing  partner,  to  joint  liquidation. 
A  applied  for  a  receiver,  because  B  made  settlements  without  his 
consent. — Bill  dismissed.  A,  though  admitted  to  equal  rights  in 
liquidation,  was  no  more  than  a  partner,  and  could  not  restridl  B's 
control  over  the  business.  Van  Rennsselaer  v.  Emery,  9  How.  Pr. 
135,  N.  Y.  (1S54). 

Appointnient  of  receiver  not  of  course  in  partnership  at  will.  A  & 
B,  partners  at  will.  A  brought  bill  for  dissolution  and  appointment 
of  a  receiver.  B  denied  any  cause  for  a  receiver,  and  A  insisted 
upon  the  appointment,  as  of  course. — Refused.  In  partnership  at 
will,  appointment  in  court's  discretion,  and  imless  cause  shown  for 
taking  business  out  of  defendant's  hands,  chancellor  will  not  break 
up  business  and  saddle  partnership  with  costs  of  settlement  in  chan- 
cerv.     Birdsall  v.  Cole,  2  vStock.  Ch.  63,  N.  J.  (1S54). 

Di'^solution.  Contrail  to  sell  machinery  to  highest  bidder  and 
divide produFi.  On  dissolution,  partners  agreed  to  divide  chocolate 
on  hand,  and  soil  out  machinery  for  its  manufacflure  to  the  highest 
bidder.  The  chocolate  was  divided  into  two  lots,  and  then  the  part- 
ners disagreed.  A  got  judgment  for  his  share  of  the  assets  against 
B. — Reversed.  Contra6l  not  binding  until  carried  out.  Konings- 
burg  V.  Launitz,  i  E.  D.  Smith,  215,  N.  Y.  (1S51.) 

Appointment  cf  receiver  refused  unless  ground  laid.  A  &  B,  at  F, 
in  partnership  with  C  &  D,  at  E,  dissolved.  A  &  B  asked  appoint- 
ment of  receiver,  because  C  &:  D  misappropriated  firm  assets  at  E, 

291 


$IOI. 


Firm   Property.  Pt.  2,  Ch.  6. 


and  refused  to  pay  notes  at  bank,  for  |5io,ooo,  or  meet  A  &  B  for  set- 
tlement C  &  D  admitted  refusal  to  pay  notes,  but  denied  conver- 
sion of  assets,  or  refusal  to  meet  A  &  B.— Appointment  refused.  No 
CN-idence  of  bad  faith.  Coddington  v.  Toppan,  ii  C.  E.  Gr.  141, 
N.J.  (iS75)- 

2.  Dr.  KuNTZE  thinks  the  joint  estate  of  the  partners 
fonns  the  legal  basis  for  the  transadlions  of  the  busi- 
ness, and  gives  the  partnership  a  standing  apart  from 
the  individuals  who  compose  it.  The  article  of  Kuntze 
is  published  only  in  a  German  legal  periodical,^  which 
is  inaccessible  to  foreign  readers.     Dr.  Kah  thus  states 

Kuxtze's  view:*^ 

,,  Gr  fint«ct  ba^  ffiefen  ber  JDirtl^f^attli^en  @enoffen[d)aft  ipcbcr  in  ber 
„  Socictdt  nod?  in  ber  CollectifgefeUfd^aft,  fonbcrn  in  eincr  ©tiftunoi:  nni- 
",,versitas  bonoriiin,  eincm  :^erfonificirtcn  pairimonium.  Ser  3ied}t^= 
','(irunb  fiicrfitr  bcftefit  iinn  barin,  baf(  cmeStbcil'o  bet  edilper))unct  bei  ber 
',',  (i}encfl'eni"d)aft  in  i[)rem  iliermogenebeftanb  ru(;c,  anbcrntbeilg  ibr  '^w^d — 
''anber-S  a\i  bci  ber  Gorporatipn — aiicf;  "o^w  einem  'Csnbiinbmun  erreid}t 
"  iinb  berfolflt  tnerben  fonne.  5^ag  Drganifaticne-^rincip  ber  luirtf)fd}att= 
^^(idjen  (yen'offenfd^aft  beftebt  rtad)  5lun^e  in  ber  a>erbtnbung  einer  ah- 
",  ftractcn  9>ennc)gen§)3erjonIid^feit  unb  ber  ©efammtl^anb,  conjimda 
,,  nianus." 

a.  VI.  3citi'cbritt  fiir  ba§  gefammte  §anbe[§red^t.  ©.  220-229. 

b.  aSeitrage  jum  9ied)t  ber  (Sri»erb§=  u.  2Ciririfc^aft§=@cnoffenid}atten,  \ii>v. 
2r.  33ern^arb  it'a^.    p.  33.     1882. 

3.  Dr.  HiJRLEM ANN'S  position  is  that  as  partnership 
originated  in  the  Roman  law,  and  has  extended  with 
its  development,  the  principle  of  its  organization  must 
be  found  in  that  system  of  law.  He  denies  that  any 
basis  exists  in  the  Civil  law  for  a  joint  estate  which  will 
secure  the  firm  creditors  a  preference  in  its  distribu- 
tion. The  right  of  individuals  to  set  apart  property, 
and  form  a  joint  mass,  which  should  be  kept  for  their 
joint  creditors,  did  not  exist  at  the  Roman  law.  i.  The 
fiction  of  a  person  he  discards  a  makeshift.  2.  The 
privilege  of  the  joint  creditors  he  denies,  because  it  has 
no  legal  foundation.  3.  The  analogy  of  the  peculiiim 
he  shows  to  be  far-fetched  and  unfounded. 

„  SledUlid)  gebbrten  bie  ^veeuHen  nod)  immer  %\\\\\  S5ermbgen  be§  <pcrrn  unb 
„  fonnten  ton  bicfem  w^ii)  'iU'lieben  eingejogen  Jrerben;  man  netgte  fid;  aber 
„  immer  mebt  ber  Stniidu'su,  ben  ®f(aiien  obcr  Sof^n,  ntit  9iiidfid;t  auf  bte 
„-^vccu(ien,  aU  fe(bi"tbered)tigt  jn  flatten,  ^urd}  £)anblungen  be^  Sflaluni 
„  obcr  Softness  iuurbe  ber  fe'err,  re|>.  Sater,  gegen  ^rttte  gar  iiidit  ber^flid;tet, 
„  (e§  >inrD  bier  bon  ben  Scliften  abge[e(ien),  Jpenn  nid)t  cin  befonberer  Grunb 
,,  sur  pcribnlid^en  S^aft  bin^n  tarn,  %.  ^.  Sicfebl,  in  ran  versio  v..  bgl.  Gtnc 
„  [trenge  :>^urd1fiif)rllng  bieu'r  ^Jeditsgrunbfdtie  Ware  iinbillig  unb  T^art  erf dne^ 
„  ncn.  Xer  £)err  bdtte  ba^  'i^eculium  al^  fein  Gigentbuni  bcbalten  unb'bie 
„  f^tdubiger  bc§  2{Ia»en  leer  ipeggefcbidt.  3:er  ':)irdtor  balf  \w\  Gbift.  Gt 
,,  beftimmte,  baf5  bie  Grcbitoren  be^S  SflaDen  (H)a§  fon  biefem  gefagt  ift,  gilt 
,,  immer  and;  »om  Sobnc)  fid[>  Jcenigfteng  axi  bag  ^eculium  l^alten  fiJnnen; 

292 


M 


Pt.  2,  Ch.  6.  FiRiM    Property.  '   §ioi. 

„  ber  .^err  foil  burd)  bic  ^•»anbtungcn  fciner  Untcrgebencn,  iticnn  nidjt  imbe* 
,,  bingt,  hod)  fo  ireit  bic  ':15eciilicn  reidjcn,  ttcr^jflirfitct  luerbcn.  vco  cutftanb  bic 
,,  actio  de  pcculio.  ^^uriftifd;  lyar  c^S  immcr  nod;  bcr  ,ocrr,  unidjcin  bag 
,,  Gigcntbum  an  ben  ^Isccutien  juftanb,  bod;  bnrfte  cr  biefclben  ben  (irebitorcn 
„nid;t  ganj  borentI;altcn,  fonbern  nur  ben  2:f)eil,  nield;cn  cr  felbft  aUfallig 
„  licn  bent  Sf(aBen  ,^u  forbern  f)atte.  ^^^tifd)  geftaltete  fid;  bie  icad;e  \i>,  alS 
„  gcr;ore  ba-S  'ipcculium  nid;t  mel;r  beni  £»errn,  fonbern  bem  Sttaben.  G§  fd;ien, 
,,  alio  iibe  ber  .'oerr  nur  ha<i,  9ied;t  <x\\^:>,  h^x^^  isermogcn  eine^  9(nbern  ju  ttieilen, 
•  ,,unb  a(§  ftebe  tf;nt  zwxprivilegium  dedudionis  ju  fiir  baejenige,  Jv»as  er 
„felbft  jn  forbern  l^atte.  Setn  (S'igentliumSred;!  erfcfiien  ale  ^Tiftributione^ 
„rcd^t  unb  'i|irinilegium. — Sie  befd;rdnfcnbe  9iid;tung  mad;te  Uicitere  g^ort^ 
,,  fd;ritte.  aSenn  ber  §err  jugab,  baft  ber  ©flabe  in  cigenem  JJame  ein 
„  $anbel§gelt»erfce  trieb^  fo  Jinlligte  er  baburc^  ein,  bafs  bas  '^y.eeulium  obcr 
„  tvenigftenS  ein  2:^eil  beefetben  baju  Dertuenbet,  niitbin  gri3feern  ©efa^ren 
„au§ge|el5t  luerbe;  C'^  ivar  baf^er  billig,  ba^  and;  er  biefen  Gf;ancen  au^ge= 
„  fe^t  fei  unb  fiir  feine  g-orberungen  nid;t  burd;  'h<x?i  privilcgimn  dednc- 
;.  „ /'/o;n'5  bollig  gefid;ert  bleibe.  2)er  ^srcitor  balf  and;  f)ier  unb  beftimmte 
;  „  in  feineni  Gbifte,  inenn  ein  (Sftabe  mit  3>ornnffen  feines  i)crrn  ^lanblung 
„treibe,  fo  berliere  le^terer  fein  privilcgium  dedudionis  wwh  concurrire 
„  bei  9]ertf;eilung  ber  merx,  ober  be§  jur  fixinblung  berirenbeten  pcculi- . 
,,nins,  mit  alien  iibrigen  Cjldubigern  bc^  Stlaben.  £0  entftanb  bie  aclio 
,,  tributoria.  Sa'o  Gigentf)unx  be§  Sevrn  dufeert  fid;  nur  nod;  in  feineni 
„  3)igtribution§recf)te.  'Seibe  Itlagen  finb  au§  berfelben  Quelle  entf^trungen, 
„ru^en  auf  bemfelben  '^srincip,  33egiinftigung  ber  (Srebitoren  be«  Stlaben 
„  gegcniiber  bent  £)errn.  2)iefe  tft  am  bebcutenbften  bei  ber  adio  tributoria. 
„2)er§err  inirb  baburc^  einem  if^-^ra«^;^5  r/-^^//'crgleid;geftcUt;  er  ber= 
,,  liert  fein  ^orabjug^red;!.  \.  5.  /.  quod  cum  eo,  qui  in  at.  pot:  ''In 
,,  tributojia  adione  domini  conditio  praccipua  non  est.  id  est,  quod 
,,  domino  debcfur,  non  dediccitur,  sed  ejusdem  juris  est  dommus, 
,,cujus  et  ceteri  crcditoresy  2)iefe§  ^srincif)  ift  in  ben  ^sanbeften  auc^ 
„  o.\\  bie  S^Ji^e  be§  S^iteUJ  '' De  tributoria  acticne'"  geftellt  (/.  /.  pr.  h.  t.) 
„unb  bei  (Sntfd;eibung  fcf)nneriger  ^dlle  fte'ts  alS  9icrm  gebenb  ju  §iilfe 
„genommen.  ©0  %.  33.  in /.  5.  ^.  7  h.  t.  bon  UlfJtan.  S)er  bent  |.  15 
„  biefer  lex  anger;dngte  f^ejielle  Grunb  fann  n-efentlid;  nid;t§  2(nbcre§  au§s 
„briiden,  alg  ba$  ber  ganjen  actio  ju  03runb  liegenbe  ^irinci^).  Unb  fo 
„  ift  e§  aucl;.  aSdbrenb  ber  aw  bie  ©^n^e  geftellte  ©al5,  ber  i'^^xx  berliere  feitt 
,,privilegiuin  dedudionis  wwh  ftebe  ben  anbern  Grebitorengleid;,  biered,)ts 
„  X\<&it  Stellung  ber  (Erebitoren  be§  Sflaben  su  feineni  .^crrn  be^eid^net, 
,,5eigt  ber  bent  §.  15.  beigefiigte  Grunb  {merci  viagis  quam  ipsi  credi- 
,,dit),  ioie  fid;  ba§  mit  33e3ie^ung  auf  bie  merx  int  i.'eben  fattijd;  geftaltc. 
„Siefer  Cirunb  bejieftt  fid;  ebenfoioof)l  allgemein  auf  alte  SBeftimmungett 
„ber  actio  tributoria,  al'S  nur  auf  ben  betreffenben  ?.  SKenn  ndmlid; 
„!otentanb  mit  eincni  ©flaven  contraf)irte,  fo  tmifste  er,  bafj  er  gegen  il;n 
„febft  entmeber  feine  5(nfpriid;e  gar  nid;t  ober  bod;  nidit  fogleid;  flagenb 
„Berfolgen  tonne,  baf3  aucl)  ber  §err  nidit  unbebingt  l^afte.  9iur  bie  vierx 
,,tonnte  if;nt  cinige  ©arantie  geben  unb  il;n  jum  Erebitiren  ermuntevn, 
„  benn  au^  biefer  muf^te  er  bejaljlt  iocrben.  3)afiir  biente  ibm  bie  adio  tri- 
ifbutoria,  unb  man  fonnte  toirtUc^  mit  9ied;t  fagen,  man  crebitire  mel;r  ber 
,,  Sanblung  al§  bem  ©ftaben  {merci  viagis  quam  ipsi  servo).  6an,^  auf 
,,  gleid;e  SUeife  muf5  bei  ber  actio  de  peculio  gefagt  iperben,  bie  ©Idubiger 
,,  crcbitiren />6r«//6>  magis  qjiam  ipsi.  Sas  giit,  ioenn  ein  ©flabe  einc 
„  ^anblung  batte,  ganj  ebenfo,  iine  toenn  er  jittci  unb  mcl^rere  fiatte.  Sie 
,,  (Srebitoren  f)attcn  fid;  natiirlicb  an  bie  merx,  riidfid/ttid;  Uield;er  fie  ores 
,,  bitirten.  3(n  bie  ©telle  bC'S  ipsi  barf  nur  ber  scrvus  ober  irer  alieni  juris 
,,ift,  auf  \><\\  bie  actio  tributoria  alfo  fid;  bejiebt,  gefetjt  toerben,  burd;au§ 
,,,'(leiner,  ber  sui  juris  ift.  Jiir  rbmifd;e  Kaufleute  .y/V; //^r/^,  fo  Jine  fiir 
„  unfere  ilaufleute,  fef^len  alle  ^unbantente  ber  actiones  de  peculio  unb 
fftfibutoria,  4DeId;e  ^auptfdd;lid;  finb:    bie  romifd^ie  potestas  unb  ba§ 

293 


§ioi.  Firm  Property.  Pt.  2,  Ch.  6. 

,,  romiidu-  ivcculionfliftcm,  imb  bie  33c[timmungm  berfelbcn  i)abm  tuir  no<i) 
,',  antiqiiarifdH'y  oiiit'crcffe  fiir  un§.  Ser  contra^irenbe  ilaufmann  iwirb 
''  fclbft  fUiiilnu  iH'ipflid^tct  iinb  nid)t  ein  Srittcr;  er  I^aftct  unbebingt,  md;t 
,',  blof}  fo  unit  bio  w<'/-.r  rcid)t/^  ^iirlcmann,  S)ag  3]erf)altniJ5,  pp.  73-6. 

The  right  to  keep  distindl,  trades  carried  on  by  dif- 
ferent freeman,  who  adled  for  the  proprietor,  was  un- 
heard of 

"  (S--3  tonntc  Juol^l  nidjt  fcltcti  fein,  bafj  ein  5laufmann  me^rere  ©efd^afte 
„  batte  iinb  fiir  jcbc§  bcfonbcrc^nftitorcn.  S^a  ift  abcr  leine  3icbe  baDon, 
',',in^  bie  (^Jldubigcr  be^j  eiiien  (Slabtiffement^  Separation  mm  benjenigen 
„be«3nnborn  ncrlangen  t'onnen,  nod;  lueniger  baHon,  ia\i  bie  61dubiger  einer 
,,ein5elneu  .vianblung  "Se^jaration  'oon  ben  5iid)tf)anblungc-'gldubigern  beg: 
„  I'elben  itaufnianns  nniprcd;en  tonnen.  9iUr  l)abm  ha  einen  <5d)nlbner, 
,,liH"Id)er  unbebingt  alien  jeinen  CSrebitoren  ntit  feinem  ganjen  'i^enni3gen 
,,  Iiaftet.  2^ie  iierl^dltniffe,  auf  bie  [idj  befonbers  bie  ac/io  institoria  ftii^t, 
„  leben  noc^  bei  un^  fort  unb  seigen  fid}  befonbere  bei  ber  §>•  ©•  'So  um-' 
„fiditig  iinb  bctaiUirt  burdigefiii^rt,  line  im  romifd^en  9fed;t,  bemertt  Xl^ol, 
„  ift  bie  iiel;re  Horn  ^nftitor  lurgenbg,  <x\\d)  ift  faum  ein  Sa^  berfelben 
„  unfern  I;eutigen  5i5er^dltniffen  luiberftrebenb."  §iirlemann,  S)a§  a!ert)dtt: 
nife,  p.  79. 

The  contrast  between  the  position  of  a  Roman  slave 
and  a  modern  trader,  is  pointed  out  by  HurlEmann, 
and  the  analogy  relied  upon  by  the  advocates  of  a  privi- 
lege for  the  firm  creditors  confuted. 

,,5n  jener  Stelle  Ul))ian§  (1.  5.  ^.  15)  unb  in  ber  actio  tributoria 
,,uberbau^3t  ift  ntd)t  ber  contraI;irenbe  Sftal'e  ber  S^erflid^tete,  fonbern  ein 
„  fritter,  ber  iperr:  f)eut3utage  aber  berjenige,  ipetc^er  IJnf^aber  ber  £)anb= 
„Iung  ift.  Sort  [;aftet  ber  "g^ri^  rtur  big  auf  ben  iBetrag  ber  ijanblung 
,,{merx):  bei  ung  I;aftet  ber  ^aufmann  unbefd;ranft  mit  feinem  ganjen 
,,  i^ermiigen.  Sort  ift  ber  ,5nf)aber  ber  £)anblung  ein  alieno  juri  sub- 
,,jediis,  ireldHT  tein  Gigentlium  tiat,  in  ber  SJegel  nur  ein  Dont  <berrn  con: 
„cebirte5  peculiuin:  jeljt  ift  ber  !^^nl)aber  ber  £»anbfung  ein  ^yreier,  sui 
,,  juris,  unb  biefe  ift  fein  (iigent^uni.  Sort  ift  Don  mefireren  ^aiibtungen 
„(/a<!»<?/-«rt5)  bie  9Jebe:  li)ir  nel;men  bafiir  nur  eine  an.  Gg  finb  bort  bie 
„6.  Wl.,  bie  niit  33e3ug  auf  bie  eine  £)anbhmg  crebitirten,  ben  £>.  @l.  ber 
„dnbern  .Soanblung  gegeniiber  geftellt:  inir  >t>oIIen  einfad)  i>."  ®l.  ben 
„^.  ®L  gegeniiber  ftellen.  Sie  33eftininuing,  baf?  bie  tributorifd)e  5llage 
„unb  bie  actio  de peculio  fid)  confumircn,  ignoriren  iinr,  unb  laffen,  tt>ag 
„  auf  ber  mcrx  nidjt  gefunben  loerben  fann,  auf  bem  iibrigen  peculiuin 
,,  fudien  unb  nad^^olen.— 3luf  biefe  9.l"eife  gelingt  eg  uns  enbtic^,  aug  ber 
,/4ieftimmung  bes  romifdien  Sieditg,  ha'^,  toenn\nn  Stlabe  init  Sortinffen 
„  feincg  feerrn  jlvei  ober  niebrere  getrennte  <banblungggefd)dftc  gefittirt  t)at, 
„  bie  (Srebitoren  Separation  unb  S3efriebigung  aug  bemjenig'en  ©efd^dft 
„  toertangen  tonnen,  riidfid}tlid)  beffen  fie  crebttirt  t)aben,  fiir  unfere  %ix- 
„f;dltniffe  fotgenben  Wrunbfal3  absuteiten:  SBenn  ein  greier  eine  <oanbhmg 
„  I^at  unbinfoUient  Unrb,  fo  tonnen  bie  §.  @l.  Separation  unb  au'5fd)lief5: 
„  lidie  iiefrie^ung  aug  benx  .'oanbUmgggute,  gegeniiber  ben  9iid)tl^anbtungg: 
„g[dubigern,  fo  ioie  fiir  9iid)ter^alteneg  (Soncurren,^  mit  i'etu'rn  bei  %iX' 
,,  tinntung  beg  ^srieatguteg  beg  Gribarg  berlangen  Hub  bag  fo  gefdiaffene 
„Sing  I;eif;t  bann  '  eine  buret)  bie  berdnberten  Sl!erl;daniffe  bebingte  2(ug: 
„bef)nung  ber  i^eftimmungen  beg  rontifdien  Dieditg.^  SBoIIte  man  bei 
„  interpretation  Don  Wefeiien  fo  berfaf;ren,  fo  liefte  fid)  nicf)t  abfet)en,  iuie 
„  n)eit  bag  fubren  luiirbe.  :;scber  erbenfUd;e  Sat?,  ben  gute  ober  iible  iiaune 
„  jufddig  m  irgenb  cinem  Hopfe  ermeden  J»iirtte,  fdnbe  fo  feine  Segriinbung 
„im  ri?miid)en  Dledit;  abgefe^en  batton,  bafj  bag   Sluffinben  Don  ©runb: 

294 


Pt.  2,  Ch.  6.  Firm    Property.  §io2. 

„  fdfeen  tm  Corpus  Juris  nod)  iud;t  geni'igt,  beren  Mntoenbung  im  Siebcu  ju 
„  be^au^jten/^  ^iirlcmann,  2)a^3  aseri)dltni^,  pp.  83-4. 

HiJRLEMANN  smns  up  the  Commercial  law,  apart  from 
Codes,  in  the  following  propositions  : 

„  '^ViX  ba§  gcmeine  beutfd^e  §anbe(sred;t  fte^en  nunmei^r  fotgenbe  9iec^t§= 
„  grunbfdfte  f"e[t : 

1)  „®ic  ^anbelSgefeUfci^aft  ift  !eine  juriftifd^e  ^perfon. 
„  ®ie  \joX  al§  jolc^e  ireber  eigne  3ted)te  nod;  3SerbinbHd)t"etten,  fonbern  bie 
„  einjelnen  SJUtgliebet  bcrfclbcn  finb  i^,  bie  in  alien  iserbdltniffen,  tr>etd^e 
„  bie  @.  betreffeii,  felbft  unb  allein  al§  bered^tigt  unb  berpfiid^tet  erfc^einen. 

2)  „®ie  ift  nad)  ben  3UgeIn  be§  rbmifd^en  91ed)t§  iiber 
„©ocietat,  i»ot)on  fie  eine  2(rt  ift,  jn  beurtt^eilen;  fie  t)at  nnr  bas 
„  (£igentt)innlid;e,  ba^  foUbarifdje  aserbinblid]fett  aller  SJUtglieber  al§  9?egel 
„gilt.  ^wc  biefe  (Sigentf)iimlic^!cit  finben  fic^  3lnaIogicn  im  romifd^en 
„3Jed)t  bet  ben  Seftimmungen  iiber  ba§  S^ftitorenDertjdltnif;.  Sie  aser= 
„mutl^ung  eincr  gegenfcitigen  pracpositio  institoria  fommt  ber  Sered;tig= 
„ung  jur  girmafii1)rung  bollig  gteid;. 

3)  „S)ie  ^irnta  ber  ^anbelSgefellfdiaft  ift  niditS  2lnbere5. 
„aU  bie  abgefiirste  Sejeidpiung  aller  folibarifd;  I)aftenben 
„0efeltfd;after. 

4)  „©o  lange  ein  3)iitg(ieb  folDcnt  bleibt,  ift  aud;>  bie  £)an= 
„be(§gefenfcf)aft  fotDent,  \\\\^  ber  ©oncurg  ber  le^ern  ift  nur  ber 
„  (EoncurS  aller  einjelnen  9Jtitglteber.  Gg  gibt  alfo  fo  Diele  Goncurfe  als 
,,3L)Utglieber  finb,  unb  natiirlid}  bei  jebem  eine  eigene  Soncurgmaffe. 

5)  ,,%XK  bie  einjefne  (Soncurgtnaff e  fallen  bie  fammt= 
,,\\^^'^'^  ©iiter  be§  OefeltfcfjafterS,  fein  Stntl^eil  am  ©ocietdtg^ 
„  gut  fotcol^l,  alg  fein  iibrigeg,  au^er  ber  ©ocietdt  liegenbe^  a>ennogen,  bag 
,,  fog.  ^rittatgut. 

6)  „®ie  ©.  01.  miiffen  il^re  ^-orberungen,  line  bie  fog.  %.  01.,  in  ben 
„  einjelnen  ©oncurfen  i^rer  Sebitoren,  ber  0efellfd)after,  anmelben.  %i\\z 
„fonnen  f'einen  ^^artihilarconcurg  berlangen;  e§  ftetjt  il^nen  in e ber 
„ein  ©e^)aration§red;t  nocf)  ein  ^ribilegium  irgenb 
„»iutd^er  21  rt  ju.  2(Ile  Crcbitoron,  biejenigen,  toeld;e'bcr  @efellfd;after 
,,  al§  Societdt^mitglieb  l;at,  fotrol)t  aUJ  beffen  %.  01.  fommen  bier  nacf>  ber 
„  allgemeinen  SJegel  al§  gleid)bered;tigt  jur  Sertl;cilung  ber  ganjen  3JJaffe. 

7)  ,,Ser3.sort!f;eil  berSocietdtggldiibiger  griinbetfid^ 
,,  e  i  n  3  i  g  unb  allein  auf  bie  6'igentl^iimlic^feit  ber  neuern  .*o.  0.,  ndm; 
„  Iid>  auf  bie  ©olibaritd  t  ber  0  e  fell  fd;  aft  er.  Suf'^fgc  ^er= 
,,felben  l^aben  bie  ©.  01.  nid}t  nur  eincn,  fonbern  me  I)  ere  ©d)ulbner, 
„  unb  fie  fonnen  if)re  Sefriebigung  in  ben  (Soncurfen  aller  ii^rer  ©d^ulbner 
„fuc^en."  §urlemann,  Sa§  a^erl^dltni^,  pp.  101-2. 


102. 


|]artner9l]ip,  being  a  status  baseii  upon  tl]e  ttrni  estate,  ^Qtz 
not  beriDC  all  its  bistiuctiBe  features  from  tl)e  tontrart  of  tlje 
parties. 

295 


j,io:\  Firm  Property.  Pt.  2,  Ch.  6. 

Judge  Gibson  advanced  a  notion,  which  makes  part- 
nership an  anomaly  in  law:  The  partners  seek,  by  an 
agreement  between  themselves,  to  bind  third  persons. 
The  partnership  property  is  withdrawn  from  the  exe- 
cution of  a  creditor,  by  a  contra6l  between  a  debtor 
and  a  stranger,  to  which  the  creditor  was  not  a  party. 
The  partnership  forms  an  exception  to  principle,  and, 
as  such,  is  tolerated  only  in   favor  of  trade.'     If  it 
were  not  for  the  partnership's  exceptional  standing  at 
law,  the  creditor  of  a  partner  would  have  a  right  in 
equity  to  the    partnership  property  on  equal  terms 
with  the  firm  creditors,  limited,  of  course,  to  the  por- 
tion of  the  firm  assets  which  belongs  to  his  debtor. 
If  Judge  Gibson's  theory  is  accepted,  and  partnership 
is  nothing  but  a  contra6l,  the  rights  of  all  creditors 
are  reduced  to  equality,  and  as  neither  class  has  a 
priority  upon  the  joint,  or  upon  the  separate,  fund, 
distribution  should  be  made  without  respe(5l  to  the 
creditor's  class.     But  this  is  unheard  of.     The  joint 
estate  is,  in  facl,  awarded  to  the  firm  creditors,  not  as 
their  right,  but  under  the  pretext  of  convenience  in 
making   distribution.       The    separate    creditors    are 
awarded  possession  of  the  separate  estate,  to  the  ex- 
clusion of  the  partnership  creditors,  in  order  to  coun- 
terbalance the  privilege  of  the  joint  creditors  to  ap- 
propriate the  firm  assets. 

The  inability  of  a  partner  to  convey  an}^  title  to  a 
specific  portion  of  the  firm  stock  by  a  sale  of  his  in- 
terest, voluntary  or  adverse,  was  to  Judge  Gibson  an 
anomaly.  While  compelled  to  admit  the  principle  as 
an  established  rule  of  law,  he  was  disposed  to  deny  it 
any  effe(5l  in  determining  the  rights  of  joint  and  sep- 
arate creditors."     A  preference  given  to  the  joint  cred- 

296 


Pt.  2,  Ch.  6.  Firm    Property.  §102. 

itor  upon  the  firm  fund,  was  in  his  view,  an  unwar- 
ranted abridgment  of  the  co-ordinate  rights  of  the 
separate  creditor. 

The  conception  entertained  by  Judge  Gibson  of  a 
partnership  was  a  tenancy  in  common.  The  partners, 
as  debtors,  have  nothing  to  say  about  the  method 
which  a  creditor  shall  adopt,  in  order  to  colle6l  his 
debt.  It  is  the  privilege  of  the  creditor  to  seledl  his 
remedy.  The  debtor  has  no  power  to  curtail  his  lia- 
bility. The  partners  could  neither  restri6l  individual 
creditors  to  the  separate  estate,  nor  firm  creditors  to 
the  joint  assets.  Both  classes  of  creditors  have  an 
equal  right  to  proceed  against  either  kind  of  property 
which  the  debtor  had.  The  separate  creditor  might 
go  against  the  firm  property,  or  a  moiety  of  it,  as  his 
debtor's  property.  The  joint  creditor  might  proceed 
against  the  separate  estate  of  his  debtor.  The  only 
plan  of  distribution  which  would  give  effect:  to  the 
equal  right  of  every  creditor,  against  his  debtor's 
property,  would  be  to  marshal  the  assets,  pro  rata^ 
among  the  individuals  of  both  classes,  without  regard 
to  the  classification  of  creditors  into  joint  and  separate: 
the  division  would  be  equal  from  the  start. 

The  reasoning  of  Judge  Gibson  furnishes  at  best  a 
superficial  treatment  of  the  partnership  relation  and 
the  rights  of  joint  and  separate  creditors.  By  his  pro- 
cess the  joint  and  separate  are  reduced  to  a  dead  level, 
on  the  ground  that  the  Common  law  does  not  recog- 
nize the  distindlion  which  subsists  between  different 
interests,  or  personcE^  when  exercised  by  one  person, 
though  the}'  are  unconne6led  with  each  other,  except 
through  the  link  of  a  common  individual.  He  main- 
tained that  a  partner  who  trades  in  a  firm  charges 

297 


§io2.  Firm   Property.  Pt.  2,  Ch.  6. 

himself  as  an  individual,  and,  in  return,  the  individual 
who  trades  on  his  separate  account  charges  himself  as 
a  partner.     Now,  it  is  true,  the  actions  of  the  Common 
law  were  incompatible  with  different  parties  in  one  in- 
dividual.    A  man  could  not  be  sued  as  a  partner, -but 
onh'  as  an  individual.     The  obstacle,  however,  as  an 
incident  of  procedure,  vanishes  in  Chancer}^,  where 
forms   do  not  interfere   with   the   administration   of 
equit}'.     There  the  lack  of  pcrsojicr  is  not  felt,  and 
the  different  interests  are  accorded  a  separate  recogni- 
tion.    Back  of  the  levelling  which  would  be  brought 
about  by  the  oblivion  of  the  Common  law  procedure 
to  all  distindliou  between  partnership  and  individual 
interests,  is  the  substantial  right  of  the  firm  credit- 
ors, which  is  established  at  laM'  and  protected  in  equit3^ 
Judge  Gibson  put  the  firm  creditors  in  a  position 
not  paramount,  but  subordinate,  to  the  separate  cred- 
itor.   He  said  the  partnership  results  from  a  contract. 
The  partners  could  not,  b}-  a  contract  between  them- 
selves, restrict  their  individual   creditors  to  any  par- 
ticular propert}',  nor  could  the}'  create  an}-  prior  right 
in  the  firm  creditors.     In  spite  of  the  contradl,  the 
individual  creditors  should  be  permitted  to  proceed 
against  the  partners'  joint  propert}'.      If  they  are  ex- 
cluded from  recourse  to  the  joint  estate,  wh}-  should 
not  the  firm  creditors  be  excluded  from  the  separate 
estate?     The  real  equity  he  maintained  was  in  the 
separate  creditor.     An  arbitrar}-  a(5l,  without  his  con- 
sent, hud  cut  him  off  from  a  portion  of  his  debtor's 
proptjrty.     He  was  entitled  to  be  paid  out  of  all,  or 
any  part  of,  the  debtor's  estate.     If  there  should  be 
an  .'  limitation,  the  joint  creditor  ought  to  be  confined 
to  the  joint  estate,  or,  admit  that  he  could  also  claim 

29S 


Pt.  2,  Ch.  6.  Firm  Propepty.  .  §102. 

to  be  paid  out  of  his  debtor's  separate  property ;  then 
both  raust  stand  upon  an  equal  footing.  Such  a  con- 
clusion would  make  tenancy  in  common  the  theory 
of  partnership  property.  His  do6lrine  of  marshalling 
assets  cannot  be  explained  upon  any  other  hypothesis. 
His  plan  of  distribution  is  equality  between  different 
sets  of  creditors,  not  according  to  their  class,  but 
among  all  the  individuals  of  each  cla.ss  pro  rata. 

If  the  true  view  of  partnership  had  been  carried  out, 
the  paramount  rights  of  the  partnership  creditors  would 
have  been  acknowledged  to  their  full  extent.  Then 
the  firm  creditors  would  have  had  an  undisputed  right 
to  all  the  firm  property,  and  an  equal  right,  with  the 
separate  creditors,  to  the  separate  estate.  There 
would  be  no  abatement,  or  dedu6lion,  of  the  partner- 
ship claims  against  the  separate  estate,  by  reason  of 
what  they  had  received  as  a  dividend  out  of  the  joint 
estate.  That  would  be  an  independent  right,  in  addi- 
tion to  the  claim  against  his  separate  assets.  The 
idea  of  equality  in  distribution  between  the  joint  and 
separate  creditors  would  be  inconsistent  with  the 
rights  of  the  parties,  which  are  based  upon  prece- 
dence. The  question  of  equality  does  not  arise  until 
the  paramount  claims  have  exhausted  their  fund,  and 
seek  satisfaction  out  of  the  common  fund  for  both 
classes  of  creditors.  The  equality  of  distribution  is 
limited  to  the  separate  estate,  and  justifies  its  divi- 
sion among  all  the  creditors,  joint  as  well  as  several, 
pro  tanto.  As  this  method  of  administering  the  as- 
sets has  not  been  adopted,  the  true  view  of  partner- 
ship has  not  prevailed  in  the  plan  of  marshalling 
joint  and  several  assets  as  finally  established.     The 


i 


299 


§io2.  Firm   Property.  Pt.  2,  Ch.  6. 

reason  for  the  departure  from  the  true  principle  is 
stated  in  §191,  ct.  seq. 

But  it  is  not  to  be  understood  that  the  opposite 
view,  as  developed  by  Judge  Gibson,  has  maintained 
itself  By  that  theory,  the  separate  creditor  would  go 
against  the  firm  property,  or  a  moiety  of  it,  as  his 
debtor's  propert3^  The  joint  creditor  would  have  no 
better  claim  to  it  than  the  separate  creditor  has,  and 
both  would  share  their  debtor's  property  between 
them.  The  division  would  be  equal  from  the  start. 
A  dire(5l  access  would  be  given  to  both  classes  of  cred- 
itors against  both  joint  and  separate  estates. 

Underlying  the  attempts  to  equalize  the  distribution 
out  of  both  funds  is  the  notion  of  the  individual  re- 
sponsibility of  the  partners.  There  is  no  distin6lion 
between  a  firm  contrail  and  an  individual  contra6l,  in 
the  matter  of  personal  liability,  and  by  easy  transi- 
tion it  may  be  supposed  that  there  should  be  no  dis- 
tin6lion  made  in  application  of  firm  and  separate 
funds  to  the  satisfa6lion  of  such  contrails.  The  no- 
tion, though  proper  in  itself,  does  not  meet  the  case. 
The  firm  creditor  enjoj^s  a  priority  on  the  firm  fund, 
not  by  reason  of  any  difference  between  his  contrail 
with  the  parties  and  that  of  a  separate  creditor,  but 
by  reason  of  an  independent  and  vested  right,  which 
he  has  acquired  in  the  firm  stock  in  consequence  of 
its  destination  to  his  use  by  means  of  the  joint  ten- 
ancy of  the  partners. 

Equity,  by  restri6ling  each  creditor  to  his  special 
fund,  recognizes  the  joint  tenancy  of  the  partners,  and 
adopts  the  Common  law  rule,  that  members  of  a  busi- 
ness firm  do  not  contribute  their  separate  estates  to  the 
partnership.     The  partners  trade  simply  in  their  joint 

300 


A 


Pt.  2,  Ch.  6.  Firm  Property.  §102. 

capacity.  But  equity  does  not  intervene  to  settle  the 
basis  of  distribution,  unless  the  partners  have  two 
funds.  This  is  a  distinct  ground  of  equity,  independ- 
ent of  partnership.'^  If  there  is  but  a  single  fund,  no 
conflict  arises  for  a  court  of  equity  to  adjust,  and  the 
Common  law  prevails,  with  its  theory  of  a  paramount 
claim  against  the  firm  stock,  and  an  equal  title  to  the 
separate  estate  of  the  partners.  The  theory  enables 
the  firm  creditors,  if  there  is  nothing  but  partnership 
property,  to  take  it  all ;  but  if  there  is  no  firm  prop- 
erty, to  participate  in  the  distribution  of  the  separate 
estate  with  the  separate  creditors.^  The  right  of  the 
separate  creditors  is  a  doctrine  of  Chancery,  where  a 
joint  creditor  is  not  permitted  to  exercise  his  legal 
right  except  upon  terms.  The  right  of  the  firm  cred- 
itors, as  a  paramount  class,  was  asserted,  and  the  re- 
striction was  made  only  as  a  matter  of  grace  to  the 
separate  creditor.  The  right  of  pre-eminence  existed 
at  law,  and  might  be  enforced. 

It  is  the  refusal  of  the  Common  law  to  let  individuals 
trade  in  the  capacity  of  partners,  without  also  trading 
in  the  same  transaction  as  individuals,  that  gives  to  a 
partnership,  at  Common  law,  its  eccentric  features.  A 
partner  pledges  not  only  the  contribution  which  he 
makes  to  the  firm  stock,  but  his  individual  fortune  in 
addition,  by  every  firm  engagement.  As  he  cannot  ac5l 
in  the  capacity  of  a  partner  simply,  but  also  ac5ls  as  an 
individual,  no  distinc9:ion  can  be  drawn  between  his 
lliability  as  a  man  and  his  liability  as  a  partner.  Had 
|the  Common  law  adopted  the  universal  partnership 
of  the  Civil  law,  in  its  full  extent,  and  prohibited  any 
dealings  by  a  partner,  except  through  the  firm,  the 
collision  between  joint  and  separate  creditors  would 

301 


§io2.  Firm   Property.  Pt.  2,  Ch.  6. 

not  have  occurred,  for  there  would  be  no  separate  cred- 
itors, and  no  equity  of  a  partner  against  a  firm  creditor. 
A  partner  may,  however,  adl,  at  Common  law,  on 
his  separate  account.  He  is  not  merged  in  the  firm, 
as  he  is  in  a  universal  partnership,  by  the  Civil  law. 
The  right  to  a6l  independently  of  the  firm,  enables 
him  to  create  liabilities,  which  charge  his  separate 
estate  alone.  Equity  treats  the  debts  incurred  by  a 
partner  on  his  separate  account  as  the  primary  bur- 
den of  the  separate  estate,  a  principle  unknown  to 
the  Common  law,  and  only  recently  acknowledged  as 
a  right.  At  the  Common  law,  joint  and  separate  cred- 
itors stood  upon  an  equal  footing  in  reference  to  the 
separate  estate,  for  the  partner's  personal  obligation 
was  the  same  in  both  cases.  The  prior  execution  took 
the  fund.  The  Common  law  extension  of  the  firm 
estate,  so  as  to  include  a  partner's  separate  property, 
which  he  did  not  contribute  to  the  firm,  and  to  sub- 
ject it  to  the  claim  of  firm  creditors,  is  rejedled  by 
equity,  if  the  privilege  confli(5ls  with  an  independent 
right  against  the  separate  estate.  The  theory  which 
charges  a  partner  as  an  individual,  and  binds  his  sepa- 
rate estate  for  a  firm  indebtedness,  is  recognized  in 
equity  only  when  the  demand  does  not  clash  with  a 
claim  against  the  partner  which  arises  out  of  an  indi- 
vidual transadlion. 

1.  "That  a  conlradl  which  enables  the  parties  to  keep  a  class  of  their 
"creditors  at  bay,  and  yet  retain  the  indicia  of  ownership,  should  not 
I' have  been  deemed  within  the  statutes  of  Elizabeth,  is  attributable 
"exclusively  to  the  disposition  universally  manifested  by  courts  of 
"justice  to  encourage  trade."  Gibson,  J.  C,  in  Doner  v.  Stauffer,  i 
Pa.,  pp.  203-4  (1S29). 

2.  Separate  execution  creditors  take  the  proceeds  and  the  purchaser  takes 
the  firm  stock.  B  &C,  partners.  D  etal.  had  separate  executions  against 
C,  iind,  1 1  August,  182-5,  levied  on  the  partnership  property.  A  etal. 
had  separate  executions  against  B,  and  levied  on  his  share.  The  firm 
property  was  sold,  under  these  and  other  executions,  to  E,  for  14,779- 

302 


Pt.  2,  Ch.  6.  Firm    Property.  §102, 

A  feigned  issue  was  granted,  to' find  out  who  was  entitled  to  the  pro- 
ceeds. D  ct  al.  claimed  half  the  fund.  A  et  al.  offered  to  show  that, 
I,  firm  was  insolvent  at  date  of  D's  levy  ;  2,  Chad  no  interest,  and,  3, 
B  was  entitled  to  marshal  assets  in  relief  of  his  liability. — ^Judgment 
for  D  et  al.  affirmed.  Gibson,  C.  J.:  "They  (the  firm  creditors)  can 
"  interfere  at  all,  only  on  the  ground  of  a  preference  which  has  regard 
"only  to  the  partnership  effeAs,  and  these  have  not  been  sold,  but 
"only  the  subordinate  interest  of  the  partner,  which  was,  stridlly 
"speaking,  his  separate  estate.  Their  recourse,  therefore,  is  neces- 
"  sarily  to  the  property  in  the  hands  of  the  purchaser.  Now  had  the 
"sheriff  sold  the  interest  of  but  one  of  the  partners,  the  execution 
"  creditor  would  have  clearly  been  entitled  to  the  proceeds.  But  al- 
"  though  he  sold  the  whole  stock  at  one  operation,  on  separate  exe- 
"cutions  against  both,  there  was,  in  contemplation  of  law,  a  separate 
"sale  of  the  interest  of  each.  What  then  would  have  been  the  effedl, 
"had  these  sales  been  made  consecutively?  The  first,  in  the  order 
"of  time,  would  have  passed  the  interest  of  the  partner,  subjecft  to 
"  the  equity  of  his  co-partner,  and  the  execution  creditor  would  have 
"been  entitled  to  the  price.  But  this  equity,  together  with  the  re 
"maining  interest  of  the  other  partner,  would  have  passed  by  the 
"succeeding  sale  to  the  same  purchaser;  the  execution  creditor,  iu 
"that  instance,  also  taking  the  proceeds.  *  Here  *  where  the 
"  shares  of  the  partners  are  united  in  the  same  purchaser,  every  sem- 
"  blance  of  partnership  equities  is  at  an  end.  As  regards  the  goods  in 
"the  hands  of  the  pvurchasers,  this  is  conceded."  Doner  v.  Stauffer,  i 
Pa.  Rep.  198  (1829). 

"I  think,"  said  Judge  Sharswood,  in  criticizing  the  case,  "alto- 
"gether  too  much  was  conceded  when  it  was  conceded  that  the  goods 
"could  not  be  followed  into  the  hands  of  the  purchaser.  The  sheriff 
"proceeded  irregularly  in  selling  as  he  did  the  effects  of  the  firm  under 
"  the  separate  executions  against  the  partners.  But  that  made  no  dif- 
"ference;  he  could  make  no  better  title  by  lumping  the  sale,  than 
"the  writs  of  execution  separately  taken  authorized  him  to  make. 
"  Had  he  sold  consecutively  the  first  purchaser  would  have  bought  the 
"  interest  of  B  subjedl  to  the  joint  debtors.  The  price  would  be  pro- 
"  portioned  to  the  hazard.  It  is  agreed,  however,  that  by  so  buying 
"  he  did  not  assume  the  joint  debts  so  as  to  become  personally  liable. 
"The  goods  themselves,  whether  in  his  hands  or  in  the  hands  of  the 
"  other  partner,  would  be  liable  to  execution  for  the  joint  debts. ' ' 

Judge  Sharswood  has  traced  Judge  Gibson's  mis- 
conception to  its  source,  and  shown  that  the  partner's 
equity  is  founded,  not  upon  the  partner's  share  in 
the  joint  property,  but  upon  his  unlimited  liability, 
which  charges  his  separate  estate.  The  equity  enables 
him  to  marshal  the  firm  assets  for  the  discharge  of  his 
liability.  The  objecfl,  as  well  as  the  purpose,  is  to  relieve 
his  separate  estate,  which  was  not  contributed  to  the 
firm  stock,  and  is,  nevertheless,  made  to  answer  for  firm 
debts  by  reason  of  the  unlimited  liability  imposed^  by 
law  upon  a  partner  for  all  firm  engagements.  The 
equity  does  not  depend  upon,  and  is  not  fed  by  the  part- 
ner's interest  in  the  joint  stock,  but  springs  from  and  is 
fed  by  his  separate  liability  for  firm  debts.     The  equity, 

303 


§102.  Firm  Property.  Pt.  2,  Ch.  6. 

therefore,  is  not  a  vendible  commodity.  No  one  is  in- 
terested in  buying  exemption  from  a  liability  to  which 
he  is  not  exposed,  that  is,  from  another  man's  debts. 
In  his  exposition  of  the  case,  Judge  Sharswood  said  : 

"  Ou  the  sale  ofC's  interest,  what  passed?  The  C.  J.  says,  His 
"equity  to  have  the  joint  property  applied  to  pay  the  joint  debts, 
"together  with  his  remaining  interest.  I  confess,  this  is  wholly 
"unintelligible  to  me.  I  cannot  conceive  of  this  equity  being  a 
"saleable  interest  at  all,  of  what  value  it  can  be  to  the  purchaser,  if, 
"  as  the  opinion  holds,  all  claim  of  the  joint  creditors  ou  the  goods  is 
"  gone  by  the  second  sale,  and  the  purchasers  hold  them  clear  and 
"  discharged,  while,  however,  B  &C  still  remain  personally  liable  for 
"  the  partnership  debts.  Nor  can  I  understand  how  on  the  sale  of  C's 
"interest,  B's  equity  should  be  so  entirely  left  out  of  view.  He  still 
"remains  personally  liable  for  the  debts  of  the  firm,  notwithstand- 
"ing  the  sale  of  his  interest,  and  his  equity  is  equal  to  C's,  to  have 
"them  appropriated  to  joint  debts.  I  should  say  then  that  under 
"the  second  sale  of  C's  interest,  what  passed  and  what  alone  passed, 
"was  his  share  subjecfl  to  the  joint  debts,  exadlly  what  passed  under 
"the  first  sale  of  B's  interest.  I  should  say  also  that  the  goods 
"themselves  would  be  subjecfl  to  execution  at  the  suit  of  tlie  joint 
"creditors,  or  the  proceeds  of  them  in  the  hands  of  the  purchaser 
"to  attachment.  If  either  of  the  partners  were  sued,  or  made  to 
"pay  out  of  their  other  property  any  of  the  joint  debts,  I  should 
"think  they  would  be  entitled  to  subrogation  in  equity  against 
"the  joint  eflfecfls.  But  the  pracftical  operation  of  the  doArines  set 
"forth  in  the  opinion  in  Doner  v.  Stauffer  would  be  that  the  pur- 
"  chaser,  though  buying  an  incumbered  title  under  the  first  execu- 
"  tion  by  the  legerdemain  of  a  second  sale  under  an  execution  against 
"the  other  partner,  is  thereby  vested  with  an  absolute  unincum- 
"bered  title  without  paying  for  it,  or  what  is  worse,  if  the  second 
"purchaser  is  a  different  person,  he  gets  a  clear  title,  and  by  the 
"same  title  clears  the  title  of  the  first  purchaser.  Thus,  by  this  pro- 
"cess,  the  separate  creditors  of  the  partner  last  sold  out  get  the  full 
"price  of  his  share  discharged  of  the  debts,  though  he  may  be  enti- 
"tled  to  little  or  nothing  after  the  debts  are  paid,  and  his  partner's 
"interest  which  has  been  sacrificed  by  a  sale  incumbered  with  an 
"uncertainty  may  be  by  far  the  largest.  A  decision  to  put  the  inter- 
"est  of  the  partners,  as  well  as  the  joint  creditors,  so  completely  at 
"sea,  to  the  mercy  of  the  winds  and  waves  I  think,  I  hope  at  least, 
"will  never  be  made."  Mss.  Lectures  at  the  University  of  Pennsyl- 
"vania. 

Judge  Sharswood  in  this  critique  discloses  his  pro- 
found and  accurate  knowledge  of  the  partnership  rela- 
tion. To  dete^l  and  point  out  the  reason  upon  which 
the  partner's  equity  is  founded,  in  spite  of  the  mislead- 
ing decisions  upon  this  qtiestio  vexata^  reveal  his  origin- 
ality,-'' not  less  than  do  the  conspicuous  illustrations 
®f  which  Mr,  Biddle  has  given  a  resume  in  his  address 
upon  the  late  Chief  Justice  of  Pennsylvania.^ 

The  decision  of  Judge  Sharswood  upon  the  nature 
of  the  partner's  contribution  to  the  firm  stock  is  another 
example  of  his  insight  into  the  relation.    No  authorities 

304 


\ 


Pt.  2,  Ch.  6.  Firm   Property.  §103. 

were  furnished  to  guide  him  in  arriving  at  a  conclusion, 
but  his  comprehension  of  the  inherent  strudlure  of  part- 
nership, led  him,  by  intuition,  to  the  result  which  others 
had  reached  only  by  dint  of  study,  and  refle(5lion.   (§34.) 

a.  Sheriff's  sale  of  partner' s  share  does  not  pass  his  equity.  B's  inte- 
rest in  B,  C  &  D,  sold  on  execution  to  E,  who  brought  account.  A 
attached  stock  in  hands  of  C  &  D  for  C's  debt.  A,  creditor  of  B,  C 
&  D,  claimed  payment  of  firm  debt  out  of  proceeds.  Recovered. — 
Sharswood,  J.:  "The  idea  which  he  puts  forth  (C.J.  Gibson  in 
"Doner  v.  Stauffer)  that  the  equity  of  the  partner  to  have  the  part- 
"  nership  effedls  applied  first  to  partnership  debts,  passes  itself  on  the 
"sale  of  that  partner's  interest  to  the  vendee  by  execution  or  other- 
"wise,  is  a  curious  illustration  of  the  danger  of  hunting  too  far  for  a 
"reason.  The  equity  of  the  partner  is  solely  grounded  on  his  lia- 
"  bility  for  the  debts,  which  continue  after  his  interest  is  devested, 
"  and  is  not  transferred  to  his  vendee.  As  the  liability  of  the  partner 
' '  to  answer  personally  for  all  the  debts  of  the  firm  is  not  extinguished 
"by  a  sale  or  devesture  of  his  interest,  so  neither  is  his  equity  which 
"depends  upon  it.  Here  Thompson  had  an  equity,  of  which  the 
"  partnership  creditors  can  avail  themselves;  he  never  gave  it  up,  nor 
"did  he  lose  it  by  the  sheriff's  sale  of  his  interest.  He  never  con- 
"sented  to  the  transfer  of  the  assets  to  the  remaining  partners  in 
"their  new  firm  capacity.'^  Brenton  v.  Thompson,  20  L.  I.  133  Dist. 
Court  of  Phila.  (1863). 

b.  The  Judicial  CharacSler  of  Chief  Justice  vSharswood,  an  address  de- 
livered before  the  Law  Association  by  George  W.  Bidule,  Chan- 
cellor of  the  Association,  1883. 

3.  2  White  &  Tudor's  Leading  Cases  in  Equity  ;  Aldrich  v.  Cooper, 
and  notes  upon  it,  p.  228,  4th  ed.,  by  Judge  J.  L'Clarke  Hare:  1877. 

4.  If  no  firm  property,  joint  creditors  share  partnei^s  separate  estate 
with  his  separate  creditors.  B  &  C  partners,  insolvent,  assigned  for 
creditors,  B  and  the  firm  to  A;  C  to  E.  B's  separate  estate  amounted 
to  $27,241.18,  and  C  also  had  separate  estate.  The  firm  assets  were 
only  16.35,  which  would  be  consumed  in  costs.  A  brought  bill  against 
partners,  and  joint  and  separate  creditors,  to  marshal  the  assets. — ■ 
Firm  creditors  entitled  to  separte  estate  equally  with  separate  cred- 
itors.    Brock  V.  Bateman,  25  Ohio  St.  609  (1874). 


§103 


(!ll)e  lata  lias  recogni^cb  anb  Establisl)el»  tl)c  partners'  estate  as 
a  joint  tenancn. 

Thoijus  accrescendi  applied,  and  the  title  survived 
in  the  living  partners.'     It  did  not  go,  as  in  tenancy 

305 


§103.  Firm   Property.  Pt.  2,  Ch.  6. 

in  common,  to  tlie  surviving  tenants  and  to  the  repre- 
sentatives of  the  deceased  tenant.' 

A  partner  can  convey  no  title  to  his  portion  of  the 
firm  stock,  free  from  the  firm  claim,  although  he  may, 
in  the  course  of  business,  sell  any  propert3^  belonging 
to  the  firm.  Hence,  it  follows  that  his  interest  in  the 
firm  stock  will  not  pass  by  judicial  sale  under  execu- 
tion issued  at  the  instance  of  a  separate  creditor.  A 
levy  is  necessary  on  an  execution  for  each  partner's 
interest,  and  a  firm  levy  is  requisite  to  cover  the  joint 
stock.  The  seizure,  or  possession,  follows  the  title, 
and  if  a  separate  execution  issues,  it  covers  only  the 
debtor  partner's  interest.'^  The  seizure  of  both  part- 
ners' interests  on  separate  executions  would  not  carry 
the  firm  title,  but  leave  it  unsold,  and  give  to  the  pur- 
chaser of  it  an  incumbered  title.'*  The  separate 
execution  entitles  the  purchaser  under  it  only  to  the 
debtor's  interest  after  all  the  firm  debts  are  paid.  He 
acquires  no  immediate  right  to  any  portion  of  the  joint 
stock,  and  although  he  becomes  a  tenant  in  common 
with  the  other  partners,  his  right  is  not  immediately 
"available.  He  must  first  bring  an  account,  in  order  to 
ascertain  if  there  is  any  balance  coming  to  his  debtor 
after  all  the  firm  debts  are  paid,  and  thus  ascertain  the 
amount  of  his  interest.  If  a  separate  creditor  pro- 
ceeded against  the  debtor  partner's  property,  the  law 
prevented  him  from  taking  it  in  execution,  and  made 
him  sell  only  his  debtor's  interest  on  a  dissolution  of 
the  firm.  To  ascertain  what  this  ultimate  interest, 
after  the  joint  estate  was  ended,  might  be,  the  law  di- 
redled  an  account.^  It  was  onlj^  when  the  Common  law 
machinery  was  found,  upon  experience,  to  be  inade- 


306 


Pt.  2,  Ch.  6.  Firm   Propefty.  §103, 

quate,  that  the  account  was  transferred  and  became  a 
remedy  in  equity/ 

The  e£fe<ft  of  a  legal  lien  is  to  prevent  the  aliena- 
tion of  the  property  free  from  the  creditor's  claim.  If 
such  a  lien  were  accorded  to  the  firm  creditors,  the 
firm  stock  would  become  immutable,  and  the  business 
would  become  impossible.  An  equitable  lien,  on  the 
other  hand,  adapts  itself  to  flu6luating  property.  The 
creditor  obtains  a  prior  right  to  make  his  debt  out  of 
the  joint  stock,  in  its  original  shape,  and  through  all 
its  subsequent  transformations.  The  original  fund 
may  disappear,  but  that  by  which  it  is  replaced  re- 
mains, subje6l  to  the  creditor's  claim.  This  equit- 
able lien  answers  the  requirements  of  the  partnership. 
The  partners  may  sell  the  stock  and  renew  it  by  pur- 
chases, but  the  fund,  at  all  times,  remains  liable  to 
the  claims  of  firm  creditors. 

But  while  the  dodlrine  of  equitable  lien  is,  theoreti 
cally,  sufficient  for  the  protection  of  creditors,  it  does 
not  explain,  historically,  the  existence  of  their  rights, 
These  rights  of  firm  creditors  have  been  recognized 
at  law  from  the  beginning,  whereas  the  equitable  lien 
is  exclusively  a  do(5lrine  of  Chancery.  The  courts 
of  law  secured  the  priority  of  firm  creditors,  not 
through'  an  application  of  the  doArine  of  lien,  either 
legal  or  equitable,  but  through  the  instrumentality 
of  a  joint  estate.  The  joint  estate  became  an  addi- 
tional debtor,  independently  responsible  to  firm  cred- 
itors. The  existence  of  the  estate  was  a  fa6l,  and  the 
firm  creditors'  privilege  of  recourse  to  the  estate  was 
not  derived  from  any  contrail  between  the  partners, 
but  was  an  original  right. 


507 


§103.  Firm    Property.  Pt.  2,  Ch,  6. 

The  Common  lawyers  were  in  the  habit  of  consid- 
ering the  estate  apart  from  the  owner.  In  their 
minds,  the  propert}^,  in  its  physical  aspe(5l,  often  as- 
snmed  a  prominence  superior  to  those  abstract  rights 
and  obligations  of  the  owner,  which  make  up  the  true 
legal  notion  of  his  estate.  As  already  stated,  the 
cause  of  this  mental  bias  was  the  Feudal  method  of 
dealing  with  land.  The  land  was  the  permanent  ele- 
ment in  their  social  strudlure.  The  rights  of  the  pos- 
sessor, for  the  time  being,  never  amounted  to  abso- 
lute ownership.  Society  curtailed  his  prerogatives 
for  the  benefit  of  his  descendants.  The  estate  was 
the  continuing  patrimony  of  successive  generations. 
Land  was  visible  and  tangible,  the  rights  of  unborn 
generations  were  contingent  and  shadowy.  Natur- 
ally, therefore,  the  mind  of  the  Profession  uncon- 
sciously gave  to  the  land  in  its  corporeal  manifesta- 
tion prominence  over  the  abstradl  rights  of  uncertain 
and  non-existent  persons.  A  good  illustration  of 
this  tendency  is  the  e£fe6l  of  a  judgment  against  co- 
debtors.  After  land  was  subjeAed  to  the  claims  of 
creditors,  and  it  was  admitted  that  these  claims  would 
survive  against  the  land  after  the  death  of  the  debtor, 
the  distincftion  between  the  owner  and  the  land  still 
remained,  to  mould  a  creditor's  rights.  Ordinarily, 
the  obligation  of  the  debtor  is  the  primary  thought, 
and  the  liability  of  his  property  exists  only  for  the 
purpose  of  satisfying  that  obligation.  If  the  obliga- 
tion ceases,  the  property  is  freed  from  the  creditor's 
claim.  If  one  of  two  judgment  debtors  died,  his  per- 
sonal obligation  was  extinguished,  his  personal  prop- 
erty, therefore,  was  relieved  from  liability  to  the  cred- 
itor,   and    the    debt    survived    against    his    co-debtor 

308 


Pt.  2,  Cii.  6.  Firm    Property.  §103. 

alone.  But  if  the  deceased  debtor  had  been  the  owner 
of  real  estate,  the  judgment  still  remained  a  lien  upon 
his  land.'  The  reason  for  this  difference  was  that, 
while  the  personal  property  did,  the  land  did  not,  rep- 
resent the  personal  obligation  of  the  deceased  debtor.^ 
The  land  was  itself  an  independent  debtor.  Further 
evidence  confirming  the  proposition  that  the  land, 
even  when  subjeAed  to  debts,  did  not  represent  the 
personal  obligation  of  the  debtor,  is  found  in  the 
following  circumstance:  A  joint  debtor  was  liable,  in 
his  individual  capacity,  for  the  full  debt,  and  while 
the  judgment  was  joint,  the  execution  was  always 
several,  and  might  issue  against  his  personal  estate 
for  the  full  amount  due.  Not  so  with  the  land.  A 
joint  debtor's  land  was  liable  only  for  his  aliquot  part 
of  the  debt,  and  the  execution  must  issue  against  the 
lands  of  all  the  joint  debtors  simultaneously,  in  order 
that  contribution  might  be  more  surely  enforced. 

The  habits  of  thought,  thus  formed,  paved  the  way 
by  easy  transition,  to  the  notion  of  a  firm  fund  as  a 
separate  and  continuing  debtor,  independent  of  the 
original  contrail  between  the  partners  and  of  their 
subsequent  a6ls,  either  in  charging  the  fund  itself,  or 
in  dealing  with  their  title  to  it.  The  reason  why  this 
statement  has  the  appearance  of  novelty  at  the  present 
day,  is  because  lawyers  have  outgrown  the  habits 
of  thought,  which  characterized  their  predecessors. 
The  lawyers  of  the  present  da}^  exclude  from  their 
science  the  objects  of  the  physical  world,  and  con- 
fine themselves  to  the  classification  of  abstract  rights 

o 

and  duties. 

The  estate  of  the  partners  enabled  them  to  trade 
in  the  capacity  of  joint  tenants,  and  gave  the  debts 

309 


Uo;^.  Firm   Property.  Pt.  2,  Ch.  6. 

coutracled  for  the  joint  estate  a  prior  claim  upon  it. 
There  was  no  lien,  as  in  the  case  of  a  right  against 
land,  nor  could  there  be  a  lien  upon  stock,  which  ex- 
isted only  for  sale.  A  lien  w^ould  frustrate  the  objedl 
for  which  the  estate  was  created.  Analogy  makes  the 
claim  available  according  to  the  nature  of  the  estate. 

The  partners  are  not  entitled  to  the  statutory  ex- 
emption out  of  the  firm  assets.  The  exemption  is  a 
personal  privilege,  and  not  a  firm  claim. ^  The  law 
makes  no  provision  for  a  destitute  partnership.  If 
the  law  provided  that  the  firm  should  have  exemption 
for  its  members,  the  partners'  right  against  the  firm 
creditors  would  be  as  clear  as  against  the  separate 
creditors,  but  the  exemption  is  not  given  to  the  firm ; 
it  remains  the  individual  privilege  of  the  debtor. 

The  title  of  a  partner  is  recognized  at  law  as  co- 
extensive with  the  firm  estate.  A  policy  of  insurance 
given  in  his  own  naine  for  firm  property,  covers  both 
interests,  unless  he  limits  it  to  his  own  share.^"  He  can 
maintain  an  aAion  for  firm  property,"  or  intervene  in 
proceedings  which  affedl  the  firm  title.'^ 

The  bankruptcy  proceedings,  as  originally  framed, 
recognized  the  joint  estate.  The  joint  and  separate 
commissions  kept  the  estates  distin(5l,  and  made  the 
separate  claims  subordinate  to  the  firm  creditors' 
rights.'^  The  present  administration  upon  a  joint  com- 
mission does  not  disclose  the  operation. 

I.  Til/e  of  firm  property  remains  iviih  surviving  partner.  B  &  Son, 
manufacturers.  B  died,  April,  1882.  C,  surviving  partner,  knowing 
firm  was  insolvent,  sold  stock,  fixtures  and  machinery  to  D,  a  creditor, 
in  payment  of  firm  debt.  A  et  al.  brought  creditors'  bill  to  set  sale 
aside. — Dismissed.  Legal  title  to  assets  survived  to  C,  who  is  entitled 
to  exclusive  posses.sion  and  control  of  them,  and  might  sell  all  or  any 
part  of  the  property  of  the  firm  in  payment  of  its  debts.  Russell  v. 
Stroud,  12  W.  N.  419,  C.  P.  Phila.  (1882);   afl&rmed  by  S.  C.  of  Pa. 

310 


Pt.  2,  Ch.  6.  Firm  Property.  §103. 

2.  The  surviving  partner  is  not  an  assignee  of  his  de- 
ceased co-partner,  and  does  not  derive  his  title  by  devo- 
lution or  assignment.  He  is  an  original  owner  by  vir- 
tue of  his  joint  title,  which  covers  the  entire  firm  prop- 
erty.    Tremper  V.  Conklin,  §100,  n.  5. 

The  death  of  a  partner  does  not  revoke  the  authority 
of  an  agent  employed  by  the  firm.  The  surviving  part- 
ner succeeds  to,  or  continues,  the  firm,  and  he  alone  can 
revoke  the  authority. 

Authority  offir))i  agent  not  revoked  by  death  of  a  partner.  B  gave 
his  note,  without  consideration,  to  C  &  D.  They  pledged  it  to  A  for 
a  contemporaneous  loan.  C  died,  but  before  his  suicide  was  discov- 
ered, F,  a  clerk,  with  authority  to  draw  checks,  drew  out  the  firm 
deposits  in  A's  hands.  The  firm  was  insolvent,  and  A  sued  B.  De- 
fence :  Set-off  of  deposits  withdrawn  since  C's  death. — Recovered.  A 
was  a  holder  for  value.  E's  authority  did  not  end,  because  the  right 
to  withdraw  balance  and  liquidate  remained  in  D,  and  because  E  drew 
and  A  paid  the  checks  in  ignorance  of  C's  death.  D  was  the  only 
one  who  could  except  to  E's  acl,  on  the  ground  of  a  revocation  of 
authority  by  C's  death.  Bank  of  N.  Y.  v.  Vanderhorst,  32  N.  Y.  553 
(1865). 

The  joint  tenant's  release  of  his  share  does  not  bar 
execution  for  a  claim,  although  the  release  operates  as 
a  merger  of  the  share  by  relation  to  the  feoflfment  which 
created  the  estate. 

By  release  of  share  joint  tenant  shall  not  bar  execution.  A  ob- 
tained judgment  against  B,  joint  tenant  for  life  with  C.  B  released 
his  estate  to  C.  A  took  the  land  in  execution  by  elegit.  C  assigned 
to  D,  who  surrendered  to  E,  the  reversioner. — Though  release  related 
back  to  original  feoffment,  and  gave  C  title  from  that  date,  he  took 
subject  to  IB's  life  estate,  which  the  law  keeps  alive  for  A's  benefit. 
A  grant  by  joint  tenant  would  bind  co-tenant  who  accepted  a  release, 
although  grantor  should  die,  for  the  release  would  prevent  his  taking 
by  survivorship,  and  be  subject  to  the  grant.  Likewise  the  rever- 
sioner, after  the  extindliou  of  the  tenancy  by  surrender,  takes  sub- 
jedl  to  the  charge  created  during  its  continuance.  The  Lord  Aber- 
gavenny's case,  6  Rep.  79  (1608). 

3.  The  partner's  right  to  sell  was  the  ground  urged  for 
claiming  that  his  separate  creditor  was  entitled  to  attach 
firm  stock.  But  the  partner's  power  was  to  sell  for  the 
finii,  and  to  make  the  assignment  efife^live  the  attach- 
ment should  be  for  a  firm  claim.  Then,  though  but  one 
partner  should  be  served,  the  stock  would  be  liable. 

Attachment  against  one  partner  takes  only  his  interest.  A,  in  an 
adlion  against  C  &  D,  issued  an  attachment  against  C.  The  firm 
failed,  and  thereafter  judgment  and  execution  against  C,  as  a  non- 
resident, and  a  sale  of  his  interest  to  A.  C  &  D  assigned  for  creditors 
to  B.  This  action  brought  to  determine  who  had  title  to  the  prop- 
erty sold. — The  firm  assets  being  insufficient  to  pay  its  debts,  C's 
interest  was  nothing,  and  A  had  no  title.  As  the  partner  might  have 
sold  the  firm  goods,  and  paid  the  creditor,  it  was  claimed  "that  the 

311 


UOT,. 


Firm   Propektv 


Pt.  2,  Cn.  6. 


law  might,  do  so  bv  attachment.  But  the  attachment  was  not  against 
specific  property,  or  against  the  firm,  but  against  the  partner's  inter- 
est. To  render  the  analogy  complete,  the  attachment  should  be 
against  both  ;  one  .should  be  ser\'ed,  and  brought  in,  and  execution 
issued  against  the  firm  ])roperty.  If  levied  l>efore  the  assignment, 
and  soUi,  the  law  would  have  done  what  the  partners  could  do. 
Staats  V.  Bristow,  73  N.  Y.  264  (1878). 

/•/>///  property  caunot  be  conveyed,  even  by  the  consent  of  all  the 
partners,  in  payment  of  their  separate  debts.  B,  C,  D,  K  &.  1*',  part- 
ners, owed  A.  I'/  and  P  sold  out  to  B,  and  he  continued  the  business 
with  C  and  D.  B  mortgaged  his  interest  in  the  new  firm  to  G,  a 
separate  creditor,  who  sold  him  out  and  bought  in  his  interest.  C 
mortgaged  his  interest  to  H,  a  separate  creditor,  who  also  foreclosed 
and  bought  in.  D  assigned  his  interest,  without  consideration,  to  I. 
A  levied  upon  and  sold  the  stock.  No  fraudulent  intent  was  found 
against  the  partners. — Entitled  to  the  proceeds.  Assignment  of  firm 
assets  for  separate  creditors  invalid,  though  all  the  partners  consent, 
unless  the  residue  is  sufficient  to  pay  the  firm  creditors.  They  have 
no  lien,  but  tlie  firm  title  is  joint,  and  the  sale  of  a  partner's  interest 
passes  no  ])iirpart,  and  does  not  destroy  his  equity.  If  the  buyer  got 
tlie  stock  and  left  the  debts  on  the  partners,  his  equity  would  be  an 
iniquity.  The  sale  to  a  partner  is  valid,  unless  the  purchaser  is  in- 
solvent, because  he  remains  liable  for  firm  debts,  and  the  assets  are 
not  ])iit  out  of  the  creditor's  reach.  B,  C  and  D  may  dispose  of  the 
stock  for  the  payment  of  their  firm  creditors,  but  K  and  Fmay  obje<ft 
to  an  assignment  for  their  separate  creditors.  Menagli  v.  Whitwell, 
52N.Y.  146(1873). 

;.  By  the  Kn<.;lisli  pradlice  110  sale  of  a  partner's  inter- 
est is  made  until  an  account  has  been  taken,  and  then  the 
interest,  which  is  thus  expressly  subje6l  to  all  the  firm 
claims,  passes  to  the  buyer,  who  could  never  pretend 
that  he  bought  any  firm  property.  Place  v.  Sweetzer, 
§  100,  note  6,  d. 

Partner's  vendee  vo  right  to  possession  cf  partner's  individual 
moiety,  but  limited  to  account.  B  &  C  ran  a  stage  line,  owning  the 
horses  and  equi]iment.  C  sold  out  his  un(livide<l  half  to  A,  who  sued 
for  possession  of  it,  or  for  its  value.  A  obtained  a  verdi6l  and  judg- 
ment for  $960. — Reversed.  Sale  dissolved  jiartnersliip,  and  A  not 
entitled  to  co-])ossessiou,  but  only  to  an  acooinit  aiul  the  value  of  C's 
interest  upon  a  .settlement.  B  was  entitled  to  retain  possession  for 
liquidation.    Miller  v.  Brigham,  50  Cal.  615  (1875). 

.Ittaehmentoffirm  property  for  separate  debt  a  trespass.  A  <S:  B, 
partners,  sued  C  in  tort  for  attaching  firm  property.  C  justified  under 
a  writ  against  B. — ^Judgment  for  ])laintilTs.  Seizure  and  removal  of 
firm  property  on  mesne  process,  like  an  execution,  a  trespass.  Sanborn 
v.  Royce,  132  Mass.  594  ^1882). 

I.     The  law  recognized  the  partner's  estate  of  joint  ten^ 
ancy,  and  when  a  separate  creditor  proceeded  agains^ 
the  debtor  partner's  property,  stopped  him  from  takin 
it  in  execution.     The  law  made  him  .sell  only  the  debt- 
or's interest  on  a  dis.solution  of  the  firm.     To  a.scertain 
what  this  ultimate  interest,  after  the  joint  estate  was 

3 1  2 


Pt.  2,  Ch.  6.  Firm   Property.  §103. 

ended,  might  be,  the  law  dire(5led  an  account.  It  was 
only  because  the  Common  law  machinery  was  inadequate 
that  the  account  became  a  remedy  in  equity.'' 

a.  Article  on  "  Executions  by  separate  creditors  against 
the  joint  efFedls  of  the  partnership,"  by  Mr.  R.  Hutch- 
inson, 3  So.  Law  Rev.  250. 

7.  Sci.fa.  must  join  heir  of  co-judgment-debtor  with  surviving  debtor,, 
in  order  to  enforce  the  debt  against  land.  A  had  judgment  against  B 
&  C,  and  afterwards  B  died.  A  brought  a  sci.  fa.  against  the  sur- 
vivor only.  Defence :  B  left  lands  and  an  heir,  who  must  be  made  a 
party.  A  demurred. — Judgment  for  A,  for  the  judgment  is  against  the 
person.  Though  by  statute  A  may  have  sci.fa.  and  elegit  to  charge 
the  land,  he  may  eledl  to  pursue  the  personalty.  If  A  ele6t  to  charge 
the  land,  the  charge  must  be  equal,  and  sci.fa.  must  issue  against  C 
and  the  heir  of  B.     After  judgment  on  such  a  sci.J'a.  A  may  have_/?. 

fa.  against  personalty  of  the  survivor,  or  elegit  against  the  lands  of 
both.  Smarte  v.  Edsun,  i  Lev.  30  (1661).  See  also  note  4  to  Trethe- 
way  V.  Auckland,  2  Saunders  51.     Sir  Wm.  Harbert's  case,  3  Rep.  14. 

8.  Death  of  one  of  two  judgment-debtors  throws  the  obligation  wholly 
upon  the  survivor.  Judgment  was  obtained  against  B  &  C,  who  after- 
wards died.  Then  judgment  was  obtained,  by  default  on  sci.  fa.  to 
revive  against  A,  the  administratrix  of  B.  A  brought  audita  querela, 
averring  that  B  had  died  in  the  lifetime  of  C. — Judgment  for  A,  because 
the  debt  survived.  Had  any  lands  been  bound  by  original  judgment^ 
the  charge  must  have  been  borne  equally  by  the  real  estate  of  each. 
Creditor  must  then  have  brought  a  sci.fa.  against  the  heir  and  terre- 
tenants.   Lampton  v.  Collingwood,  4  Mod.  315  (1695). 

In  Penn.sylvania,  land  being  assets  for  the  payment  of  debts,  the 
executor  or  administrator  is  substituted  for  the  heir,  and  the  lands  of 
a  deceased  debtor  may  be  sold  on  a  judgment  against  him,  without  a 
sci.  fa.  to  bring  in  the  heirs  as  terretenants.  Commonwealth  v.  Van- 
derslice,  8  vS.  &  R.  452  (1822). 

Sci.fa.  against  surviving,  arid  personal  representatives  of  deceased, 
judgment  debtor.  A  sued  B,  C,  D  &  E,  and  E,  dying  pending  suit,  ob- 
tained judgment  against  B,  C  &  D.  Subsequently,  D  died,  and  A 
issued  sci.fa.  against  B,  C  and  the  executors  of  D.  Defence:  Mis- 
joinder of  adlion. — Judgment  for  A.  ROGERS,  J. :  "The  real  estate  is 
"bound  by  the  judgment,  and  payment  alone  will  discharge  the  lien. 
"Although  I  cannot  perceive  the  propriety  of  the  distinction,  that  the 
"judgment  survives  as  to  the  personalty,  but  not  the  realt}-,  yet  there 
"is  no  question  that  it  has  been  so  adjudged  in  England  and  inci- 
"  dentally  in  Pa.  *  If  then  the  judgment  be  joint,  and  survives 
"against  the  land,  the  execution  which  follows  the  nature  of  the 
"judgment  should  be  joint  also;  or,  at  any  rate,  against  the  same 
"persons,  against  whom  judgment  is  rendered.  The  obje<ft  of  the 
"^r/r^yi/aa^  is  to  ascertain  the  sum  due,  and  for  the  defendants  to 
"show  cause  why  the  plaintiffs  should  not  have  execution  against  the 
"survivors,  and  the  lands  of  the  deceased;  for  in  no  other  way  can  he 
"have  the  fruits  of  his  judgment.  If  these  principles  be  correct,  and 
"they  are  supported  1)y  the  highest  authority,  this  defence  cannot 
"  avail  the  defendants. "   Com'wealth  v.  Mateer  16  S.  &  R.  416  (1827). 

9.     Are  partners  entitled  to  exemption  out  of  firm  prop- 
erty?     If  the  exemption    is  allowed,   the  title  of  the 

313 


§103.  Firm  Property.  Pt.  2,  Ch.  6. 

partners  is  several,  and  not  joint,  otherwise  the  separate 
claim  for  exemption  would  be  subje(5l  to  the  paramount 
title.''  The  notion  that  as  the  partners  could,  but  would 
not  divide  the  assets  between  them,  the  sheriff  could 
make  the  partition,  and  set  apart  the  exemptions  out 
of  the  allotments,  is  based  upon  separate  titles  and  a 
severance  of  the  joint  possession  according  to  the  titles.^ 
Saying  that  the  exemption  cuts  out  joint,  as  well  as 
separate,  creditors,  means,  unless  a  tenancy  in  common 
exists,  that  the  exemption  is  a  joint,  or  firm,  claim,  and 
is  preferred  to  the  claims  of  firm  creditors.  But  exemp- 
tion has  always  been  recognized  as  an  individual,  and 
not  a  firm,  privilege. '^ 

a.  Homestead  on  firm  land  not  exempt  from  execution  for  partner- 
ship debts.  B  &  C,  manufacturers  of  tiles,  owned  in  partnership  land 
on  wliich  mill  was  erected  for  the  business.  C  also  built  and  occu- 
pied a  house  on  the  firm  land.  A  recovered  judgment  against  firm 
and  issued  execution  against  the  land.  C  claimed  that  his  home- 
stead was  exempt.  B  opposed  the  exemption. — Judgment  for  A. 
Land  treated  as  firm  assets,  and  C's  interest  nothing,  after  firm  debts 
are  paid.     Trowbridge  v.  Cross,  117  111.,  109  (1886). 

Partners  no  exemption  out  of  firm  property .  A  obtained  judgment 
against  B,  C  &  D,  and  levied  upon  leasehold  and  machinery  belong- 
ing to  them  as  partners.  B,  C  &  D,  who  had  no  separate  estates, 
claimed  the  statutory  exemptions,  but  sheriff  sold  the  property,  and 
paid  the  proceeds  into  court.  Court  below  awarded  II500  to  each,  or 
one-third  of  the  fund  if  less  than  $1,500.— Reversed.  Partner  has  no 
separate  title  to  firm  property,  and,  if  co-partners  sever  the  joint  title, 
the  exemption  attaches  by  virtue  of  the  contract,  and  not  of  the  stat- 
ute. A"s  execution  took  the  joint  title  out  of  the  partners.  Gaylord 
v.  Imhoff,  26 'Ohio  St.  317  (1875). 

b.  Partner  entitled  to  exemption  out  of  firm  stock  according  to  his 
share;  which  the  sheriff  may  allot  if  the  partners  do  not.  B,  the 
sheriff,  seized  and  took  possession  of  firm  stock.  A  claimed  exemp- 
tion, as  a  partner,  out  of  it,  and  brought  trover  against  B. — Recov- 
ered. Partner  entitled  to  exemption  out  of  his  share  of  firm  prop- 
erty, and  if  the  partners  do  not  aid  the  sheriff  and  divide  the  assets 
between  themselves,  he  may  make  the  apportionment.  Skinner  v. 
Shannon,  44  Mich.  86  (1880). 

c.  Xo  exemption  out  of  firm  stock.  B  &  C,  partners  in  manufadlure 
of  cigars,  assigned  joint  and  separate  estates  for  creditors.  Assignee 
surrendered  tobacco  and  tools,  part  of  the  firm  stock,  to  C,  who  claimed 
the  property  as  exempt.  Substituted  assignee  sued  for  breach  of  as- 
signment bond. — Recovered.  Property  claimed  by  C  belonged  to  firm 
creditors.     Prosser  v.  Hartley,  29  N.  W.  Rep'r  156  (1886). 

Exemption  for  deceased  partner's  family  out  of  his  share,  not  out 
of  firm  property.  B  &  C,  partners  in  planting.  C  died,  and  D,  a 
minor  child,  claimed  |i,ooo  under  Revised  Civil  Code  of  La.,  Article 
3276,  which  secured  that  amount  to  D  in  preference  to  debts  contradled 
by  C— Disallowed.  Firm  debts  contracted  by  B  &  C.  Partner's 
share  subject  to  firm  debts :  Art.  2823.  Succession  of  Pilcher,  i  S. 
Reg'r929,  La.  (1887),  note. 

314 


Pt.  2,  Ch.  6.  Firm   Property.  §104. 

Cojiveyance  by  partner  to  co-partner  not  withdrawal  to  cut  out  tien 
creditors.  B  &  C,  partners  in  buying  and  selling  real  estate.  D  at- 
tached land  of  B  &  C.  C  then  conveyed  house  and  land  to  B.  D 
obtained  judgment,  and,  at  sale,  B  claimed  premises  as  prote(fled, 
A  bought  at  sale  and  brought  ejedlment  against  B. — Recovered.  Lind- 
ley  V.  Davis,  13  P.  Rep'r  118,  Min.  (1887). 

10.  A  partner' s  insurable  interest  extends  beyond  his  share,  and  covers 
the  firm  stock.  A  paid  premium  for  insurance  of  firm  stock,  but  took 
policy  in  his  own  name,  on  agent's  assurance  that  interests  of  both 
A  &  B  would  be  covered.  Defence  to  A's  suit  for  firm's  loss :  B's 
interest  not  insured,  and  A's  quota  but  one-half — Recovered  for  the 
whole  loss.  A's  interest  is  co-extensive  with  firm  stock.  Manhattan 
Ins.  Co.  V.  Webster,  9  Smith  227,  Pa.  (1868). 

Interest  covers  joint  title,  unless  limited  to  a  single  share.  A,  at 
Gaudaloupe,  &  B,  at  St.  Kitts,  made  a  joint  shipment  to  New  York. 
A  insured  the  cargo  for  his  account,  though  the  policy  covered  any 
other  person's  interest,  in  part  or  in  whole.  The  ship  was  captured, 
and  A's  portion  condemned,  but  B's  portion  acquitted.  Insurance 
J5639.24;  A's  quota  I366. 60.  A  sued  for  his  half  Defence:  Policy 
covered  B's  quota,  which  was  lost. — A  recovered  but  a  quarter.  Law- 
rence V.  Sebor,  2  Caines  505,  N.  Y.  (1804). 

11.  Non-joinder  of  a  partner  no  bar  to  partner' s  recovery  of  insurance. 
A  &  B  insured  a  cargo,  which  they  shipped  on  joint  account  with 
C.  A  &  B  averred,  as  plaintiffs,  an  entire  interest  in  the  insurance. 
Defence  :  C  taken  into  the  joint  concern  before  insurance  effedled. — 
Recovered  whole  insurance.  A  &  B's  interest  extended  throughout 
the  entire  cargo.    Page  v.  Frye,  2  B.  &  P.  240  (1800). 

12.  The  title  carries  the  right  to  intervene  or  recover  for 
disturbance,  and  a  partner  may  contest  the  seizure  or 
attachment  of  firm  property. 

Partner's  joint  title  enables  him  to  contest  creditor's  lien  on  pro- 
ceeds of  a  sale  by  the  sheriff  of  firm  goods.  A  ruled  B,  the  sheriff,  to 
pay  over  money  raised  by  sale  of  C  &  Co.'s  goods.  B  returned  figoo, 
proceeds  and  claims  against  them  by  D's  execution  and  A's  attach- 
ment. C  appeared  against  the  rule,  and  claimed  an  issue  upon  A's 
lien,  because  A  had  not  sued  or  served  the  firm,  or  its  members.  A 
objected  to  C's  intervention  for  the  firm. — Obje6tiou  overruled.  C's 
title  to  firm  stock  authorizes  him  to  represent  the  firm,  to  protedl  it. 
Wynne  v.  Millers,  61  Geo.  345  (1878). 

13.  A  Digest  of  the  Laws  of  Partnership,  by  Basil  Montagu,  Esq., 
Chapter  VII.,  i  vol.,  pp.  183,  et.  seq. :    1822. 


§104. 

<l\]t  lau)  rqectcLi  a  tcuancg  m  tonimon  of  \\)t  firm  propertti. 

But  the  suggestion  that  the  partners  are  tenants  in 
common,  persistently  recurs  at  all  points  for  discus- 

315 


{jio4.  Firm   Property.  Pt.  2,  Ch.  6. 

siou,  and  again  calls  in  question  the  settled  principle 
of  partnership  at  the  Common  law.  The  explanation 
is  this :  The  relation  is  assumed,  despite  of  history,  to 
be  defined  by  contract.  The  idea  of  a  status,  it  is 
deemed,  has  been  outgrown  and  superceded,  although 
partnership  was  made  a  fundlion  of  the  Common  law 
by  means  of  the  joint  estate.  The  partners,  it  is  now 
said,  cannot  by  contra(5l  join  titles,  and  prevent  sepa- 
rate creditors  from  proceeding  against  the  titles  as 
distin(5l.  In  other  words,  partners  cannot,  by  con- 
trail, withdraw  any  part  of  their  property  from  exe- 
cution. The  rights  of  the  partners,  and  of  their  joint 
and  separate  creditors,  must  be  worked  out  upon  the 
basis  of  a  contradl.  The  right  of  the  separate  creditor 
to  his  debtor's  purpart  in  the  firm  property,  is  pro- 
claimed to  be  equal  to  the  firm  creditor's  claim  against 
the  debtor's  separate  estate,  and  this  was  formerly  the 
basisof  marshalling  assets  in  Pennsylvania,^  and  is  at 
present  the  foundation  of  the  bankruptcy  rule.  The 
attempt  is  to  reconstrudl  partnership  upon  a  principle 
which  did  not  organize  the  relation  at  Common  law. 
It  is  needless  to  state  that  a  system  cannot  be  coherent 
while  the  fundamental  principle  upon  which  it  rests 
remains  unsettled. 

A  statute  or  constitution  is  sometimes  deemed  a 
mandate  that  the  partner's  title  to  firm  property  shall 
be  construed  several,  and  not  joint,  in  order  to  give 
effect;  to  the  enadlment.  This  construc?tion  is  made  ^1 
when  the  exemption  of  a  partner  is  granted  out  of 
firm  assets,^  or  a  statutory  liability  for  the  negligence  ^^k, 
of  a  partner  in  the  firm  business  is  made  a  lien  upon 
a  specific  portion  of  the  firm  property  as  his  separate 
estate.'^ 


316 


ill 


11 1 


Pt.  2,  Ch.  6;  Firm    Property.  §104. 

The  purchaser  of  a  partner's  interest  stepped  into 
his  shoes,  and  became  entitled  to  joint  possession 
with  the  other  partners.  If  the  sheriff  delivered  pos- 
session of  the  firm  stock,  a  co-partner  could  not  recover 
for  the  conversion  of  the  firm  property,  but  only  for 
his  half  as  a  tenant  in  common.  An  attachment  by 
a  separate  creditor  is  sustained  upon  the  ground  that 
the  sheriff  could  seize  the  firm  stock  and  sell  a  part- 
ner's interest,  which  would  be  treated  as  a  moiety. 
This  is  according  to  the  theory  of  a  tenancy  in  com- 
mon, or  holding  by  several  titles  with  joint  possession, 
which  would  be  severed  by  execution  and  the  purchaser 
vested  with  defendant's  title  and  possession.^ 

This  •  pra6lice  is  unsound.  The  sheriff  can,  it  is 
true,  seize  the  firm  stock,  in  order  to  sell  a  partner's 
interest  in  it.  The  execution,  a  fi.  fa.^  required  a 
tangible  thing  for  it  to  operate  upon.^  But  the  re- 
quirement of  the  writ  being  satisfied,  the  sheriff  must 
not  disturb  or  remove  the  stock,  and  can  sell  only  the 
partner's  interest  in  it.^  The  purchaser  acquires  no 
right  to  immediate  co-possession,  but  merely  a  claim 
to  the  balance,  if  any  is  coming  to  the  partner,  to  be 
ascertained  by  an  account.  A  distin6lion  has  been 
made  in  this  respe(5l  between  the  interest  of  a  general 
and  of  a  special  partner,  and  it  has  been  said  that  a 
special  partner's  share  can  not  be  taken  in  execution. 
The  sheriff  could  not  seize  anything  in  which  the 
partner  had  an  estate,  as  owner,  absolute  or  qualified. 
The  special  partner's  interest  was  declared  to  be  a 
chose  in  action,  or  a  claim,  but  not  a  property  interest 
in  the  stock.'^  He  had  handed  over  the  stock  to  the 
general  partners,  who  have  the  exclusive  right  to  its 
possession  and  control.     But  there  is  no  reason  for 

317 


§104. 


Firm  Property. 


Pt.  2,  Ch.  6. 


the  distincflion.  The  special  partner  is  a  co-owner, 
although  his  property  right  is  not  separate  and  un- 
trammeled.  His  interest  is  not,  generically,  different 
from  that  of  a  general  partner.  On  this  ground  an 
attachment  could  not  be  laid  upon  the  firm  stock  for 
a  claim  against  a  partner.  The  attachment  would 
forbid  to  the  firm  the  use  of  its  stock,  and  amount  to 
an  exclusion  until  the  controversy  was  ended.  The 
purchaser  of  a  partner's  share  does  not  become  enti- 
tled to  co-possession  with  the  other  partners,  because 
the  sale  dissolves  the  partnership,  and  the  purchaser 
is  interested  only  in  the  liquidation  which  the  part- 
ners are  entitled  to  make,  unless  they  are  shown  to 
be  unfit.^  If  the  sheriff  levies  on  the  firm  stock,  and 
sells  a  partner's  interest  on  separate  execution,  the 
co-partner  cannot  recover  in  trover,  because  he  would 
have  no  claim.  Nothing  passed  but  the  partner's  in- 
terest; which  was  liable  to  execution."  But  if  the 
sheriff  delivered  possession  of  the  firm  stock,  then  the 
co-partner  could  recover  for  the  conversion  of  the  firm 
property.^*' 

1.  Note  by  Judge  J.  T.  MITCHELL  to  Northern  Bank  of  Kentucky  v. 
Keizer,  5  Am.  Law  Reg.,  N.  S.  75  (1886). 

2.  Constitution  of  Georgia  provides  a  homestead  for  each  partner  out 
of  partnership  property.  B  &  C,  partners.  They  took  title,  in  the 
firm  name,  to  a  plantation,  which  they  used  in  the  firm  business. 
They  contracted  a  debt  to  A,  part  in  1871  and  part  in  1873,  for  which 
he  brought  suit,  and  obtained  judgment,  in  1875.  In  1874  they  made 
a  partition  of  the  plantation,  which  was  all  the  property  they  owned 
in  Georgia,  as  a  firm  or  as  individuals,  and  conveyed  a  moiety  to 
each  partner  in  severalty.  Each  had  his  moiety  appraised  and  set 
apart  to  him  as  a  homestead,  under  sections  2002-3  of  the  Con.stitu- 
tion,  which  allows  ^2,000  in  realty  and  |i.ooo  in  personalty.  A 
levied  upon  both  homesteads  as  firm  property.— Execution  set  aside. 
A  partner  is  as  much  entitled  to  take  firm  property  for  a  homestead 
from  the  firm  creditors  as  his  separate  estate  from  his  individual 
creditors.     Harris  v.  Vischer,  57  Georgia,  229  (1876). 

J.  Firin  property  severed  by  statute  imposing  liability  for  negligence 
of  partner  Railroads  B,  C  &  D  ran  in  partnership.  A  recovered 
lUQgment  against  B  for  negligence,  and  levied  on  locomotive  and  car, 

318 


Pt.  2,  Ch.  6.  Firm    Property.  §104 

property  of  the  firm.  C  and  U  enjoined  A  from  selling,  on  ground 
that  B's  interest  less  than  debts,  and  joint  creditors  preferred  to  A.— 
Decree  reversed.  R.  L.  Vt.,  ^3443,  subje<5l  the  rolling  stock  of  rail- 
roads to  execution,  for  injury  by  the  corporation.  B's  quota  assumed 
to  be  one-third,  and  that  purpart  liable.  R.  R.  Co.  v.  Bixby,  ss  Vt. 
235  (1882). 

4.  Sheriff  may  attach  arid  hold  firm  stock  for  partner' s  quota.  A,  B, 
C  &  D,  partners.  C  withdrew,  and  D  sold  out  to  E.  F,  the  sheriff, 
seized  the  goods  under  G's  attachment  against  A,  B,  C  &  D,  and 
under  C's  attachment  against  A,  B  &  D.  A,  B  &  E  sued  F  for  the 
goods  and  damages  for  the  detention.  Plaintiffs  obtained  possession 
of  the  goods  after  adlion  brought,  and  proceeded  for  damages. — ^Judg- 
ment for  defendant.  Execution  against  one  partner  authorizes  sheriff 
to  seize  and  hold  all  or  part  of  the  firm  goods,  to  sell  the  partner's 
share  in  the  goods  seized,  and  deliver  possession  to  the  vendee,  as 
tenant  in  common.  An  attachment  simply  anticipates  the  execution, 
and  is  governed  by  the  same  principle.  Smith  v.  Orsee,  42  N.  Y. 
132  (1870). 

5.  Fi.fa.  seizes  only  tangible  property,  and  does  not  pass  book  debts 
or  good-will.  Insanity  of  partner  not  a  dissolution.  Partner  canH 
buy  insane  partner's  interest  at   sheriff's  sale,  at  least  with  firm 

funds.  Sheriff  took  in  execution  on  judgments  against  A  for  ^'86, 
his  interest  in  A  &  B,  during  A's  temporary  insanity,  and  sold  it  at 
auction  to  B,  who  paid  for  it  by  a  check  on  the  firm  deposit,  and 
charged  payment  to  A's  account.  At  time  of  sale  assets  were :  out- 
standing claims  ^2,599  9-'^-  5^- 1  deposit  in  bank,  ^1,499  i^s.  2d.;  stock 
in  trade,  ^963  17.^.  /\d.\  cash,  ^'15  and  the  good-will.  B  treated  sale 
as  dissolution,  and  carried  on  business  as  B  &  Co.  A  sued  B  as  part- 
ner in  spite  of  sale. — Decree.  Purchase  by  B  enured  to  A.  Hel- 
more  v.  Smith,  35  Ch.  D.  436  (1885). 

6.  Purchaser  of  partner's  interest  at  sheriff's  sale  has  no  right  to  pos- 
session, and  is  only  quasi  tenant  in  common.  A  bought  a  pair  of 
mares,  owned  by  B,  C  &  D,  of  B,  at  private  sale  after  execution  had 
gone  out  against  B.  A  also  bought  the  mares  at  sheriff's  sale,  and 
brought  replevin  against  E,  a  purchaser  of  the  mares  at  a  subsequent 
sheriffs  sale  of  B's  interest  in  the  firm. — No  title  in  A  to  maintain 
replevin,  which  requires  right  to  exclusive  possession.  A  no  right 
to  possession,  which  belongs  to  the  partners,  and  is  not  even  tenant 
in  common.    Rensheimer  v.  Hemingsway,  11  Casey  432,  Pa.   (i860). 

7.  Special  partner' s  interest  catinot  be  sold  on  execution.  B,  general, 
C,  D  &  E,  special  partners.  Articles  provided  that,  unless  C  paid  at 
maturity,  certain  private  notes,  and  abstained  from  giving  other 
paper  without  co-partners'  consent,  his  interest  in  profits  should 
cease,  and  his  contribution  be  treated  as  a  loan,  at  7  per  cent.  F  sued 
C  on  one  of  the  notes,  and  attached  his  interest  in  the  firm.  Sheriff 
sold  C's  interest  to  D  at  public  sale,  C  and  D  being  present,  but  none 
of  the  stock  in  view.  A,  C's  administrator,  sued  D,  B  &  E  for  ac- 
count and  C's  interest  in  the  firm. — Judgment  for  defendants.  Sale 
void.  General  partner  exclusive  right  to  possession.  Therefore, 
sheriff  could  not  levy  on  stock  in  order  to  sell  special  partner's  inte- 
rest, nor  deliver  possession.  Choses  in  adtion  not  subje<5l  to  sale  on 
execution  at  Common  law.  Code  provides  for  sale  of  stock  in  cor- 
porations ;  other  debts  must  be  collecfled  by  the  sheriff,  and  applied 
to  satisfa6lion  of  the  judgment.  A  special  partner's  interest  resem- 
bles a  debt  rather  than  stock  in  a  corporation,  and,  after  the  breach 
of  condition,    C's   interest   became   a  debt   by  the   articles.     C   not 

319 


§i05- 


Firm   Property. 


Pt.  2,  Ch.  C. 


Harris  v.  Murray,  28  N.  Y.  574 


estopped  h\  his  presence  at  the  sale. 
11864). 
.     Miller  v.  Brigham,  ^  103,  n.  5,  and  cases  in  ^  loi,  n.  i. 

I.  Sheriff  ruho  takes  possession  0/  firm  stock  and  sells  a  partner's  in- 
terest in  it,  does  not  convert  the  co-partner's  share.  B,  the  owner  of 
land,  agreed  to  give  C  3-4  of  the  crop  for  farming  it.  C  formed  a 
partnership  with  A,  to  farm  the  laud  with  him,  and  they  shared  C's 
3-4  equally  between  them.  D  obtained  judgment  against  C,  and  E, 
the  sheriff,  took  possession  of  the  crop,  and  sold  C's  interest  in  it. 
A  sued  E  for  the  value  of  3-8  of  the  crop,  and  obtained  judgment. — 
Reversed.  The  sheriff  did  not  sell  A's  share,  but  only  C's  interest, 
which  was  all  the  purchaser  took.  Clark  v.  Cushing,  52  Cal.  617 
(1878). 

Farrell  v.  Col  well,  ^  100,  n.  8. 

Sheriff  n>ho  sells  joint  property  on  separate  execution,  liable  for 
damages  in  trespass.  A  &  B  sued  C,  sheriff,  for  trespass  in  selling 
firm  property  on  execution  against  B. — Recovered  judgment  against 
C  for  damages.   Bogue  v.  Steel,  i  Phil'a  R.  90  (1850). 

Sheriff  who  sells  firm  goods  for  the  separate  debt  of  one  partner,  is 
liable  in  trover  only  for  the  co-partner' s  moiety.     A  &  B,  partners. 

C,  a  separate  creditor  of  B,  issued  execution  against  him,  on  which 

D,  the  sheriff,  sold  and  delivered  to  E  the  firm  goods.  A  sued  D,  in 
trover,  for  the  value  of  one-half  the  goods  sold.  Defence :  Non- 
joinder of  B.  If  B  not  joined,  the  measure  of  damages,  A's  interest 
after  a  balance  had  been  struck  on  a  partnership  account. — Recov- 
ered. A  entitled  to  a  moiety  of  the  goods  without  reference  to  the 
partnership  account.  The  partners  hold  the  stock  as  tenants  in  com- 
mon. The  partner's  equity  to  control  his  co-partner's  share  is  not  a 
title  upon  which  he  can  recover.  Walsh  v.  Adams,  3  Denio,  125, 
N.  Y.  (1846). 


§105. 

^\\t  tfjcorn  of  marsljalling  assets  ciclutifs  tl)c  notion  of  a 
tenancn  in  coininon. 

But  the  hypothesis  of  a  tenancy  in  common  to  ex- 
plain partnership,  is  answered  by  the  fads,  without 
any  argument.  The  liability  of  firm  stock  for  a  sepa- 
rate debt,  is  not  a  principle  of  any  court,  and  no  dis- 
tribution is  made,  pro  rata,  among  all  the  creditors, 
but  a  discrimination  is  always  made  between  the  joint 
and  the  separate  classes.     The  distinction  of  the  law, 


I 


Pt.  2,  Ch.  6.  Firm  Property.  §105. 

which  classifies  the  creditors,  is  recognized  as  the 
basis  of  all  the  reasouing  about  marshalling  assets. 
It  is  the  admitted  advantage  at  law,  of  the  firm  cred- 
itor, who  can  resort  to  both  the  joint  and  the  sepa- 
rate estate,  for  the  satisfa(flion  of  his  debt,  that  has 
led  to  the  interposition  of  Chancery.  But  even  courts 
of  equity  have  not  deprived  him  of  the  privilege,  or 
attempted  to  deny  his  right.  They  were  satisfied, 
without  giving  to  the  individual  creditor  the  exclu- 
sive right  to  the  separate  estate,  to  confine  the  joint 
creditor  to  the  firm  assets,  when  any  existed,  or,  if  he 
resorted  to  the  separate  estate,  to  make  him  dedu6l, 
for  the  individual  creditor,  a  dividend  equivalent  to 
the  dividend  declared  out  of  the  joint  estate. 

The  individual  partners,  being  liable  for  the  firm 
debts  not  less  than  for  their  individual  debts,  may 
be  held  by  the  joint  creditors.  The  only  restri6lion 
which  can  be  put  upon  the  exercise  of  their  right,  by 
a  court  of  equity,  is  confining  them  to  the  joint  fund 
in  the  first  instance,  so  as  not  to  deprive  the  sepa- 
rate creditors  of  their  only  fund.  This  is  the  ex- 
tent of  equitable  interference.  But  the  allowance  of 
what  the  joint  creditors  had  received  from  the  firm 
assets  implies  that  the  separate  creditors  also  share 
the  joint  assets  with  the  firm  creditors.  They  might 
not  share  it  in  the  first  instance,  but  the  moment  the 
separate  estate  is  touched,  they  assert  the  right  of  par- 
ticipation in  the  joint  funds  by  relation.  They  date 
back  to  the  division  of  the  firm  assets,  and  make  the 
division  not  only  of  them,  but  of  the  whole  consoli- 
dated fund.  Though  the  participation  of  the  separate 
creditors  in  the  partnership  assets  is  contingent  upon 
the  joint  creditors  coming  in  upon  the  separate  estate, 

321 


5 105.  Firm   Property.  Pt.  2,  Ch.  6. 

it  is  none  the  less  a  sharing,  by  the  separate  creditors, 
of  the  joint  estate.  This  sharing,  however,  is  based 
npon  no  independent  right,  or  equity,  but  is  a  conse- 
quence of  the  control,  by  Chancery,  of  the  exercise  of  a 
legal  right,  which  it  has  no  jurisdiction  to  take  away. 
If  Chancery  should  attempt  to  accomplish  this  result 
upon  equitable  principles,  and  stay  the  joint  creditors 
with  a  joint  fund  from  resorting  to  the  separate  estate, 
the  only  means  of  enforcing  their  abstention  is  by 
making  them  share  the  joint  estate  with  the  separate 
creditors. 

As  the  effe(ft  of  the  condition  imposed  by  equity 
upon  the  joint  creditors,  if  they  resorted  to  the  sepa- 
rate estate,  was  to  make  them  share  the  joint  estate 
with  the  separate  creditors,  the  right  of  the  firm  cred- 
itors, though  not  taken  awa}^,  ceased  to  be  an  avail- 
able privilege,  except  when  the  dividend  of  the  sepa- 
rate estate  exceeded  the  rate  of  the  joint  estate.  The 
firm  creditors  have  the  right,  at  law,  to  come  in  upon 
the  separate  estate.  They  would  share  it  equally, 
with  the  separate  creditors.  As  the  separate  credit- 
ors never  had  any  claim  upon  the  joint  assets,  they 
could  not  ask  any  allowance  out  of  that  fund,  and,  of 
course,  no  account  would  be  taken  of  what  the  joint 
creditors  had  received  from  the  partnership  estate. 
Both  sets  of  creditors  would  start  as  equal  claimants 
upon  the  separate  fund,  and  be  entitled  to  an  equal 
distribution  of  it.  Chancery,  therefore,  by  the  terms 
which  it  imposed  upon  the  joint  creditors,  stripped 
their  right  of  half  its  value.  The  other  half  was  in 
danger  of  being  lost  by  the  lack  of  an  accountant, 
who  could  credit  to  each  partner's  interest  the  proper 
proportion  of  the  dividend  obtained  from  the  joint 

■^22 


Pt.  2,  Ch.  6.  Firm  Property.  §105. 

stock,  and  carry  it  to  the  credit  of  the  separate  cred- 
itors upon  the  different  separate  estates  before  permit- 
ting the  joint  creditors  to  participate  in  the  division 
of  the  separate  estates.  The  intricacy  of  the  prob- 
lem, which  must  be  solved,  in  order  to  equalize  the 
quota  which  each  creditor  was  entitled  to  receive  out 
of  the  combined  funds,  led  Chancery  to  adopt,  on 
account  of  its  simplicity,  the  'rule  of  convenience,' 
which  confines  each  class  of  creditors  to  its  own  estate 
in  the  first  instance.  The  surplus  of  either  estate, 
after  its  special  creditors  are  paid,  remains,  as  at  law, 
the  property  of  the  creditors  of  the  other  estate,  as 
each  class  has  a  cross-remainder  in  the  surplus. 

The  joint  creditor's  right  is  not  extinguished;  it 
is  subordinate  to  the  right  of  the  separate  creditors, 
when  both  have  estates  for  distribution.  The  allow' 
ance  of  proof  by  a  firm  creditor,  against  a  separate 
estate,  establishes  a  right,  which  may  be  controlled  in 
its  exercise,  but  cannot  be  denied  as  a  prerogative.^ 
The  duty,  which  correlates  with  the  right,  exists  as  a 
liability,  recognized  and  imposed  by  law.  The  exer- 
tion of  the  right  is  not  interfered  with,  except  when  a 
jpint  fund  exists.^  Then,  as  the  firm  creditors  have 
an  estate  which  is  exclusively  appropriated  by  law 
to  the  satisfaAion  of  their  claims,  the  separate  estate 
is  reserved  for  the  individual  creditors.  No  excuse 
for  limiting  the  firm  creditors  to  their  own  fund  exists 
until  such  a  joint  estate,  which  is  available  for  them, 
is  forthcoming.  They  are  postponed  for  the  conveni- 
ence of  distribution,  but  no  embarrassment  arises, 
unless  two  funds  are  to  be  shared,  in  common,  by 
different  sets  of  creditors.  The  liability  of  the  sepa- 
rate fund  for  joint  debts  is  never  denied,  as  a  legal 

323 


II 


§  I  OS- 


Firm    Property. 


Pt.  2,  Ch.  6. 


principle.  On  the  contrary,  it  is  asserted  as  indis- 
putable.^ If  the  several  creditors  had  a  primary  right, 
or  an  equitable  lien,  no  law  could  deprive  them  of 
recourse  to  the  separate  fund  in  the  first  instance. 
Any  legislation  which  frustrated  the  resort,  would 
interfere  with  a  vested  right,  or  would  take  away  a 
security  from  the  proprietor.  The  law  would  make 
compensation  for  such  an  appropriation.  It  would 
never  be  done  by  constru61;ion,  or  implication.  If  a 
statute  should  be  held  to  deprive  the  separate  credit- 
ors of  such  a  recourse,  it  would  show  that  no  right 
existed,  but  simply  a  privilege,  which  the  law  gave 
for  its  own  convenience  of  administration.  Therefore, 
no  legal  right  is  violated  when  the  joint  creditors,  in 
the  absence  of  a  joint  fund,  share  the  separate  estate 
on  an  equal  footing  with  the  separate  creditors. 

I.  The  history  of  marshalling  assets  shows  a  contrariety 
of  views  in  reference  to  the  partner's  title  to  firm  prop- 
erty. At  first,  the  firm  creditors  took  the  joint  assets, 
and  came  in  upon  the  separate  assets  with  the  separate 
creditors,  though  not  until  the  separate  creditors  were 
allowed  a  rate  equal  to  the  partner's  quota  of  the  joint 
estate. 

Upon  distribution  of  joint  and  separate  estates,  separate  creditors 
may  dedicfl,  by  way.  of  preference,  from  separate  estate  a  rate  equal  to 
dividend  received  by  firm  creditors  out  of  joint  fund  on  account  of 
separate  partner' s  share.  B  &  C  owed  debts  as  partners,  and  B  was 
indebted  to  A  on  his  separate  account.  B  died,  and  his  administrator 
c.  t.  a.  had  in  his  hands,  for  administration,  some  private  property  of 
B,  and  also  some  partnership  property  of  B  &  C,  but  not  enough  to 
pay  the  partnership  debts.  The  question  submitted  to  the  court  was 
whether  the  separate  property  should  be  applied  first  to  the  payment 
of  the  debt  due  to  A,  or  whether  the  firm  creditors  should  come  \npro 
rata. — Opinions  were  delivered  seriatim:  The  majority  :  The  K&.  of 
19th  April,  1794,  gives  creditors  of  the  same  nature  an  equal  share  in 
the  intestate's  estate.  The  creditor  has  a  legal  remedy  against  each 
partner  for  the  whole  debt.  If  B  were  alive,  creditors  of  the  firm 
might  levy  their  whole  debt  on  his  separate  estate.  It  is  the  partner's 
equity  that  neither  has  a  right  to  withdraw  anything  from  the  joint 
stock  and  ajjply  it  to  his  private  purposes  until  the  debts  are  paid. 
The  separate  creditors  are  entitled  to  insist  that  the  joint  creditors, 
after  having  exhausted  the  joint  stock,  shall  not  take  the  separate 
estate  until  the  separate  creditors  are  made  even,  according  to  their 

324 


Pt.  2,  Ch.  6.  Firm   Property.  §105. 

debtor's  share,  because,  e.g.,  one-half  of  the  joint  stock  was  received 
from  the  individual  partner's  estate.  The  balance  is  shared  equally 
between  the  joint  and  separate  creditors.  The  joint  creditors  gave 
credit  to  the  tirni,  and  the  separate  creditors  to  the  individual  part- 
ners. The  joint  creditors  alone  contribute  to  the  joint  mass,  while 
both  contribute  to  the  separate  estate.  No  credit  is  given  to  the 
partner  which  would  create  a  lien ;  the  partner  might  sell  the  next 
minute.  The  joint  creditor's  equity  is  not  a  lien  ;  but  firm  stock  is 
independent,  and  in  addition  to  an  equal  .right  against  the  separate 
estate.  The  decision  assumed  the  partners'  shares  to  be  equal,  and 
the  joint  creditors,  having  received  a  dividend  of  twenty  per  cent, 
from  the  partnership  fund,  have  therefore  received  ten  per  cent,  from 
B's  estate.  A,  the  only  separate  creditor,  was  entitled,  therefore,  to 
ten  per  cent,  before  the  joint  creditors  could  share  B's  separate  estate 
with  him.  Gibson,  J. ,  dissented.  Each  fund  should  bear  the  burden 
of  its  own  debts,  and  if  the  firm  creditors  can  come  on  the  separate 
estate,  after  the  separate  creditors  have  received  an  equal  rate,  the 
separate  creditors  should  come  in  on  the  firm  assets,  when  they  are 
the  largest.    Bell  v.  Newman,  5  S.  &  R.  78  (1819). 

2.  Proof  involves  not  only  taking  part  in  the  ele6lion 
of  an  assignee,  to  distribnte  the  fund,  but  also  the  ex- 
tinguishment of  the  partner's  debt  by  his  discharge  in 
bankruptcy.  The  right  to  prove  is,  therefore,  an  ac- 
knowledgement of  the  partner's  liability  to  the  full 
extent  of  his  resources  for  the  firm  debt. 

Under  Bankrupt  Adl  of  1800,  ?  6,  a  provision  that  "the  discharge 
"should  not  affedl  any  person  liable  as  partner  with  the  bankrupt," 
established  the  joint  creditor's  right  to  prove  against  the  separate 
estate  of  a  bankrupt  partner.  Tucker  v.  Oxley,  5  Cranch  34.  The 
A(5t  of  2  March,  1867,  ^33,  contains  a  provision  to  the  same  effedl : 
"  No  discharge  shall  release  discharge  or  affecSt  any  person  liable  for 
"the  same  debt  with  the  bankrupt    "•'■    as  partner." 

Joitit  creditor  may  prove  against  bankrupt  partner's  separate  estate. 
B  was  adjudged  a  bankrupt.  He  had  a  partner,  C.  D,  who  was  a  cred- 
itor of  B  &  C,  proved  his  claim,  and  voted  for  E,  as  assignee.  A,  who 
was  a  separate  creditor  of  B,  proved  his  claim,  and  voted  for  F  as 
assignee.  As  there  was  no  elecflion,  the  Register  appointed  E  assignee. 
A  excepted  to  D's  proof,  and  demanded  the  appointment  of  F.  Upon 
certificate  to  court — Proof  sustained.  The  several  liability  exists  as  a 
constituent  of  a  joint  debt,  and,  therefore,  proof  allowed  by  a  joint 
creditor,  against  a  separate  partner,  although  no  participation  until 
separate  creditors  are  satisfied.  In  re  Webb,  16  Nat.  Bk'pt  Reg'r,  258 
(1875). 

Judgment-creditor  of  a  firm,  after  exhausting  its  assets  at  law,  may 
proceed  against  the  separate  estate  in  equity.  B  conveyed  his  real 
estate,  through  a  trustee,  to  his  wife,  and  she  conveyed  it  to  his  father. 
A  brought  bill,  as  judgment-creditor  of  B  &  C,  against  B,  his  wife  and 
father,  to  set  aside  conveyances  and  take  land  in  execution  as  B's 
property.  The  defendants  demurred,  because,  i,  C  was  not,  and,  2, 
B's  wife  was  joined,  and,  3,  firm  assets  had  not  been  exhausted. — Over- 
j  ruled.     No  cause  alleged  or  relief  asked  against  B.     Wife  a  party  to 

I  fraud.     A  has  a  right  at  law,  by  virtue  of  his  judgment,  to  seize  B's 

separate  estate,  and  equity  enforces  the  legal  right.  He  need  not 
prove  firm's  insolvency,  but  sheriff's  return  of  'no  goods,'  shows  that 

325 


§io6.  Firm   Property.  Pt.  2,  Ch.  6. 

he  has  exhausted  the  firm  assets  and  his  remedy  at  law.  Randolph  v. 
Daly,  I  C.  E.  Gr.  313,  N.  J.  (1865). 

3.  Brock  V.  Bateman,  ^  102,  n.  4. 

If  no  joint  fund  for  distribution,  firtn  creditors  share  partner's 
separate  estate  luith  his  individual  creditors.  B  &  Sons,  bankrupts, 
left  no  more  assets  than  were  sufficient  to  pay  the  costs  of  proceedings. 
B  had  separate  assets.  A,  assignee,  claimed  to  come  in  with  separate 
creditors  of  B. — Allowed.  'i  36  U.  S.  Bankrupt  A(5l,  1867,  does  not 
alter  the  law.    In  re  McEwen,  12  Nat.  Bankruptcy  Register  11  (1875). 

B,  who  had  bought  out  his  co-partner,  C,  assigned  for  creditors.  No 
firm  assets,  and  C  insolvent. — Firm  creditors  admitted  to  share  B's 
separate  estate  with  his  individual  creditois.  Alexander  v.  Gorman, 
7  A.  Rep'r  243,  R.  I.  (1886). 

4.  An  attachment  is  allowed,  even  for  a  firm  claim. 
Attachment  lies  agai7ist  a  partner  on  a  firm  contrail  for  his  sepa- 
rate property.      B  issued  attachment  against  A,  who  was  a  partner 

with  C,  in  Georgia,  but  a  citizen  of .    The  declaration  was  against 

A  alone,  on  a  firm  account.  A  moved  for  a  non-suit,  based  on  the 
non-joinder  of  C. — Refused.  Code,  'i  3276,  permits  attachment  against 
a  partner,  if  limited  to  his  separate  property.  Connon  v.  Dimlop,  64 
Ga.  680  (1880). 


§106. 


(?ri)£  partner's  equity  is  besigneb  for  \\\t  protection  of  l)is  sepa- 
rate estate,  anii  becomes  tl)e  founi)ation  of  tirm  crebitors'  rigljts. 

The  partner's  equity  originated  in  the  self-interest 
of  the  man,  as  opposed  to  the  partner.  That  motive 
induced  him  to  force  his  co-partner  to  apply  the  firm 
funds  to  the  firm  debts.  The  stock  was  devoted  to 
their  payment,  and  could  be  used  for  no  other  pur- 
pose. Though  this  was  the  separate  partner's  work, 
done  for  his  own  individual  benefit,  the  result  was  a 
distinct  advantage  to  the  firm  creditors,  who  were  to 
be  paid  out  of  the  funds  thus  bound  by  the  partner's 
equity  to  their  claims.  The  destination  enured  to  their 
benefit,  and  fixed  the  charadler  of  the  partnership  stock 
in  correspondence  with  the  nature  of  the  partnership 
title.     As  the  firm  title  was  one  and  indivisible,  so  the 

326 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

firm  stock  was  devoted  to  a  single  and  special  pur- 
pose. The  cliara61:er  thus  stamped  upon  the  firm 
stock,  by  the  partners,  became  indelible.  The  part- 
ners themselves,  though  they  all  united,  could  not 
change  the  direction  which  the}^  had  given  to  the 
stock,  to  the  creditor's  detriment.  An  independent 
and  paramount  right  has  been  created  by  the  part- 
ner's equity,  which  dissolution  itself  would  not  dis- 
turb. This  right  created  a  new  party,  with  whom  the 
firm  must  settle  before  it  could  dispose  of  its  goods. 
The  creditors  were  not  threatened  until  insolvency 
intervened,  and,  therefore,  while  the  firm  was  solvent, 
the  partners  could  dispose  of  the  stock  as  they  pleased. 
If  Chancery  should  exercise  control  while  the  firm  was 
solvent,  it  would  take  the  management  of  all  the  part- 
nership) business  of  the  country.  But  when  insolvency 
occurred,  the  rights  of  creditors  would  be  impaired  by 
an  alienation,  unless  for  full  value.*  How,  if  all  the 
parties  unite  in  applying  a  portion  of  the  firm  stock  to 
the  payment  of  a  separate  partner's  debt  ?  This  would 
be  applying  the  firm  assets  to  extinguish  a  separate 
partner's  liability,  but  it  would  not  relieve  him.  He 
would  be  liable  to  a  firm  creditor,  who  might  have  been 
paid  with  those  assets,  but  was  not.  It  is  j  ust  the  same 
to  him,  whether  his  liability  is  extinguished  by  pay- 
ment of  a  joint,  or  by  payment  of  a  separate,  creditor. 
If  he  could  prefer  a  creditor,  he  might  satisfy  his  prefer- 
ence by  dire6ling  which  creditor  should  be  paid.  But 
the  law  says :  Adhere  to  the  position  you  have  taken, 
and  to  the  estate  which  you  have  created,  and  be  con- 
sistent with  yourself.  As  the  law  denies  to  your  part- 
ner a  title  which  will  enable  him  to  convey  any  estate 
in  the  firm  goods  by  means  of  sales  not  made  in  the 

0^7 


^io6. 


Firm  Property.  Ft.  2,  Ch.  6. 


course  of  the  firm's  business,  you  shall   not,  while 
enjoying  this  protedlion,  unite  with  him  to  accomplish 
a  divertion  of  the  firm  stock  from  its  original  purpose, 
to  the  prejudice  of  your  creditors.     As  persons  hold 
themselves  out  as  partners  by  their  ad,  and  by  the 
legal  effe(5l  of  their  contradls,  so  have  the  partners 
lield  out  that  the  firm  assets  were  irrevocably  devoted 
to  firm  debts.     Creditors,  knowing  the  interest  which 
led  to  the  announcement,  and  relying  upon  the  pledge, 
are  prote(5led.     The  partners  might,  as  between  them- 
selves, rescind  the  contradl,  and  appropriate  the  stock 
to  their  own  individual  use.     But  if  they  were  honest, 
they  would  gain  nothing  by  the  divertion,  and  by  pay- 
ing separate,  instead  of  joint,  creditors;  for  the  joint 
would  then  become  separate.    The  law,  however,  says 
that  they  cannot  revoke  the  pledge,  without  an  equiva- 
lent.   The  offer  was  made  for  the  partner's  own  benefit, 
but  the  pledge  was  accepted  by  the  creditors,  for  their 
own  sake.     The  bargain  cannot  be  broken,  except  by 
the  consent  of  both  parties.     The  attempt  to  do  so  by 
the  partners  is  a  fraud  upon  the  creditors,  which  a 
court  of  equit}'  will  enjoin." 

The  partner's  equity  is  his  right  to  have  the  firm 
assets  applied  to  the  payment  of  the  firm  debts,  in 
exoneration  of  his  separate  estate.  This  prerogative, 
though  styled  an  equity,  is,  in  fad,  a  legal  right.  It 
is  a  constituent  of  the  partnership  contradl,  and  an 
element  of  the  firm  estate.  It  distinguishes  a  trade 
partnership  from  the  brotherhood  omnium  bonoriim. 
Without  it,  the  contribution  of  a  partner  might,  at 
any  time,  without  his  consent,  be  diverted  from  the 
joint  purpose  to  the  private  relief  of  his  co-partner,  1 
and  his  separate  estate  might,  in  this  way,  be  drawn | 

328 


I 


Ft.  2,  Ch.  6.  Firm   Property.  §io6. 

in  to  supply  a  deficiency  in  the  firm  fund  by  the  arbi- 
trary a6l  of  his  co-partner.  The  equity  is  a  principle 
for  the  adjustment  of  the  interests  of  the  partners  be- 
tween themselves.  This  adjustment  is  made  neces- 
sary by  the  individual  liability,  which  the  law  im- 
poses upon  each  partner,  in  spite  of  himself,  and 
charges  upon  his  separate  estate,  as  the  result  of 
every  firm  obligation.  Properly  considered,  the  equity 
is  not  the  source  of  the  creditor's  rights,  but  the  means 
employed  by  the  partners  to  restore  among  themselves 
the  equipoise  disturbed  by  the  creditors  in  the  pursuit 
of  their  legal  rights. 

Upon  what  does  the  partner's  equity  rest?  Is  it 
founded  upon  his  interest  in  the  partnership  property? 
If  so,  a  sale  of  his  interest  would  carry  with  it  the 
equity.  The  interest  in  the  property  would  feed  the 
equity,  and  when  the  source  of  supply  was  cut  off^ 
nothing  would  remain  to  sustain  the  offspring.^ 

When,  therefore,  a  partner  sold  his  interest  in  the 
firm,  he  would  lose  his  right  to  require  the  application 
of  the  firm  funds  to  their  original  purpose.  He  would 
be  left  with  his  separate  estate  at  the  mercy  of  the 
firm  creditors,  without  any  means  of  compelling  his 
successor  in  the  possession  of  the  firm  stock  to  dis- 
charge the  old  firm  debts. ^ 

Now,  take  the  other,  and  the  correal,  view,  that  the 
interest  is  one  thing,  the  equity  another  and  a  differ- 
ent thing.  Then  there  is  no  necessary  connection  be- 
tween the  two  rights.  They  may  be  severed  and  ex- 
erted, either  together  or  apart.  The  two  may  be  not 
onl}^  disparate,  but  antagonistic.  The  interest  is  a 
joint-property  right.  The  equity  springs  from  the 
ownership  of  separate  property.     The  partners  are 

329 


§io6. 


Firm   Property.  Pt.  2,  Ch.  6. 


liable  in  their  separate  estates  for  the  firm  debts.  The 
interest  of  the  partners  in  the  firm  property  protects 
itself  But  the  interest  in  their  separate  estates  must 
be  guarded  by  an  equity,  which  entitles  them  to  have 
the  firm  assets  applied  to  the  payment  of  the  firm 
debts.  The  liability,  which  extends  over  the  entire 
individual  estates,  must  be  restridled  to  its  appropri- 
ate fund.  The  equity  of  the  partner,  therefore,  springs 
out  of  his  separate-estate  liability.  His  separate  estate 
might  be  exhausted  in  satisfying  the  firm  creditors. 
He  has,  therefore,  an  independent  right  which  gives 
him  a  motive  to  compel  his  co-partners  to  appropriate 
the  partnership  stock  to  the  payment  of  the  firm  debts. 
Their  payment,  while  an  obligation  of  the  firm,  is  a 
release  of  the  separate  estate.  Every  payment  -out 
of  the  firm  assets  exonerates,  to  that  amount,  the 
partner's  separate  estate.  The  object  of  the  partner 
is  not  to  have  his  separate  estate  charged  with  firm 
debts.  If  he  sells  his  interest  in  the  firm,  his  liabil- 
ity is  not  gone.  He  remains  still  a  debtor  for  the  firm 
debts  to  the  joint  creditors.  His  equity  is  now  his 
only  reliance.  While  a  partner,  his  rights  of  control 
enabled  him  to  protedl  his  separate  estate  by  appro- 
priating the  firm  funds  to  the  payment  of  firm  debts. 
Now,  that  he  has  left  the  firm,  his  immediate  right 
of  intervention  and  control  is  gone,  with  his  propria- 
tary  right  as  a  partner.  His  right,  as  an  individual 
aiid  independent  proprietor,  would  be  put  in  jeopardy, 
unless  his  right  to  see  that  the  firm  assets  were  not 
misapplied,  survived  his  connexion  with  the  firm.'' 
At  Common  law,  the  exemption  of  a  deceased  part- 
ner's estate  from  liability  dispensed  with  his  equity. 
As  he  ceased  to  be  liable  for  firm  debts,  he  did  not 


330 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

need  any  equity  to  protedl  his  estate.  But  when 
Chancery  allowed  recourse  to  his  estate,  the  necessity 
for  a  corresponding  equity,  to  protedl  it  from  being  re- 
sorted to,  while  firm  assets  existed,  was  re-created,  and 
was  given  to  him.  The  executor  was  vested  with  the 
equity,  on  behalf  of  the  estate.*^  This  privilege  was 
independent  of  the  deceased  partner's  interest  in  the 
firm,  for  it  continued  in  the  executor  after  he  had  sold 
the  interest  to  a  third  person.'  The  right,  therefore, 
did  not  depend  upon  the  interest  which  might  have 
resulted  to  the  estate  had  it  remained  part  of  the  in- 
heritance. 

Consider  for  a  moment  the  consequences  of  basing 
the  rule  that  firm  assets  constitute  a  fund  for  the  pay- 
ment of  firm  debts,  upon  an  interest,  instead  of  upon  a 
liability.    The  notion  that  the  partner's  equity  is  a  per- 
sonal privilege,  which  he  may  waive  or  assert  at  his 
caprice,  enables  him  to  cut  out  the  firm  creditors  at 
any  instant.    The  partners  agreed  to  assume  an  indi- 
vidual debt,  if  execution  were  postponed.     They  were 
precluded,  by  the  agreement,  from  setting  up  an  equity 
to  have  the  assets  appropriated  to  firm  creditors.    The 
agreement  barred  the  lien,  or  equity,  of  the  partner. 
Though  the  stock  remains  liable  to  seizure,  at  the  in- 
stance of  firm  creditors,  until  it  is  actually  sold,  yet 
the  firm  creditors  may  be  cut  out  from  access  to  it. 
The  mere  bargain,  to  dispose  of  the  assets,  will  be 
suf&cient  to  prevent    their  executions   from    taking 
effe6l.     The  parting  with  his  equity  by  a  partner,  is 
more  e£fe6live  than  the  disposal  by  an  owner.     If  the 
owner  agreed,  to  sell  his  property,  but,  before  the  sale 
was  adlually  effe6led,  an  execution  was  levied  upon 
the  property,  the  sale  could  not  take  effe6l,  except 

331 


§io6.  Firm  Property.  Pt.  2,  Ch.  6. 

subje(5l  to  the  execution.*  The  partners,  though,  as 
owners,  they  could  not  dispose  of  the  stock  by  a  direA 
bargain,  and  cut  out  a  firm  creditor,  may  effe6l  the  dis- 
position, b}'  an  indiredl  bargain,  and  cut  him  out  alto- 
gether. The  process  is  simply  for  the  partners  to 
renounce  their  equity,  and  the  effecfl  of  the  renuncia- 
tion is  to  convert  the  joint  into  separate  assets.  The 
agreement  to  assume  the  individual  debt,  if  execution 
were  postponed,  is  treated  as  a  lien  upon  the  partner's 
equity,  and  by  means  of  it,  is  advanced  over  any  lien 
of  a  firm  creditor." 

The  partners  could,  by  a  waiver  of  their  equity,  em- 
ploy the  firm  funds  in  the  furtherance  of  an  individual 
purpose;  they  might,  by  original  agreement,  leave  the 
entire  firm  stock  in  the  hands  of  one  partner,  as  his 
personal  propert}'.  They  would  then  have  formed  a 
partnership,  and  have  sheltered  the  entire  firm  capital, 
on  which  they  traded,  from  the  prior  claims  of  firm 
creditors.  The  whole  idea  of  waiving  the  partner's 
equity  is  inconsistent  with  the  theory  of  partnership. 
Men  are  often  made  parties  by  operation  of  law,  with- 
out their  consent,  at  the  instance  of  their  creditors. 
How  much  more,  therefore,  shall  they  be  forbidden  to 
renounce  any  rights  which  the  creditors  may  enforce 
for  their  own  benefit.  It  is  the  creditors  who  regulate 
the  rights  of  the  partners,  and  not  the  partners  who 
regulate  the  rights  of  the  creditors.  The  attempt  to 
divert  firm  property  and  appropriate  it  to  any  other 
objea,  would  be  a  fraud  upon  the  creditors.  The  as- 
sertion of  any  individual  right,  until  the  firm  creditors 
are  paid,  would  be  inconsistent  with  tbe  partnership 
created  by  law.  To  make  such  a  partnership  depend- 
ent for  Its  existence  and  its  terms  upon  the  caprice  of 

332 


M 


Pt.  2,  Ch.  6.  Firm  Property.  §io6. 

the  partners,  would  destroy  it  altogether,  as  a  creditor's 
partnership,  and  reduce  it  to  a  partnership  between  the 
partners. 

The  sale  on  a  separate  execution  conveys  only  the 
partner's  interest,  which  is  subjedl  to  all  claims  against 
the  firm.  The  aggregate  interests  of  all  the  partners 
are  also  subjedl  to  the  same  firm  liability,  and  a  pur- 
chaser of  each  and  all  the  partners'  interests  take  a 
title  encumbered  with  the  firm  debts.  No  specific 
property  passes  by  the  sale  of  the  partner's  interests, 
either  separate  or  combined.  Where,  then,  does  the 
stock  go?  It  remains  the  property  of  the  firm,  and 
can  be  got  out  of  the  partnership  only  by  an  a6l  of 
disposition  performed  by  the  firm,  or  by  legal  pro- 
ceedings on  behalf  of  firm  creditors.  If  the  partners 
conveyed  the  firm  property,  it  would  pass,  because 
they,  as  the  proprietors,  exerted  the  dominion  vested 
in  them.  Whether  the  conveyance  would  be  a  fraud 
on  their  creditors  is  an  independent  matter.  The 
conveyance  of  interests  never  could  pass  the  stock. 
The  partner's  equity  is  the  key  to  the  situation,  and 
his  equity  is  held,  in  Pennsylvania,  to  pass  with  his 
interest.  The  last  partner's  conveyance,  therefore, 
of  his  interest,  carries  with  it  the  creditor's  last  hold 
upon  the  partnership  stock.  Judge  Gibson  evidently 
considered  the  partner's  equity  as  his  separate  estate. 
The  assertion  of  it  enured  to  the  benefit  of  the  firm 
creditors,  but  if  the  partner  did  not  volunteer  to  exert 
his  equity,  it  remained  his  individual  right,  and  be- 
came extin(?t  when  his  interest,  which  fed  it,  was 
gone.  The  liabilit}^  of  the  partner,  which  still  con- 
tinues after  a  sale  of  his  interest,  for  the  firm  debts, 
was  overlooked  as  the  foundation  of  his  equity.    The 

333 


! 


5io6.  Firm   Property.  Pt.  2,  Ch.  6. 

interest  which  he  had  in  the  stock  was  regarded  as 
the  foundation  for  his  right  to  exert  a  control  over  the 
disposition  of  the  stock.  The  equity  which  springs 
from  the  separate  liability,  and  guards  the  individual 
estate,  was  left  out  of  account.  When  the  interest 
was  lost,  no  basis,  it  was  thought,  is  left  for  a  part- 
ner's intervention.'''  True  enough,  he  is  liable  to  firm 
creditors,  and  to  individual  creditors.  But  the  two- 
fold liability  makes  him  neutral  between  the  confli6l- 
ing  claimants.  He  has  no  right  to  do  anything 
to  favor  one  class  of  creditors  over  the  other  class. 
He  must  let  the  liabilities  stand  just  as  the  law 
imposed  them.  It  is  equity,  however,  to  exonerate  the 
separate  estate,  by  applying  the  firm  assets  to  the 
pa3'ment  of  the  joint  debts.  If  the  partner  should 
satisfy  the  firm  creditors  out  of  the  stock,  they  would, 
to  that  extent,  be  out  of  the  way,  and  the  separate 
creditors  relieved  of  that  amount  of  competition.  No 
one  would  be  harmed  by  keeping  a  resort  to  the  firm 
fund,  which  would  otherwise  be  lost.  The  sale  of  the 
interest  would,  it  is  true,  yield  more  by  reason  of  its 
passing  the  partner's  equity,  but  this  would  be  using 
the  equity,  not  as  a  protection  for  firm  creditors,  but 
as  a  sword,  to  slay  them.  The  equity  could  not  be 
used  to  effecl:  a  dispossession  of  the  firm  creditors. 
The  proceeds  of  a  sale  of  the  partner's  interest  are 
separate  estate,  and  his  equity  is  treated  as  if  indis- 
solubly  connedled  with  his  interest,  and  sold  with  it. 
The  equity,  on  the  contrary,  is  independent  of  the 
partner's  interest,  and  does  not  pass  by  a  sale  of  it. 
The  equity  still  exists,  to  protecT:  the  separate  estate, 
and  enures  to  the  benefit  of  the  joint  creditors,  who 
are  entitled  to  avail  themselves  of  it.     The  stock  is 

334 


I 


Pt.  2,  Ch.  6.  Firm   Property.  §io6 

subjecft  to  a  lien,  which  belongs  to  the  firm  creditors. 
The  conveyance  of  their  interests  by  the  partners 
would  not  effect  the  stock,  nor  its  incumbrances." 

I.  How  does  the  theory  of  joint  tenancy  affedl  the  alien- 
ation by  a  partner?  The  disposition  is  subjedl  to  debts, 
unless  in  the  course  of  trade,  and  in  all  other  cases, 
enables  the  joint  creditors  to  enforce  an  equitable  lien. 
If  a  partner  sells  his  interest  in  the  firm,  nothing- 
passes  by  the  sale  but  the  seller's  share,  after  the  estate 
and  its  liabilities  have  been  settled.'^  If  the  partner 
sells  out  to  his  co-partner,  the  share  passes,  subjecfl  to 
the  firm  debts.  The  joint  creditors  should  treat  the 
conveyance  as  a  fraud,  if  intended  to  sever  the  joint 
title  and  convert  the  firm  property  into  separate  estate.  ^ 

a.  Partner's  interest  in  exenition  only  balance  after  payment  of  firm 
debts.  B  &  C,  brickmakers,  sold  out  to  A,  for  12,500,  and  let  him 
brick-yard  for  one  year,  at  |;ioo  rent.  Reciting  sale  and  lease,  it  was 
agreed  the  same  day  that  A  should  carry  on  business  in  his  name, 
advance  12,000,  and  furnish  everything  necessary;  that  he  should 
employ  B,  at  $2.25,  and  C,  at  |2.oo  a  day;  that  A  should  receive 
|2,ooo  a  year,  and  lawful  interest  on  his  advances,  and  that  he  should 
reconvey  everything  when  B  &  C  repaid  him  above  sums  and  an  old 
mortgage.  D,  an  individual  creditor  of  B,  levied  on  the  chattels, 
and  A  enjoined  sale. — Maintained.  If  B  a  partner,  firm  debts  double 
amount  of  assets,  and  take  precedence.  Atwood  v.  Impson,  5  C.  E. 
Gr.  151,  N.J.  (1869). 

b.  Partner's  appropriation,  while  insolvent,  of  firm  assets  to  payment 
of  separate  creditors  a  fraud  on  firm  creditors.  B  &  C  partners.  In 
1874,  D  took  B's  notes  for  loan  of  |!2,ooo;  in  1875,  C's  note  for  loan 
of  14,700.  7th  January,  i88r,  B  &  C  indebted  to  D  &  E,  |i4,ooo,  and 
to  A  et  al.,  $iT^,ooo,  conveyed  firm  R.  E.  to  D,  in  part  payment  of 
said  notes,  and  assigned  other  assets,  first  to  pay  D  &  E  in  full,  and 
then  A  et  al.  pro  rata.  A  et  al.  obtained  judgment,  and  on  return  of 
nulla  bona,  brought  bill  to  avoid  conveyance,  as  a  fraud  on  them. — 
Decree.  Assignment  equivalent  to  bankruptcy,  and  conveyance, 
while  insolvent,  a  gift  to  separate  creditor.  Though  firm  creditors 
no  lien  on  firm  assets,  entitled  to  set  aside  conveyance  for  fraud. 
Goodbar  V.  Cary,  16  Fed.  Rep.  316  (1882). 

Menagh  v.  Whitwell,   g  103,  n.  4. 

If  the  partner  sells  out  to  his  co-partner,  who  agrees 
to  pay  the  firm  debts,  the  seller  can  compel  him  to  apply 
the  assets  to  such  payment.  The  sale  devested  the  part- 
ner's property  interest,  but  was  made  subjedl  to  the  firm 
debts,  so  that  the  partner  would  continue  interested  in 
the  payment  of  them,  in  relief  of  his  liability  and  for  the 
benefit  of  firm  creditors. 

The  confusion  has  arisen  from  a  joint  sale  by  both 
partners.    Although  each  sells  subje(5l  to  the  joint  title, 

335 


iio6. 


Firm   Property. 


Ft.  2,  Ch.  6. 


which  is  paramount  to  the  several  titles,  the  sale  by 
both  leaves  no  representative  of  the  estate,  and  unless 
it  is  insolvent,  no  court  has  jurisdidlion  to  take  charge 
of  the  licrcditas  jacens.  There  is,  however,  no  lack  of 
a  title-bearer.  Either  partner  may  enforce  the  joint 
title  after  a  sale  of  both  partners'  interests,  in  order  to 
protect  his  separate  estate,  and  the  firm  creditors  may- 
avail  themselves  of  his  right.  *"  They  cannot  be  deprived 
of  this  privilege  by  the  partner's  renunciation,  because 
they  are  entitled  to  make  him  exert  his  joint  right  for 
their  satisfacflion.  The  conversion  of  the  joint  into 
separate  estate,  and  the  abandonment  of  the  title,  is  a 
fraud  upon  them.  It  hinders  and  delays  them,  by  con- 
founding them  with  separate  creditors,  even  if  the  sep- 
arate partners  are  solvent.'' 

c.  Sale  on  separate  executions  against  each  partner,  passes  no  title 
against  joint  creditors.  B  &  C  sold  the  joint  stock,  and  applied  it 
to  the  payment  of  the  separate  debts  of  each  partner.  A  subsequently 
obtained  judgment  against  the  firm,  and  levied  on  the  stock.— Exe- 
cution vali  \  A's  claim  paramount  to  claims  of  separate  creditors. 
Person  v.  »Monroe,  i  Foster,  462  N.  H.  (1850). 

d.  The  conveyance  by  a  partner  of  his  share  in  the 
joint  stock  to  his  co-partner,  if  he  or  his  co-partner  is 
insolvent,  is  a  fraud  on  the  firm  creditors.  The  trans- 
fer being  voluntary,  is  a  constructive  fraud  upon  them, 
and  will  be  set  aside  without  proof  of  a6lual  fraud. 

Partner's  assignment  to  co-partner  unable  to  pay  firm  debts  volun- 
tary and^  not  binding  on  creditors.  B  &  C,  partners.  B  contributed 
l4,ooo,  C  |2,ooo  borrowed  money.  Business  began,  i  Febuary,  1881. 
Firm  dissolved,  27  September,  1882.  C  paid  B  |4,ooo,  and  agreed  to 
pay  creditors.  He  commenced  business,  and  asked  an  extension  by 
the  creditors,  admitting  his  inability  to  pay.  A  et  al.  brought  credit- 
ors' bill  to  set  sale  aside. — Sale  voluntary  and  not  binding  on  firm 
creditors,  who  are  entitled  to  the  assets.  Proof  of  a<5lual  fraud  nega- 
tived.   Johnston  v.  Straus,  26  Fed.  Rep.  57  (1882). 

2.  If  the  partners  assign  the  stock,  why  cannot  firm 
creditors  follow  the  assets,  and  claim  payment?  The 
joint  creditors  have  no  lien  on  them,  and  the  price  stands 
for  the  stock,  if  an  equivalent.  If  not,  and  sufficient 
property  is  not  left,  equity  would  give  the  creditors 
recourse  to  the  fund.''^  The  renunciation  by  the  part- 
ner of  his  equity  would  not  effect  his  creditors,  who 
^^\\f?^  ^.o"»c^  by  his  dispositions  in  fraud  of  them.^ 

Vy  hat  IS  the  construdlion  of  the  assignment,  if  accom- 
panied by  an  agreement  of  the  assignee  to  pay  the 
debts.     The  assignment  is  made  subje^  to  the  debts. 
1  he  agreement  goes  with  the  assets,  and  the  liability 
336 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

becomes  the  assignee's  own  debt,  and  not  a  personal 
contrail  with  the  assignor.*' 

a.  No  transfer  by  partners  will  release  the  fund  from  joint  debts,  tin- 
less  the  firin  was  solvent,  or  an  equivalent  was  received  for  the  assign- 
nient,  made  in  good  faith,  and  with  the  intention  to  discharge  the 
assets  of  original  liability.  A  firm  composed  of  four.  One  retired, 
and  the  three  continued  the  business  with  the  assets  equal  to  their 
liabilities,  excepting  the  large  debt  due  the  retiring  partner.  He  re- 
entered the  firm  for  a  year,  stipulating  for  repayment  of  his  debt, 
and  the  balance,  after  payment  of  other  debts,  to  be  divided  among 
his  co-partners.  This  was,  in  eflfecft,  paying  a  partner  with  firm  assets 
when  the  firm  could  not  pay  its  creditors. — He  was  held  liable  for 
the  amount  withdrawn  from  the  firm  assets.  Cadwalader,  J.: 
"The  argument  on  this  point  assumes  that  these  creditors  cannot 
"complain  of  injury  suffered  from  any  disposition  of  the  joint  prop- 
"  erty  in  which  all  the  partners  united,  if  there  was  a  sufficient  con- 
"  sideration  for  it,  as  between  the  immediate  parties  to  it.  The  as- 
"  sumption  is  unwarranted,  and,  as  may  be  even  said,  fallacious.  The 
"existence  of  a  consideration  sufficient,  as  between  the  parties,  does 
"not  suffice  to  sustain  an  adt  against  creditors  whose  rights  it  was 
"intended  to  defeat  or  frustrate,  or,  what  is  the  same  thing,  had  a 
"  tendency  to  defeat  or  to  frustrate.  So  the  law  was  held  in  Twyne's 
"case  (3  Co.,  So),  and  in  earlier  and  later  decisions.  In  this  respedt 
"the  enadtments  of  the  statute  13  Eliz.,  chapter  5,  are  declaratory  of 
"the  Common  law.  The  rule  of  decision  is  a  general  one.  Its 
"diredt  application  to  adls  changing  the  ownership  of  partnership 
"property,  so  as  to  frustrate  the  recourse  of  the  joint  creditors  of  the 
"firm  to  it,  is  exemplified  in  many  decided  cases  which  have  been 
"cited,  and  in  more  than  one  of  them,  was  expressly  so  stated  and 
"  explained.  To  except  such  a6ts  from  the  general  rule  would  afford 
"an  immunity  for  profligate  transfers  of  joint  property  in  derogation 
"of  rights  of  creditors."  Potter  v.  Magee,  Pamphlet  U.  vS.  C.  C.(i878). 

Cadwalader,  J.,  thus  states  a  leading  authority :  "The  cited  case 
"was  that  of  a  retiringpartner  whose  interest  in  the  joint  concern  was 
"  computed  upon  the  estimate  of  bad  and  doubtful  debts  at  par.  He 
"  had  withdrawn  part  of  his  so-called  capital  before  the  dissolution 
"  efFedled  by  his  retirement ;  and  the  rest  was  afterwards  paid  to  him, 
"from  time  to  time,  as  a  debt,  by  the  continuing  partners,  during  four 
"years,  at  the  end  of  which  they  became  bankrupt,  with  a  deficit  ap- 
"  proximately  equal  to  the  whole  of  what  he  had,  before  and  after  the 
"dissolution,  received  under  the  name  of  his  capital,  or  of  their  debt 
"to  him.  He  was,  at  the  suit  of  the  assignee  in  bankruptcy  of  the 
"continuing  partners,  compelled  to  refund  to  their  estate  so  much  as 
"he  had  received  from  them  since  the  dissolution.  A  decree  for  an 
"  account  of  what  he  had  previously  received,  beyond  his  just  share, 
"was  refused,  because  any  such  excess  was  not  recoverable  by  the 
"  complainant  for  creditors  of  the  bankrupt  partners,  though  it  might 
"have  been  recoverable  by  creditors  of  the  former  firm,  if  any  such 
"creditors  had  been  unpaid.  Anderson  v.  Maltby,  4Brown,  Ch.  422  ; 
"s.  c,  2  Ves.  Jr.  244." 

b.  An  assignee  in  bankruptcy  of  a  partner  could  not  reclaim  a  pay- 
ment made  by  his  co-partners,  in  fraud  of  creditors,  though  the  firm 
assignee  could.  A  firm,  C  &  D,  having  numerous  creditors,  of  whom 
A  was  one,  became  embarras,sed,  and  stopped  pa3anent.  From  that 
time,  with  the  tacit  assent  of  D,  C,  who  had  put  in  two-thirds  of  the 
capital,  and  was  a  large  creditor  of  the  partnership  for  money  lent, 

337 


5io6.  Firm   Property.  Pt.  2,  Ch.  6. 

proceeded  as  if  tiie  partnership  had  been  dissolved,  managed  the  as- 
sets ns  if  thfv  hail  been  his  own,  continued  business  in  his  own  indi- 
\-i(lual  uanK-.'aiiii  proposed  to  creditors  a  compromise.  To  further 
this,  he  paid  A  a  large  sum  in  anticipation  of  A's  share.  The  neces- 
sary number  of  creditors  not  consenting,  he  made  a  general  assign- 
ment of ///.>•  property  for  the  benefit  of  his  creditors  to  State  assignee. 
Then,  on  j)L-tition  of  firm  creditors,  who  had  got  wind  of  the  secret 
agreement  between  A  6c  C,  C,  not  the  firm,  nor  D,  was  decreed  a 
bajikrupt,  and  U  appointed  his  assignee.  On  appeal,  A  contended 
that  ]{  could  not  recover  the  sum  C  had  paid  A,  denying  fraud,  and 
setting  up  the  point  that  15  was  assignee  of  C,  individually,  and  not 
of  the  firm  of  C  ix.D;  that  the  co-partnership  had  not  been  dissolved; 
that  B  did  not  represent  the  interest  of  D,  and  that  D's  interest  did 
not  pass  to  B. — Firm  not  dissolved;  only  assignee  of  partnership 
could  recover  here;  B  is  merely  assignee  of  individual  partner.  Am- 
siuck  V.  Bean,  22  Wallace  395  (1874). 

c.  If  partner  takes  firm  stock,  and  agrees  with  co-partner  to  pay  firm 
debts,  agreement  enures  to  firm  creditors.  B  assigned  the  firm  assets 
to  his  partner  C,  who  agreed  to  pay  the  firm  debts.  The  firm  sub- 
sequently became  bankrupt.  Firm  creditor  A  proved  against  C's  sep- 
arate estate. — Allowed.  The  agreement  was  in  addition  to  partner- 
ship liability,  and  enured  to  the  firm  creditors.  In  re  Long,  9  Nat. 
Bank'cy  Reg'r  227  (1874). 

3.  It  is  only  the  gravity  of  the  situation,  which  pre- 
vents one  from  considering  the  transaction  a  joke. 
/*/;■/«  creditors  barred  by  partners'  distribution  of  assets  arnong 
themselves.  B,  C,  D  &  E,  traded  as  B,  C  &  Co.  B  bought  out  C, 
and  gave  D  &  E  54,ooo  in  secured  notes  for  their  quotas,  and,  in  con- 
sideration for  the  assets,  then  adequate,  undertook  to  pay  the  firm 
debts.  B  squandered  the  assets,  and  D  and  E,  who  became  insolvent, 
assigned  the  notes  to  F",  for  separate  creditors.  A,  who  was  surety 
for  B,  C  &  Co.,  brought  bill  for  application  of  money  colledled  on 
the  notes  to  payment  of  firm  liabilities. — Dismissed.  |4,ooo  in  notes 
for  price,  individual  property  of  D  &  E,  as  |4,ooo  of  assets,  if  dis- 
tributed to  them,  would  liave  been ;  and  conversion  by  partners  of 
joint  into  separate  estate,  bars  their  equity  and  creditors'' right,  which 
depends  upon  it.     Belknap  v.  Abbott,  11  Ohio  St.  411  (1882). 

I  B,  |2,000 

Firm  assets,  |8,ooo  divided  bet.     J,'    ^'°°°    and  nothing  left  to  firm. 

D,    2,000  ° 

I  E,   2,000 

Firm  debts,  |8,ooo,  unpaid,  and  separate  debts  |8,ooo,  could  be 

paid  with  firm  funds. 

4-  The  equity,  on  the  contrary,  springs  into  existence 
under  the  pressure  of  the  partner's  liability.  This  ap- 
pears clearly  in  the  case  of  a  partner  by  estoppel.  He 
has  no  property  interest,  and,  therefore,  no  right  to  ex- 
ert, as  proprietor,  any  control  over  the  firm  assets,  yet 
the  holding  out  creates  liability  as  a  partner,  and  gives 
the  party  held  out  the  partner' s'equity  for  relief  from  the 
liability  imposed  upon  him  by  law.** 

a.     Bitter  v.  Rathman,  §69,  n.  19. 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

The  equity  is  equally  available  for  the  creditors  of  the 
partner  by  estoppel. '' 
b.     Buffalo  City  Bauk  v.  Howai-d,  ^  69,  n.  19. 

5.  The  sale  of  a  partner's  share  was  held  to  bar  his 
equity.  His  right  to  have  the  assets  applied  to  the 
firm  debts  passed  as  an  incident  to  the  property  as- 
signed, as  if  a  privilege  of  the  debtor  alone,  in  which 
the  beneficiaries  had  no  concern.  But,  in  the  language 
of  Judge  Sharswood,  "the  equity  of  a  partner  is  solely 
"grounded  on  his  liability  for  the  debts,  which  con- 
"tinue  after  his  interest  is  devested,  and  is  not  trans- 
"  ferred  to  his  vendee.  As  the  liability  of  the  partners 
"  to  answer  personally  for  all  the  debts  of  the  firm  is 
"not  extinguished  by  a  sale  or  devesture  of  his  interest, 
"so  neither  is  his  equity,  which  depends  upon  it."* 
The  titles  of  the  partners  were  regarded  as  several,  and 
an  owner  may  dispose  of  his  own  without  let  or  hind- 
rance. But,  unless  a  full  equivalent  is  paid,  the  stock 
is  given  away,  and  by  being  subjedled  to  the  purchaser's 
separate  debts,  is  taken  from  the  firm  creditors.  If  he 
agrees  to  pay  the  joint  debts,  they  should  be  a  lien, 
which,  being  founded  upon  the  seller's  liability,  and  in 
ease  of  it,  should  entitle  the  creditors  to  insist  upon  the 
application  of  the  stock  to  the  firm  debts.  This  should 
be  implied  without  an  indemnity.^  The  joint  creditor, 
it  is  sometimes  said,  has  no  lien,  even  in  equity,  to  pre- 
vent the  alienation  until  he  obtains  judgment,  nor  upoi\ 
personalty,  until  execution.'^  This  is  a  technical  view. 
The  joint  creditors  are  entitled  to  the  fund  by  the  exclu> 
sion  of  the  separate  creditors  and  by  the  partner's  equity, 
which  appropriates  the  assets  to  the  firm  creditors. '^ 

a.  Breuton  v.  Thompson,  ?  103,  n.  2,  a. 

b.  Joint  assets  charged  with  firm  debts  until  they  are  satisfied.  A 
claimed  exemption.  The  only  evidence  of  separate  ownership  was  his 
attorney's  testimony  that  firm  of  A  &  Co.  had  dissolved  and  divided 
the  stock.  Firm  creditors  attached  the  property.  State  ex  ret.  A 
issued  mandamus  against  B,  the  constable,  to  set  apart  the  property 
claimed  to  be  exempt. — Dismissed.  Assets  remain  charged  with  firm 
debts.     Till's  case,  2  Neb.  261   (1874). 

C.  Separate  judgment  creditor  takes  balatice  raised  by  joint  execution, 
and  joint  creditor,  zcithout  judgment,  no  standing  to  prevent  it.  B 
&  C  gave  a  chattel  mortgage  on  their  stock,  as  partners,  to  D.  A 
brought  suit,  as  a  firm  creditor.  B  confessed  judgment  to  E,  an  in- 
dividual creditor,  who  levied  on  the  firm  stock.  D  foreclosed,  and 
after  his  debt  was  paid  out  of  the  proceeds  of  a  sale,  ^670  remained  in 
the  sheriff's  hands  for  distribution.     A  enjoined  sheriff  from  paying 

339 


^j^  I'iRM    Propkrtv.  Pt.  2,  Cn.  6. 

jj Injunclioii  ilissolvcii.       A  luwl  no    standini^,   until  he  ohlaiucd 

iudK>"«-"«>t.  *^veii  to  prevent  firm  from  conveyinj^in  fraud  of  creditors; 
no  (inasi-l'ien  on  firm  i)ropertv  against  cither  partners  or  individual 
crtHlitor.    MittniKht  v.  vSmith,  2  C.  Iv.  G.  259,  N.  J.  (1865). 

jsj^jTK—IIow  could  specific  property  pass  by  execution  against  a 
partner's  interest.  The  I'ojo  represented  the  interests  of  both  part- 
ners. Half,  or  J;vvS.  vould  not  be  separate  estate,  because  account 
necessary  of  all  items,  in  order  to  strike  an  ultimate  balance. 

(.'nu-nil/irm  creditor  no  stamiiug  to  prevent  execution  by  indiviclnal 
judiimentcreditors  upon  Jinn  assets.  Individual  creditors  obtained 
judgments,  and  took  the  firm  assets  of  B  &  C  in  execution.  A  claimed, 
as  a  joint  creditor,  distribution  anu)ng  the  firm  creditors,  and  de- 
man(led  an  injunciion. — Refu.sed.  No  slaudiug,  ^vithout  an  execu- 
tion, which  bound  the  assets  at  law.  Young  v.  I'rier,  1  Stock,  465, 
NJ-  ('^53^  overruling  Blackwell  v.  Rankin,  3  Hal.  Ch.  152. 

/■'inn  creditor  teit/iout  j/ti(i;>nent  no  lien  on  stock.  B  gave  use  of 
his  saw-mill  to  firm  of  B  ^:  C,  for  ten  years.  The  mill  and  improve- 
ments, erected  with  funds  furnished  the  firm  by  A,  constituted  its 
sole  capital.  .\t  end  of  four  years,  B  assigned  for  his  separate  cred- 
itors. Assignee  sohl  premises  to  I),  but  B  remained  in  possession. 
A,  without  judgment,  demanded  a  receiver,  and  application  of  pro- 
cee<ls  of  unexpired  term  to  firm  debts. — A  no  standing  to  prevent 
disposition  made  by  B  with  C's  consent.  Greenwood  v.  Brodhead,  6 
Barb.  593,  N.  Y.  (iSso)- 
d.  CvinvAi.ADKR,  J  :  "  Where  joint  creditors  have  a  beneficial  recourse 
"to joint  assets,  it  matters  little,  to  practical  intents,  whether  they 
■'have  such  recourse  through  a  distinct  right  of  their  own,  or  derive 
■■  the  right  through  an  equity  of  a  i)artueror  partners,  or  acquire  it  as 
"  a  consequence  of  the  necessary  exclusion  of  the  separate  creditors. 
"The  rule  of  distribution  is  practically  the  same  in  whatever  form  of 
"words  the  proposition  mav  be  stated."  Potter  v.  Magee,  Pamphlet, 
p.  21,  r.  vS.  C.  C.  (1S78). 

The  notion  tliat  the  partner  had  relinquished  his 
equity,  and  that  it  pa.ssed  with  the  conve)ance,  which 
botnid  him,  led  to  the  conclusion  that  he  retained  no 
right  wl^ich  his  creditors  conld  enforce.  They  must, 
therefore,  make  out  a  cause  of  adlion  independently  of 
their  debtor.  The  outstanding^  liabilit)-,  however,  is 
the  ground  of  his  equity,  and  until  the  debts  are  satis- 
fied he  is  entitled  to  exert  his  control  over  them  for  the 
purpose  of  liquidation.  The  joint  creditors  are  subro- 
gated to  his  rights,  and  may  enforce  them.'' 

r.  Ccneral  creditor  of  insolvent  firm  mav  enjoin  separate  execution 
creditor  from  seiziniT  Jinn  assets.  B  cSiC  confessed  judgments  to 
their  firm  creditors,  and  each  partner  also  confessed  judgments  to  his 
separate  creditors.  Executions  were  issued  on  the  separate  judg- 
ments, ami  the  sheriff  levied  on  the  firm  stock.  A,  who,  though 
without  a  judgment,  was  a  firm  creditor,  averred  insolvency  of  the 
firm,  and  enjoined  the  sherifiF.— Injunction  maintained.  A  joint 
creditor,  though  without  judgment  or  execution,  has  an  e(]uitable 
lien,  which  entitles  him  to  iircveut  separate  execution  creditors  from 
sej/.mg  firm  projierty.  Thev  can  take  only  the  interest  of  the  .sepa- 
rate partners,  and  the  firm  being  insolvent,  they  have  nothing. 
Blackwell  v.  Rankin,  3  Hal.  Ch.  152,  N.  J.  (1S48). 


Pt.  2,  Ch.  6.  Firm    Property.  §io6. 

If  the  business  is  continued,  the  right  is  also  contin- 
ued, except  so  far  as  it  interferes  with  the  rights  of 
creditors  of  the  new  finn/ 

f.  Lien  of  deceased  partner' s  representatives  limited  to  old  firm  stock, 
if  they  consent  to  continuance  by  surviving  partners.  B  &  C,  inauu- 
facflurers.  B  died,  and  his  widow,  D,  became  administratrix.  C  died, 
and  his  widow,  E,  appointed  administratrix.  Children  of  B  &  C  con- 
tinued business,  with  administratrix'  consent,  for  eight  years,  when 
firm  became  a  corporation.  Upon  its  assignment  for  creditors,  D  and 
E  claimed  a  lien  in  preference  to  creditors. — Disallowed.  Lieu  re- 
stri(5led  to  old  stock,  and  continuing  partners,  in  favor  of  creditors  of 
new  firm.  Hoyt  v.  Sprague,  103  U.  S.  613  (1880).  The  lien  enures  to 
the  creditors  of  original  firm.  "Lord  Eldon  said:  'In  the  case  of 
"  death,  it  is  the  equity  of  the  deceased  partner  that  enables  the  cred- 
"itors  to  bring  forward  the  distribution.'  11  Ves.  6.  If  the  surviving 
"partners  form  a  new  partnership  with  other  persons,  the  joint  credit- 
' '  ors  of  the  old  firm  can  follow  the  assets  of  that  firm,  in  order  to  make 
"such  assets  (including  the  deceased  partner's  interest)  liable  for  the 
"  debts  of  the  old  firm,  so  far  as  this  can  be  done  without  a  disturbance 
"■^  oi  bona  fide  rights  of  creditors  of  the  new  partnership,  and  of  other 
"  persons.  Lord  Rosslyn  said  that  the  complainants  in  a  bill  for  this 
"purpose,  'are  creditors  upon  the  effecfts  of  the  old  partnership,  not 
"upon  the  efFedls  of  the  new  partnership.'  Daniel  v.  Cross,  3  Ves. 
"277;"  Cadwal.\dhr,  J.,  in  Potter  V.  Magee,  p.  22,  supra. 

6.  /deceased  partner's  equity,  efi/orced  by  the  joint  creditors,  is  limited 
to  applying-  assets  to  payment  of  firm  debts,  and  not  extended  to  pre- 
vent preferences  among  firm  creditors.  B,  C  &  D,  partners.  B  died, 
December,  1828,  aiid  E  appointed  administrator.  Firm  continued 
business  until  January,  1829,  when  it  became  insolvent.  D,  without 
consulting  C  or  E,  assigned  for  preferred  creditors,  to  F.  A  et  at., 
firm  creditors,  brought  bill  to  avoid  assignment. — Dismissed.  Sur- 
viving partner  may  prefer,  "but  deceased  partner's  representative," 
said  Walworth,  Chancellor,  "has  the  right  to  insist  that  the  part- 
"  nership  effects  shall  be  applied  to  the  payment  of  the  debts  of  the 
"firm,  as  the  separate  estate  of  decedent  may  eventuall}^  be  made 
"liable  for  any  deficiency."  Egberts  v.  Wood,  3  Paige  Ch.  517,  N.  Y. 
(1832). 

7.  Equity  not  a  property  right  which  passes  with  the  stock.  A  sold 
out  to  B,  who  took  the  joint  stock  to  pay  the  firm  debts  and  indem- 
nify A  against  them.  B  became  insolvent,  and  threatened  to  appro- 
priate assets  to  his  own  use.  A  brought  injuudtion.  B  demurred. — 
Demurrer  overruled  and  decree.  Walworth,  Ch. :  "It  is  a  well - 
"settled  principle  of  equity  that  the  creditors  of  a  partnership  concern 
"have  an  equitable  right  to  payment  out  of  the  partnership  effedls  in 
"preference  to  the  individual  partners."  Deveau  v.  Fowler,  2  Paige 
Ch.  400,  N.  Y.  (1S31). 

The  deceased  partner's  estate  is  liable  in  the  first  in- 
stance,'^ and  the  equity  springs  from  the  liability. 

In  Pennsylvania  the  liability  extends  to  a  debt  due  by 
the  deceased  partner  to  his  co-partner.*^ 

a.     Brewster  v.  Sterrett,  \  88,  u.  2. 

Deceased  parttier's  estate  liable  for  firm  debts.  B  &  C  partners, 
dealt  in  real  estate.     C  left  all  his  property  to  D,  his  executor.     After 

341 


§io6.  Firm    Propp:rty.  Pt.  2,  Ch.  6. 

cxi'fvnioiis  ;iiiil  altachineiits  had  issued  against  the  firm  estate,  B  as- 
sijs'iifil  it  for  creditors  to  A,  who  brought  bill  to  enjoin  creditors,  and 
to  compel  D  to  convey  him  the  legal  title.— Decree.  Shanks  v.  Klein, 
14  Otto  18(1881). 

b.  Finn  creditors  may  colleB  balance  due  by  deceased  partner  to  co- 
partner. The  assignee  for  creditors  of  the  sur\iving  jjartner  claimed 
on  l)chalf  of  the  joint  creditors  against  the  administrators  of  the  de- 
cease<l  partner  for  the  amount  he  owed  the  firm,  116,790.13.  The 
surviving  partner  was  also  indebted  to  the  firm,  |ii, 204.68.  Both 
were  insolvent,  as  well  as  the  firm. — The  debt  of  the  partner  to  the 
firm,  is  a  finn  asset,  for  which  he  must  account  to  his  co-partner, 
who  would  first  dedudl  his  own  debt  to  the  firm,  and  claim  one-half, 
|2,792.72>2.  The  balance  of  1^5,585.45,  is  due  to  him  on  account  of 
bis  share  of  the  firm  assets.  AlcCormick's  Appeal,  5  Sm.  252,  Pa. 
(1866). 

8.  Joint  execution  any  time  before  sale,  cuts  out  separate  executions. 
Separate  executions  were  issued  against  both  A  and  B,  and  subse- 
quently an  execution  against  the  firm  A  &  B  was  lodged  with  the 
sheriff,  who,  in  doubt  how  to  sell,  took  an  agreement  from  counsel 
that  the  sales  should  be  lumped,  and  the  proceeds  divided  as  if  the 
sales  had  been  made  according  to  law. — ^Joint  execution  bound  each 
partner's  equity,  and  a  sale  or  transfer  could  not  release  the  lien. 
Change  of  title  must  be  before  lien  attached.  Sheriff  was  boimd  to 
make  lien  effedlive  by  a  sale,  first,  on  the  joint  execution.  That  is  a 
lien  on  the  chattels;  the  separate  executions,  on  the  surplus  after 
payment  of  firm  debts.     Coover's  Appeal,  5  Casey  9  (1S57). 

What  gives  the  court  authority  to  make  distribution 
upon  joint  and  separate  executions?  Inconsistent  re- 
turns by  the  sheriff,  who  says  he  made  the  money  on 
both  writs.  The  court  has  to  ascertain  how  he  might 
have  sold  under  the  writs  put  in  his  hands,  and  then 
presumes  that  he  did  his  duty,  or  what  the  law  pre- 
scribes as  the  course  for  realizing  under  the  different 
classes  of  writs.'' 

a.  If  sale  on  joint  and  sepai-ate  executions,  proceeds  go  first  to  firm 
creditors.  A  issued  execution  against  C,  and  E  issued  execiition 
agam.st  C  &  D.  Subsequently  B  issued  joint  execution.  Sheriff  re- 
turned that  he  had  sold  property  of  C  &  D  on  all  the  writs.  A  claimed 
payment,  in  preference  to  B,  out  of  proceeds. —Judgment  for  B.  A 
no  niterest  until  firm  creditors  paid.  King's  Appeal,  9  Barr  124,  Pa. 
(1848). 

How  did  the  courts  arrive  at  the  conclusion  that  the 
separate  executions  made  any  part  of  the  fund?  The 
joint  executions  would  be  first  in  order,  no  matter  when 
they  reached  the  .sheriff's  hands,  for  until  a  sale  the  title 
would  be  subjecl  to  seizure,  and  the  firm  execution  would 
take  the  specific  property.  Instead  of  saying,  however, 
tliat  the  whole  fund  was  raised  by  the  paramount  writ, 
and  leaving  the  money  in  the  sheriff's  hands  for  other 
hnn  creditors,  the  court  said,  that  as  the  sheriff  returned 

342 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

a  sale  on  all  the  writs,  the  balance,  after  satisfying  the 
joint  executions,  was  raised  by  the  separate  executions.'' 

b.  Sale  on  joint  and  separate  writs  entitles  separate  creditor  to  smpltis 
after  payment  of  joint  executioti.  B  issued  joint  execution  against 
C  &  B,  for  |2oo.  E  issued  separate  execution  against  C  for  1233. 
Constable  levied  on  firm  stock  under  both  writs,  and  sold  for  I400. 
Before  sale,  D  notified  constable  not  to  pay  over  to  E  any  surplus 
which  should  be  left  after  payment  of  B's  claim,  because  the  firm  had 
assigned  surplus  to  joint  creditor  A.  Constable  paid  surplus  to  C,  and 
A  sued  constable. — Judgment  for  defendant.  Roop  v.  Rogers,  5  Watts 
193,  Pa.  (1836). 

If  a  separate  creditor  levied  on  the  firm  stock,  which 
was  insufficient  to  pay  the  joint  debts,  could  he  be  en- 
joined from  selling?  He  would  be  enjoined  if  nothing 
would  remain  over  and  above  the  debts,  the  separate 
creditors  would  get  nothing  by  the  sale.'' 

c.  Firm  creditors  enforce  partner's  equity,  and  confine  separate  cred- 
itors to  balance  left  after  firm  debts  are  paid.  B,  C  &  I),  traded  as 
B  &  Co.  E  and  others,  separate  creditors,  attached  the  firm  stock 
for  an  aggregate  indebtedness  of  ^2,452.23.  A,  who  had  subsequently 
attached  the  stock,  brought  a  bill  to  enjoin  sheriff  and  for  payment  of 
a  firm  debt  for  11,328.77. — Decree.  "  It  follows,"  said  Redfield,  J., 
"from  the  admitted  fa6l  that  a  partner's  interest  is  only  his  share  of 
' '  the  surplus  after  all  partnership  debts  are  satisfied,  that  while  a  part- 
"nership  creditor  may  sell  the  entire  interest  in  all  the  tangible  prop- 
"  erty  of  the  firm,  the  creditors  of  the  separate  partner  can  sell  only 
"the  interest  of  that  partner,  which  may  be  something,  or  nothing,  as 
■'the  concern  shall  prove  solvent,  or  insolvent,  on  a  final  settlement 
"of  all  its  concerns.  So  that  in  this  way  the  entire  property  of  the 
"partnership  might  be  sold  upon  execution  against  each  separate 
"  partner,  and  still  nothing  accrue  to  any  of  the  purchasers,  since  all 
"must  purchase  subject  to  the  claims  of  all  the  joint  claims.  This, 
"then,  being  the  rule,  it  is  useless  to  attempt  to  exclude  the  prefer- 
"ence  of  joint  creditors,  since  every  sale,  upon  a  separate  execution, 
"  ;««5/ <5»^  w^at/^  subject  to  their  claims,  *  no  rule  of  English  juris- 
" prudence  is  better  settled." 

"  Unless,  then,  we  are  prepared  to  put  the  law  of  the  State  upon  a 
"different  basis  from  the  law  of  any  other  State,  almost,  upon  this 
"subject,  we  must  recognize  the  right  of  these  partnership  creditors 
"  to  be  first  paid.  It  is  true,  that  they  prevail  here  over  the  separate 
"creditors  by  virtue  of  a  lien,  which  each  partner  is  supposed  to 
"  have,  by  implied  contract  upon  all  the  partnership  effecfts,  until  all 
"  the  partnership  debts  are  paid.  This  gives  him  an  equity  prior  to 
"  that  of  the  separate  creditors;  and  it  is  only  by  calling  this  equity 
"  to  their  aid,  that  the  partnership  creditors  are  enabled  to  maintain 
"their  claims  in  this  case.  But  this  is  not  a  new  principle  in  equity, 
"for  one  man  to  prevail  in  a  suit,  not  by  his  own  superior  equity, 
"but  in  consequence  of  that  which  resides  primarily  in  some 
"third  party,  who  is,  indeed,  generally  a  necessary  party  to  the  bill. 
"This  is  the  case  where  a  creditor  claims  to  have  the  benefit  of  se- 
"  curities  put  in  the  hands  of  his  debtor  by  some  other  debtor,  the 
"  two  debtors  standing,  perhaps,  in  the  same  relation  to  the  creditor, 
"but  one  being  principal  and  the  other  surety  as  between  them- 
"  selves.     So,  too,  in  all  cases  where  one  holds  funds,  which  are  ulti- 


§io6.  Firm   Property.  Pt.  2,  Ch.  6. 

•  malflv  to  ^o  ill  a  particular  channel,  equity  will  interfere  on  behalf 
"of  the  i)arly  ultimately  to  be  benefitted  by  such  appropriation,  not- 
"  withstandinji  he  may  not  be  a  party  to  the  original  transadlion. 
"This  is  ahva\s  more  or  less  the  case,  when  a  court  of  equity  inter- 
"  feres  in  marshalling  assets." 

'•  It  is  upon  this  very  principle  of  the  law  of  partnership,  that  each 
"partner  is  Iwund  for  the  whole  debt  oi  the  partnership,  and  so,  as 
"to  the  share  of  the  other  partners,  is  virtually  a  surety,  that  a  court 
"of  equitv  will  suffer  one  partner  to  maintain  a  lien  upon  the  co- 
"  partnership  property,  until  he  is  released  from  such  suretyship, 
"when  all  the  debts  of  the  firm  are  paid.  Nor  is  there  anything 
"singular  in  enabling  partnership  creditors  to  enforce  this  lien, 
"which  is  thus  created  upon  the  partnership  funds  in  favor  of  the 
"creditors  of  the  partnership,  although  not  created  principally  for 
"their  benefit,  but  for  the  security  of  the  other  partners.  This  is 
"but  carrying  out  the  most  familiar  principles  of  the  law  of  principal 
"and  surety,  as  well  between  themselves,  as  between  each  and  their 
"common  creditor.  Authorities  might  be  multiplied  upon  this 
"point  both  in  England  and  this  country."  Washburn  v.  Bank  of 
Bellow's  Falls,  19  Vt.  278  (1S47). 

The  principle  alluded  to  by  Judge  Re;dfiei<d  is  called  the  dodlrine 
oi  c.\  parte  Waring:  "The  Rule  ex  Parte  Waring,"  by  Arthur 
Clement  Eddis,  B.  A.,  Barrister  at  Law:  1876. 

The  Court,  in  other  instances,  has  assumed  the  task 
of  distributing  a  fund  among  all  the  creditors  entitled, 
although  by  virtue  of  no  writ,  except  the  one  under 
which  the  sale  was  made.*^  In  the  absence  of  an  in- 
solvent court  on  adverse  process,  a  distribution  should 
be  made  by  the  Common  Pleas.  The  balance  could  be 
retained  for  other  firm  creditors,  who  are  entitled  to  the 
proceeds,  and  not  handed  over  to  separate  creditors,  who 
are  entitled  to  nothing  until  the  joint  creditors  are  paid 
in  full. 

d.     Court  marshals  assets  not  only  among  execution   creditors,    but 
among  all  creditors.     B,  who  had  a  simple  contracft  claim  against  C, 
deceased,  obtained  judgment  against  his  administrator  D,  and  en- 
tering it  de  terris,  sold  lands  which  belonged  to  C's  estate.     A  had  a 
specialty  claim,  for  which  he  demanded  payment  to  the  exclusion  of 
B. — Decree  for  A.     Administrator  guilty  of  devastavit,  if  he  permits 
execution  to  be  levied  out  of  personal   property,  to  the  prejudice  of 
])rcferred  claimants.     But  he  could  not  prevent  "the  judgment  credit- 
ors from  taking  the  land.     The  courts,  however,  will  not  permit  the.  I 
proceeds  to  be  distributed  until  notice  has  been  given,  in  order  tori| 
enable  those  who  have  preferred  claims  to  come  in   and  be  paid.*^ 
The  Agricultural  &  Mfrs.   Bank  v.  Stambaugh,    13  S.  &  R.  299,   Pa. 
(1825). 

Penalty  0/ official  bond  distributed  pro  rata  among  creditors  without 
reference  to  date  of  execution.     B,  administrator,  "gave  official  bond,  ' 
for  ?2o,ooo,  to  Commonwealth.    A  recovered  judgment  for  penal  sum, 
and  his  claim  was  liquidated  at  |7, 162.75.    The  claims  against  admin-l 
istrator  exceeded  $20,000. — A  entitled  only  \.opro  rata,  and  court  con-fe  j 
trolled  executions.     Wetherill  v.  Commonwealth,  17  W.  N.   104,  Pa.l| 
(1885J.  ■ 

344 


Pt.  2,  Ch.  6.  Firm   Property.  §io6. 

If  the  sheriff  makes  a  return  that  he  has  made  the 
money  on  a  particular  writ,  can  the  court  marshal  the 
fund  among  other  execution  creditors?  The  return 
cannot  be  contradidled.  A  levy  on  a  partner's  interest 
was  cut  out  by  a  firm  execution,  although  there  was  no 
firm,  and  the  defendant  in  the  execution  owned  the 
property.® 

e.  Sheriff's  return  of  property  sold  on  a  partiailar  writ  conclusive.  A, 
an  individual  judgment  creditor  of  B,  issued,/?,  yh:.  against  him,  and 
to  this  writ  the  sheriff  returned  that  "  he  had  levied  all  the  interest 
of  B  in  the  business  and  property  of  B  &  Sons,  and  subsequently  sold 
said  property  as  that  of  B  &  Sons  under  execution  against  the  firm." 
The  fund  arising  from  the  sale  under  execution  against  the  partner- 
ship, was  referred  to  an  auditor  for  distribution.  Before  him,  A 
claimed  the  amount  of  his  judgment  out  of  the  proceeds,  and  offered 
evidence  to  show  that  no  partnership  existed,  but  that  the  property 
belonged  to  B  alone. — The  auditor  could  not  inquire  into  the  exist- 
ence of  the  partnership,  and  A  was  concluded  by  the  return  to  his 
writ,  and  estopped  from  making  any  claim  to  the  fund.  Bogue's 
Appeal,  2  Norris  loi,  Pa.  (1876). 

How  is  the  fund  marshalled  between  separate  execu- 
tions when  the  sale  is  lumped?  According  to  the  shares 
of  the  respe(5live  partners  defendant.  If  one  is  creditor 
of  his  co-partners,  the  separate  creditor  of  the  creditor 
partner  will  take  the  fund.^ 

f.  Separate  executions  satisfied  according  to  respective  partner"  s  share. 
B  invested  in  the  partnership  of  B  &  C,  over  |;i  7,000  more  than  C. 
On  the  same  day  separate  executions  were  issued  by  A  against  C,  and 
by  D  against  B ;  but  before  sale,  E  issued  execution  against  the  firm. 
Appeal  from  auditor's  distribution  of  proceeds. — E  should  be  paid 
first,  and  then  D  to  exclusion  of  A,  because  B's  advance  in  excess  of 
proceeds  of  sale.     Cooper's  Appeal,  2  Casey  262  Pa.  (1856). 

The  confusion  arising  from  the  sheriff's  seizure  of  the 
firm  stock  for  separate,  as  well  as  for  joint,  claims  was 
obviated  in  Pennsylvania  by  a  statute.^  The  a6l  was 
passed  to  authorize  the  sale  by  ayf.  fa.  of  the  rights, 
claims  or  credits  of  a  firm,  but  the  language  was  com- 
prehensive, and  the  courts  gladly  utilized  it  to  get  rid 
of  the  snarl  introduced  into  the  law  by  Doner  v.  Stauflfer. 
A  special yf.y«.  was  authorized  to  sell  a  partner's  interest 
without  levying  on  the  firm  stock.  If  twojf.  fas.  issue, 
the  first  in  the  Common  law,  and  the  second  in  the  statu- 
tory form,  the  second  will  take  precedence.'^  The  sheriff 
was  not  bound  to  execute  the  first,  but  if  he  did,  it  was 
only  in  subordination  to  the  second.  If  neither  writ 
is  in  the  statutory  form,  the  writ  which  effe6led  the  sale 
and  made  the  money  will  take  the  proceeds,  although 

345 


5io6.  Firm   Property.  Pt.  2,  Ch.  6. 

execution  liad  been  levied  under  the  earlier  writ.     No 
lieu  is  acquired  by  an  execution  in  the  discarded  form.' 

g.     S  April,  1S73,  P.  L.  65. 

h.  Sfxrcittl  Ji./a.  under  A^,  /S73,  to  sell  partner's  interest  in  a  firm, 
necfssary  to  holdshcr.jf  or  create  a  lien.  A  obtained  judgment  against 
B  <•/<;/.,  9  June,  1875,  md  issued y?.ya.  to  I),  the  sheriff,  on  that  date. 
On  gjulv,  1.S75,  K  obtained  judgment  against  B  et  al.,  and,  14  July, 
i,S75.  issued  afi.  fa.  to  1),  which  direcfled  him  to  levy  upon  B's  inter- 
est in  firms  of  I'  &  Co.  and  G  &  Co.,  each  having  its  chief  place  of 
business  in  the  county.  D  sold  B's  interest  on  it's fi. /a.,  and  paid 
the  i)roceeds  into  court,  which  awarded  them  to  E,  and  the  S.  C. 
artinned  the  award.  A  then  sued  D.— Judgment  for  D.  Sheriff  not 
bound  to  levy  on  B's  partnership  interests  until  he  received  a  special 
fi.fii.  under  S  April,  1873,  P.  L.  05,  and  could  not  do  it  or  appropriate 
the  jjroceeds  of  a  sale  on  E's  execution.  Hare  v.  Commonwealth,  11 
Norris  141  (1875). 

I.  If  neither  execution  for  sale  of  partfier's  interest  in  a  firm  follows 
requirement  of  8  April,  iSjj,  proceeds  go  to  the  writ  which  raised 
them  by  a  sale.  A's  fi.  fa.  was  levied  in  August,  1878;  B's  als.fi.  fa. 
was  levied  in  September,  and  partnership  interest  of  D  in  D  &  Co. 
sold  30  September,  1878,  for  |8oo.  A  issued,  28  September,  1878, 
vend,  e.x-.,  and  E,  sheriff,  returned,  in  Ocftober,  that  he  had  sold  on 
A's  writ,  and  he  paid  the  proceeds  into  court,  which  awarded  them 
to  A. — Reversed.  Neither  execution  complied  with  the  statutory 
requirement.  A's  execution,  therefore,  created  no  lien,  and  the  sale 
was  not  made  on  A's  writ,  because  it  had  been  returned,  and  z'end.  ex. 
issued  two  days  before  the  sale  was  made.  The  proceeds  belong  to  B, 
as  the  sale  was  made  on  his  writ.   Kain's  Appeal,  11  Norris  276  (1879). 

May  a  partner  di.spo.se  of  his  title  by  anticipation, 
and  retain  no  share  of  the  partnership  stock,  so  that 
the  separate  execution  against  the  capitalist  partner 
would  cut  out  the  firm  execution?  It  was  so  held,  while 
the  stock  remained  unchano-ed,Jbut  any  sales  and  replen- 
isliint^  would  be  on  joint  credit,  and  convert  the  stock 
into  partnership  property. '^ 

/      York  Co.  Bank's  Appeal,  ^,  25,  u.  3. 

/•      Walter's  Appeal,  ?  25,  u.  5. 

9.  Would  execution  on  a  judgment  confessed  by  a  firm 
for  a  partner's  separate  debt  cut  out  a  subsequent  joint 
execution  for  a  firm  debt?  The  firm  owns  its  assets, 
and  may  di.spose  of  them  as  it  likes.  Even  its  promise 
to  pay  a  separate  execution  devotes  the  joint  assets  to 
the  separate  claim  in  preference  to  a  joint  execution." 

Why  could  this  not  be  done  if  pavment  of  the  sepa- 
rate execution  would  render  the  firm  insolvent?  The 
payment  of  a  partner's  individual  debt  is  no  consid- 
eration to  the  firm,  and  is  a  gift  which  can  be  made 
only  when  sufficient  property  is  left  to  pay  all  the  firm 

346 


Pt.  2,  Ch.  6.  Firm  Property.  §io6. 

debts. ^  Does  the  title  pass?  The  title  passes,  because 
the  firm  is  bound  by  its  own  a6l,  although  a  fraud  upon 
its  creditors,  and  they  are  the  only  ones  who  can  take 
advantage  of  the  fraud  to  impeach  the  transfer.  Could 
an  assignee  for  creditors  set  aside  the  fraudulent  dispo- 
sition? It  was  held  not,*^  though  the  reason  was  defec- 
tive, and  no  longer  obtains.*^ 

a.  Co7ifessed  jiidg-inent  by  firm,  when  insolvent,  for  separate  debt  of 
partner  cuts  out  firm  creditors.  A  lent  B,  partner  of  C,  |2,2oo,  and 
loan  remained  B's  individual  debt  for  5  years.  Then  B  &  C  confessed 
judgment  to  A  for  the  debt.  A  year  afterwards,  the  firm  failed.  A 
feigned  issue  to  try  title  to  proceeds  of  firm  assets  between  A  and  firm 
creditors. — Judgment  for  A.  The  firm  creditors  had  no  standing  to 
impeach  the  transaction,  because  they  derived  all  the  right  they  had 
from  the  partners,  who  made  the  change.  The  insolvency  of  the  firm 
did  not  affecft  the  validity  of  the  substitution,  because  the  partners 
could  prefer  creditors,  and  therefore  create  or  pay  debts  up  to  the  date 
when  insolvency  was  declared.  Siegel  v.  Chidsey,  4  Cas.  279,  Pa. 
(1857). 

Agreemejit  to  appr-opriate  firm  assets  to  separate  debt  gives  it  pre- 
cedence over  subseqiient  execiition  againstfirm.  D  obtained  judgment 
against  B,  and  issued  execution  against  B's  interest  in  B  &  C.  C 
promised  to  pay  the  amount  of  execution  thus  levied  on  firm  effedls, 
if  sheriff  would  forbear.  Ket  at.,  firm  creditors,  levied  on  stock,  and, 
upon  distribution  of  proceeds,  claimed  priority. — Judgment  for  D. 
Promise  by  C  gave  separate  debt  a  preference  over  subsequent  levy 
for  the  obligation  contradled  by  the  firm.  The  promise  was  treated 
as  an  agreement  to  devote  the  joint  property  to  the  separate  debt. 
Snodgrass'  Appeal,  i  Harris  471  (1850). 

b.  Insolvent  firm  can'' t  pay  separate  debt  with  joint  stock.  A  was  cred- 
itor of  B  &  C,  succeeded  by  B,  C  &  D,  who,  when  insolvent,  deliv- 
ered goods  to  A,  in  satisfaction  of  his  claim.  Evidence  that  D  also 
was  indebted  to  A.  Creditors  of  B,  C  &  D  seized  and  sold  the  goods 
in  A's  possession.  A  sued  sheriff. — Court  charged  that  unless  jury 
found  a  debt  from  D,  the  payment  was  fraudulent,  not  because  of  pre- 
ference, but  because  an  insolvent  firm  cannot  pay  separate  debts  of 
one  partner  with  joint  stock.  Walsh  v.  Kellv,  42  Barb.  98 ;  s.  c.  27 
How.  Pr.  559  N.  Y.  (1864). 

Under  agreement  for  indemnity,  creditors  of  old  firm  co-ordinated 
with  creditors  of  nezu.  Partners  may  pay  separate  debts  with  firm 
property  only  in  proportion  to  their  shares.  C  &  D  bought  out  B, 
and  agreed  to  pay  the  firm  debts.  Three  months  later,  C  &  D  failed, 
and  having  unequal  shares  in  the  firm  stoek,  assigned  to  E  to  pay  (i) 
debts  of  C  &  D,  and  (2)  their  separate  debts,  without  reference  to 
partner's  quotas.  A,  though  creditor  of  old  firm,  claimed,  by  virtue 
of  agreement  with  B,  to  be  a  creditor  of  new  firm,  and  brought  bill 
to  set  aside  assignment. — Could  not  objedl  to  preference  of  creditors 
of  new  firm,  but  distribution  of  stock  among  separate  creditors  of  C 
&  D,  without  reference  to  partner's  share,  avoided  the  assignment. 
Smith  v.  Howard,  20  How.  Pr.  121  N.  Y.  (1859). 

Assignment  by  continuing  firm  for  separate  and  prior  firm  debts, 
which  it  assumed,  and  for  partner's  administration  funds,  which  it 
used,  is  not  fraudulent,  unless  110  separate  debts.  B  &  Co.  bought 
out  B  &  C,  and  agreed  to  jjay  the  firm  debts.     B  &  Co.  failed,  and 

347 


Sio;. 


Firm  Property.  Pt.  2,  Ch.  6. 


assiened  to  A.  to  pay  (0  a  creditor  of  B  &  C,  (2)  money  used  by  B  as 
adumiistrator  in  B  cS:  Co.,  (3)  individual  board  bills  assumed  by  B  & 
Co  an<l  (4 )  their  separate  creditors.  The  goods  were  seized  and  sold 
bv  it  N:  Co.'s  creditors,  and  A  sued  them  for  the  price.  Defence: 
VssiLMinieiii  fraudulent,  on  account  of  preference  and  appropriation 
io  separate  debts.— Recovered.  Debts  of  prior  firm  and  of  individual 
partners  became  debts  of  continuing  firm.  Absence  of  separate  debts 
rebutted  presumption  of  fraud.    Turner  v.  Jaycox,  40  N.  Y.  470  (1869). 

c.  ^Issi^nce,  agent  0/ assignor,  not  of  creditors.  B  took  all  efFedls  of 
finn,  \\  &.  C,  and  agreed  to  pay  its  debts.  He  subsequently  formed  a 
limited  partnership  with  two  other  persons,  in  which  he  was  the  gen- 
eral partner.  He  then  transferred  certain  demands  of  B  &  C  to  A, 
as  security  for  private  debt,  and  on  same  day  made  a  general  assign- 
ment for  benefit  of  his  creditors  to  D.  Suit  was  brought  by  A  to 
recover  money  coUedled  by  D  on  claims  assigned  to  A  by  B. — The 
appropriation  to  A  was  valid  as  to  creditors  of  B  &  C,  though  the 
special  partners  or  the  creditors  of  the  limited  partnership  might  set 
it  aside,  because  the  assignment  is  made  void  by  statute.  The  as- 
signees for  creditors  stand  in  the  shoes  of  the  assignor,  and  cannot 
impeach  his  transacflion.  Bullitt  v.  M.  E.  Church,  2  Casey  108,  Pa, 
(1856). 

d.  Amsink  v.  Bean,  supra  n.  2,  b. 


U07. 


^hc  boctrine  of  bestination,  as  applieb  to  partncrsl)ip,  is  an 
outiirouitl)  of  tl)c  partner's  ioint  tenancn  for  rDl)ul)  it  is  tt)e  wtxi 
cquitn  cquinalcnt. 

In  the  application  of  this  dodrine,  the  destination 
given  to  the  firm  property  originally  by  the  partners 
makes  a  court  administer  it  as  firm  assets,  and  no 
transfer  by  partners  will  release  the  fund  from  the 
joint  debts,  unless  the  firm  was  solvent,  or  an  equiva- 
lent was  received  for  the  assignment  made  in  good 
faith,  and  with  the  intention  to  discharge  the  assets 
of  the  original  liability.  In  a  leading  case,  the  firm 
was  composed  of  four.  One  retired,  and  the  three 
continued  the  business,  with  assets  about  equal  to 
their  liabilities,  excepting  the  large  debt  to  the  retir- 
ing partner.     He  re-entered  the  firm  for  a  year,  stipu- 

348 


Pt.  2,  Ch.  6.  Firm   Property.  §107. 

lating  for  re-payment  of  his  debts,  and  the  balance, 
after  payment  of  other  debts,  to  be  divided  among  his 
co-partners.  This  was,  in  efife(5l,  paying  a  partner 
with  the  firm  assets,  when  the  firm  could  not  pay  its 
creditors.  He  was  held  liable  for  the  amount  with- 
drawn from  the  firm  assets.'  The  right  of  the  credit- 
ors is  derived  from  the  partner's  equity  to  have  the 
good  applied  to  payment  of  firm  debts.  The  assignee 
in  bankruptcy  of  the  firm  could  reclaim  a  payment 
made  by  his  co-partners,  in  fraud  of  creditors."  On 
dissolution,  one  partner  made  over  the  firm  assets  to 
his  co-partner,  who  agreed  to  pay  the  firm  debts,  and 
indemnify  him  against  them.  The  funds  transferred 
enabled  him  to  pay,  and  "Wis personal  obligation  enured 
to  the  creditors  in  addition  to  their  claim  against  the 
firm.  They  might  come  in  upon  his  separate  estate, 
like  his  individual  creditors.''  If  the  firm  stock  is  sold, 
and  the  proceeds  applied  to  a  partner's  individual  debt, 
the  sale  is  void  against  firm  creditors,  and  the  stock  is 
subject  to  their  execution.'*  Unless  the  firm  is  solvent, 
neither  partner  can  make  or  accept  an  assignment  of 
firm  property  for  his  individual  account.'  If  the  trans- 
fer would  make  the  firm  insolvent,  the  assignment  is 
void. 

1.  Potter  V.  Magee,  \  io6,  ii.  2,  a. 

2.  Amsinck  v.  Dean,  \  106,  n.  2,  b. 

3.  In  re  Long,  ?  106,  n.  2,  c. 

When  a  partner  sells  otit,  the  assets  go  to  the  nczu  firvi,  snbje£l  to  the 
prior  firm' s  debts.  A  partner  retired,  and  his  co-partners  continued 
the  business  with  the  firm  assets,  and  assumed  the  debts  of  the  old 
firm,  executing  a  joint  bond  of  indemnit}'. — The  retired  partner's 
liability  continued  ])rimarilv  for  the  old  firm's  debts,  and  he  was  en- 
titled to  subrogation  for  the  debts  which  he  was  compelled  to  pay, 
not  only  against  the  individuals  who  executed  the  bond,  but  against 
the  firm.    Frow,  Jacobs  &  Co.'s  Estate,  23  vSmitli  459,  Pa.  (1873). 

The  contrary  had  been  decided  as  the  law  of  Pennsylvania,  prior 
to  this  decision.  A  firm  of  five  members  was  succeeded  by  three  of 
them,  and  later  by  an  assignment  of  one's  share,  of  two.  Then  the 
two  assigned  all  their  stock  for  the  benefit  of  their  creditors.     The 

349 


§io8. 


Firm   Property. 


Pt.  2,  Ch.  6. 


creditors  of  the  first  two  firms  claimed  a  share  in  the  fund. — Excluded, 
as  their  equities  nnist  be  worked  out  through  the  partner's  lieu,  which 
ha»l  been  renounced.  Limiting  a  partner  to  the  payment  of  the  firm 
debts,  is  his  co-partner's  equity,  but  not  the  creditors,  who  have  no 
lien  on  the  stock.  A  change  of  the  assets  by  the  partners  puts  an  end 
to  the  creditors'  preference.  A  sale  by  a  partner  to  his  co-partner  in 
consideration  of  his  payment  of  the  firm  debts,  is  a.  perso>ial  contraA, 
and  creates  no  lien.  If  the  co-partner  disposes  of  the  assets,  and  does 
not  pay  the  firm  liabilities,  the  preference  of  the  firm  creditors  en- 
grafted on  his  equity  dies  with  its  stock.  Baker's  Appeal,  9  Harris  76, 
I'a.  (i«53i- 

Menagh  v.  Whitwell,  J  103,  n.  4;  Goodbar  v.  Cary,  ?.  106,  n.  i,  d ; 
l-'crson  V.  Monroe,  i  106.  n.  i,  c;  Johnston  v.  Straus,  g  106,  n.  i,  d. 

Parttu-rscautioi  ivithdraw property,  unless  solvent.  B  &  C,  partners 
in  brickmaking,  with  lease  of  a  colliery.  Embarrassed  by  suits,  they 
tried  to  raise  money,  but  failing  to  obtain  credit,  B  assigned  to  C,  who 
ujulertook  to  carrv  on  the  business  and  indemnify  B  against  debts. 
Firm  creditor  brought  bill  to  avoid  assignment. — Decree.  WEST- 
BrKV,  Lord  Ch. :  "Taking  •*  the  principle  of  law  which  is  embodied 
"in  the  Statute  of  Eliz.,  c.  5,  and  applying  that  to  the  transadlion,  I 
"  think  that  it  was  not  competent  for  one  to  make  or  for  the  other  to 
"  accept  an  assignment  of  that  description,  both  of  them  being  insolv- 
"  ent  at  the  time."   Ex  parte  Mayou,  4  DeG.  J.  &  S.  664  (1865). 


§108. 

^lI)c  preference  gicen  to  fTtm  treMtors  can  not  be  aplauui)  on 
anij  tl)eonj  of  crctiit,  nor  bn  anntl]ing  but  ioint  tenancg. 

Leaving  out  of  view  the  historical  fa(5t  that  equity 
simply  supplied  its  process  for  the  ascertainment  of 
a  partner's  share  upon  a  determination >  of  the  joint 
estate/  various  theories  have  been  suggested  to  account 
for  the  course  of  distribution  in  equity.  They  natu- 
rally do  not  go  to  the  source  of  the  change,  and  explain 
the  cause  which  brought  about  the  departure  from  the 
contracT;  .system.  The  notion  of  credit,  that  as  the 
joint  creditors  relied  upon  the  firm  assets,  the  sepa- 
rate creditors  looked  to  the  separate  estate  for  pay- 
ment, is  an  assumption.'  It  contradidls  the  experience 
which  imputes  to  every  man  a  knowledge  of  the  law. 

350 


Pt.  2,  Ch.  6.  Firm   Property.  §io8. 

The  credit  would  depend  upon  the  estate  the  debtor 
had.  The  partners  have  joint  and  separate  estates, 
which  are  both  subject  to  the  firm's  debts.  The  credit 
would,  of  course,  be  given  in  reliance  upon  both 
estates.  The  partner  has  a  resulting  interest  in  the 
firm  after  all  its  debts  are  paid,  and  his  separate  es- 
tate, which  is  also  subje(5l  to  the  firm  debts.  His 
creditor  could  expe6l  nothing  from  the  partner's  share 
until  the  firm  creditors  had  been  satisfied,  and  he  could 
share  only  the  separate  estate  with  them,  unless  in- 
solvency supervened,  which,  under  the  makeshift  rule 
of  convenience,  would  give  him  a  paramount  title  to 
the  separate  fund.  The  credit  given  to  a  debtor  is  not 
the  cause  of  his  estate,  but  a  consequence  of  his  pos- 
sessing the  means  to  pay  the  debt. 

The  Roman  lawyers,  as  might  have  been  antici- 
pated, worked  out  the  equities  of  each  class  of  credit- 
ors without  inconsistency,  and  on  principle.  Their 
starting  point  was  that  the  joint  debts  created  or  in- 
creased the  partnership  fund,  while  the  separate  debts 
formed  or  enlarged  the  individual  partner's  estate. 
From  this  origin  of  the  funds,  an  equity,  it  was  con- 
ceived, arises,  which  appropriates  them,  upon  insol- 
vency, to  the  creditors,  who,  respe6lively,  contributed 
to  create  them.  This  rule  was  sustained  by  analogy 
to  the  law  of  sale.  The  price,  with  the  civilians, 
stood  for  the  merchandise,  and  if  the  consideration 
was  not  paid,  the  property  might  be  reclaimed,  al- 
though the  sale  had  been  completed,  by  delivery  to 
the  buyer.  The  contrail,  though  executed,  was  re- 
scinded by  non-payment.'^  They  followed  the  prop- 
erty, as  equity  lawyers  do  a  trust  fund,  as  long  as  its 
•  identity  could  be  traced.     When  the  property  lost  its 

351 


§io8. 


Firm   Property. 


Pt.  2,  Ch.  6. 


distin(5live  charaAer,  and  became  merged  in  tlie  mass 
of  the  debtor's  estate,  the  creditor  was  entitled  to  an 
equivalent  out  of  the  mass  for  his  property,  which 
could  be  identified  on  account  of  the  debtor's  conver- 
sion of  it  into  something  else.  The  equity  springs 
from  a  recognized  liability.  The  firm  stock  stood  in 
the  place  of  the  thing  sold,  and  the  creditors  whose 
advances  had  increased  the  stock  in  the  place  of  the 
seller.^  No  such  analog}^  exists  at  the  Common  law 
to  explain  this  feature  of  partnership.  The  Civil 
law  theory  of  sale  does  not  prevail  at  the  Common 
law.  The  specific  property  sold  and  delivered  to  the 
buyer  cannot  be  reclaimed  in  any  event.  The  owner- 
sliip  is  vested  in  him  by  the  sale.  Insolvency  does 
not  devest  his  title  to  any  property;  much  less  does 
it  revest  the  debtor's  title  in  the  former  owner.  The 
insolvent,  by  his  inability  to  meet  his  liabilities,  is 
not  the  less,  but  all  the  more,  a  debtor.  He  owes  to 
his  creditors  not  the  property  itself,  nor  any  other 
asset,  but  merely  the  price  of  the  property.  The 
debt  is  personal,  without  any  lien  or  preference  for 
its  payment  out  of  the  debtor's  estate.  The  individ- 
ual partner  is,  however,  not  less  liable  for  a  firm  debt 
than  is  the  firm  itself.  The  several  liability  of  the 
partners  is  no  less  a  constituent  of  the  partnership 
obligation  than  is  their  joint  obligation.  Both  spring 
from  the  root  of  partnership.  The  joint  creditors, 
therefore,  are  entitled,  at  law,  to  share  the  separate 
estate  of  a  partner  with  his  individual  creditors.  The 
firm  creditors  are  not  dependent  upon  any  equity  for 
their  preference  in  the  distribution  of  the  partnership 
assets.  They  have  an  independent  right,  which  arises 
out  of  the  partnership  relation,  and  exists  both  at  law 


352 


Pt.  2,  Ch.  6.  Firm   Property.  5^io8 

and  in  equity.''  Apart  from  the  diredl  liability  of  the 
individual  partner  for  the  debts  of  the  firm,  his  share 
also  is  subjecft  to  them.  No  title  vests  in  him  until 
the  firm  debts  are  paid  in  full.  His  creditors,  who 
stand  in  his  shoes,  so  far  from  being  on  an  equal  foot- 
ing with  the  firm  creditors,  have  no  claim  against  the 
partnership  fund,  so  long  as  a  single  firm  creditor  is 
in  existence.  The  individual  partners,  being  liable 
for  the  firm  debts  not  less  than  for  their  individual 
debts,  may  be  held  by  the  joint  creditors.  The 
only  restri(?tion  which  can  be  put  upon  the  exercise 
of  their  right  by  a  court  of  equity,  is  confining  them 
to  the  joint  fund  in  the  first  instance,  so  as  not  to  de- 
prive the  separate  creditors  of  their  only  fund.*"  If 
the  partnership  assets  are  iiot  sufficient  to  pay  the 
joint  debts,  then  the  firm  creditors  are  entitled  to 
come  in  upon  the  separate  estate.  They  would  share 
it  equally  with  the  separate  creditors.  As  the  sepa- 
rate creditors  never  had  any  claim  upon  the  joint  as- 
sets, they  could  not  ask  any  allowance  out  of  that 
fund,  and,  of  course,  no  account  would  be  taken  of 
what  the  joint  creditors  had  received  from  the  part- 
nership estate.  Both  sets  of  creditors  would  start  as 
equal  claimants  upon  the  separate  fund,  and  be  enti- 
tled to  an  equal  distribution  of  it.  If  the  amount 
which  the  joint  creditors  had  received  from  the  firm 
assets  should  be  dedu(5led  from  their  claims  against 
the  separate  estate,  or  an  equal  amount  allowed  the 
separate  creditors  before  distribution  were  made,  the}^ 
would,  in  fa6l,  share  the  joint  estate  with  the  joint 
creditors.  It  would  not  be  a  division  between  them  in 
the  first  instance,  but  the  moment  the  separate  estate 
is  touched,  the  individual  creditors  assert  the  right  to 

353 


liio8.  Firm   Property.  Pt.  2,  Ch.  6. 

participate  in  the  joint  funds  by  relation.  They  date 
their  claims  back  to  the  distribution  of  the  firm  assets, 
and  make  the  division  not  only  of  them,  but  of  the 
whole  consolidated  fund.  Though  the  participation 
of  the  separate  creditors  in  the  partnership  assets  is 
contingent  upon  the  joint  creditors  coming  in  upon 
the  separate  estate,  it  is  none  the  less  a  sharing,  by 
the  separate  creditors,  of  the  joint  estate.  The  debtor 
pays  his  debt  (in  part)  out  of  his  creditors'  estate. 
The  rule  of  convenience,  as  it  is  called,  established 
in  bankruptcy,  and  followed  in  equity,  runs  counter 
to  the  principle  of  partnership  liability.  At  first,  the 
joint  creditors  could  come  in  upon  the  separate  fund 
onl}'  upon  condition  that  they  surrendered  an  equi- 
valent, if  it  had  been  received  from  the  joint  estate.® 
They  retained,  after  the  repeal  of  their  privilege  to 
resort  to  both  funds,  an  independent  and  exclusive 
right  to  the  firm  assets,  but  they  lost  the  right,  which 
the}'  had  previously  enjoyed  in  addition,  to  resort  to 
the  separate  fund  on  equal  terms  with  the  individual 
creditors.  The  principle  of  this  adjustment  was  that 
each  class  of  creditors  should  be  remanded  to  its  dis- 
tinclive  fund,  because  the  separate  creditors  owned 
the  individual  partner's  estate  by  as  good  a  right  as 
the  joint  creditors  were  entitled  to  the  partnership 
estate.'  The  logic  of  the  change  made  itself  felt,  and 
pracT;ice,  in  due  season,  embodied  the  precept,  by  cre- 
ating a  right  in  the  separate  creditors  to  take  the  sur- 
plus of  the  joint  estate,  after  the  partnership  credit- 
ors had  been  paid  in  full,  in  return  for  their  access  to 
the  separate  estate  after  the  individual  creditors  had  I 
been  satisfied.  The  right  of  the  separate  creditor 
lacks  not  only  the  support  of  a  legal  liability,  which  [ 

354 


Pt.  2,  Ch.  6.  Firm    Property.  §io8. 

comes  in  aid  of  a  joint  creditor  and  upholds  his  right, 
but  the  legal  liability  negatives  any  exclusive  right 
in  the  separate  creditor.  The  joint  creditors  are  co- 
OAAOiers  of  the  separate  estate.  Nevertheless  the  legal 
liability  is  annihilated,  and  the  right  of  the  partner- 
ship creditors  in  the  separate  fund  is  extinguished. 

1.  The  history  of  the  method  adopted  to  proceed  against 
a  debtor-partner's  share  of  the  joint  property  by  execu- 
tion at  law,  and  the  modification  of  the  process  under 
the  influence  of  equity  is  accurately  stated  by  '  F.  F. '  in 
an  article  entitled  :  "The  legal  and  equitable  rights  of 
' '  individual  and  partnership  creditors  ;  with  reference 
"to  the  taking  in  execution  of  partnership  property  for 
"the  debt  of  a  partner,"  published  in  26  American 
Jurist  55  :    1841. 

2.  Potter  V.  Magee,  §  106,  n.  2,  a ;   Washburn  v.  Bank,  ^  106,  n.  8,  c. 

3.  At  the  Roman  law  the  price  was  a  condition  of  the 
sale,  and,  without  payment  of  it,  the  property  did  not 
pass  from  the  seller  to  the  buyer.  Though  credit  might 
be  given  or  security  taken,  instead  of  payment,  the  na- 
ture of  the  transa(5lion  was  then  a  sort  of  tacit  mortgage 
of  the  property  for  the  price. 

„  3]on  ber  ©c^Iiefeung  be§  5lauf^  ift  bie  ©rfiilhing  beffelben  ju  unter= 
„  frfieiben.  ©iefe  gefdiiel^et  bon  ©eiten  be§  3Serfdufer-3  burd;  bie  auf  gefdft= 
,,  ntdfeige  9(rt  betriirfte  Uebergabc  ber  ©adie,  bon  ©eiten  be^J  ^duferl  aber 
,,burrf)  bie  33e3af)[ung  be§  ^aufge(be§.  3>on  biefer  (Srfiillung  l^angt  bie 
,,Uebertragiirtg  be§  Gigentl^utnS  ab/'  16  ©tiicf,  (Srlduterung  ber"^]pan= 
becten.     g  988. 

4.  The  modern  Civil  law  does  not  revert  to  the  Roman 
conception  of  a  sale,  although  there  is  a  reminiscence 
of  the  primitive  theory  in  the  J2cs  scparatioiiis  main- 
tained by  some  authors,  on  the  ground  that  the  mer- 
chandise should  return  to  the  unpaid  seller,  and  not  go 
to  and  enrich  a  stranger.  Speaking  of  a  trader  who  car- 
ried on  business  at  different  places,  Ulpian  said  :  ^''Ae- 
^'' qiiissimitm  puto  separativi  tribiitionejn  faciendain^  ne 
' '  ex  altcrius  re  merceve  alii indemncsjiant^  alii  dammmi 
^''  sentianty   D.  14,  4,  16. 

©trcitig  ift,  ob  eine  Separation  imb  ni3tf;igenfal(§  ein  ^sarticu(arconcur§ 
iiberall  eintreten  barf,  tpo  ein  Xf)ci(  bc--^  IseVmbgensi,  trtelcfier  fe^jarirt  unb 
@egenftanb  eincS  ^articuIarconcurfeS  lycrbeu  foil,  ein  eigenc§  Don  "xaw  ^t- 
fe^en  al§  foW}c§  anerfanteS  G)iitercor^.nio  [univcrsitas  imiiii)  auCMuacfit, 
unb  bie  J-orbcrungen  ber  cytdubigcr  mit  eincr  fold)cn  Giitcrmaffe  tn  einem 

355. 


§io8.  Firm  Property.  Pt.  2,  Ch.  b. 

bo'oiibiTcn  iU-il'iUtmifc  )"tclH'ii,  uhh'ou  tic  cui5Clncii  in  Den  ©efc^en  ciaal;n= 
ten  ii-piUiUioiKMiiUc  bivii  iU'Upiclc  bil&ctcn. 

eim^c  biial^ai  t>m  lln^  ttcUcii  als  WrunDfa^)  auf;  ber  ^^articularcon^ 
v-uro  ftnK't  m  aUcn  (fallen  )tatt,  >uo  bcftunnttc  O^ilaubicjcr  311  ciner  bcftimnu 
ten,  alo  cm  ciiicnco  (>Hucriorpu'o  ihmi  Dcni  iibngcn  ^iNcmibgcn  nbsutrcnm-n: 
ben  unb  jur  iU-fricMiiung  bcr  an  bicjclbt  jtatijinccnbcn  Jorfccrungcn  nidit 
jicnuvicnbcu  'iU-rnu\jonvina|)c  in  cmcni  lold'cu  iici-faJircn  [tcl'en,  taf;  fie  bie 
^evamtion  beri'elben  I'on  bcni  ubngea  UNenncgcn  icd)lUc{;  Derlangen 
fiMuien.  CO  id  nanuntlidi  tin  Ojlaubiijern  cince  Maujnianne,  ircldicr 
ine^)rere  jietrennte  .VMinblungen  babe,  bas  iceparationeredn  ju  geftatten. 

Mallliiae's  Coulroverseu-Lexikon  des  riJmischeu  Civilrechls,  171, 
where  llie  authorities  are  collected. 

5.  /('/«/  crcdilors,  after  exhausting  fir-m  assets,  come  in  for  balance 
on  partner' s  separate  real  estate  pari  passu  with  his  separate  credit- 
ors. B,  C  S:  I),  traded  as  B  &  Sons.  I.  borrowed  |5,oco  of  E,  and 
title  deeds  of  land  held  by  B,  and  contradl  for  purchase  of  land  were 
deposited  for  preparation  of  mortgage  to  secure  loan.  B  died  before 
mortgage  executed.  Then  C  died.  Heirs  of  B  &  C  executed  mortgage 
to  E.  \  et  al.,  firm  creditors,  enjoined  D,  and  prayed  for  receiver 
to  take  land  bargained  for,  and  land  held  by  B,  disputing  equitable 
mortgage. — Decree.  Land  separate  property  of  B,  but  equitable 
mortgage  not  proved.  Firm  creditors  unsati.'^fied  by  firm  assets,  pro- 
ceed for  balance  against  separate  estate  with  separate  creditors. 
Simpson,  C.  J.:  "We  think  the  true  do<5lrine  is,  as  stated  by  the 
"Circuit  Judge  with  respedt  to  the  right  of  the  separate  creditor,  if 
"  any  equity  exists  in  his  behalf,  such  as  two  funds  *  to  threw  the 
"co-partnership  creditors  on  the  partnership  assets  in  the  first  in- 
"  stance,  but  after  the  partnership  assets  have  been  fully  and  fairly 
"exhausted,  to  come  in  pro  ?-«/«■  with  the  separate  creditor.  This 
"seems  to  be  the  weight  of  authority  with  us.  Besides  a  debt  con- 
"tracled  by  a  co-partnership,  is  not  only  a  debt  of  the  firm,  hut  a 
"debt  in  substance  of  each  individual  member  of  the  firm,  and  the 
"  property  of  the  firm,  and  of  eacli  member,  is  liable  for  it.  But  the 
"property  of  the  firm  is  not  liable  for  the  separate  debt  of  a  mem- 
|'1x;r;  only  the  interest  of  the  member  is  liable,  which  is  nothing 
"until  the  firm  debts  are  paid.  So  that,  because  a  co-partntrship 
"creditor  has  an  exclusive  claim  upon  the  firm  property,  it  dees  not 
"  follow  tiiat  a  separate  creditor  should  have  an  exclusive  claim  upon 
"the  separate  property.  In  the  first  place,  the  efiedl;  of  the  ccntradl 
j'is  to  pledge  as  a  ba.sis  of  credit,  both  partnership  and  private  prop- 
yl erty;  in  the  second  case,  the  separate  property  alone  gives  the 
[^"■^d't.  And,  as  to  partnership  property,  there  is  no  separate  prop- 
"erty  until  the  debts  are  paid,  which  is  liable  to  both  partnership 
"and  separate  debts  by  contradl."  Hutzler  v,  Phillips,  i  S.  E.  Rep'r 
502,  S.  C.  fi887). 

Firm  creditor  enforces  partner's  separate  liability  as  a  constituent 
of  partnership.  Equity  controls  exercise  of  right  when  creditor  has 
joitit  and  separate  funds,  and  separate  creditor  only  separate  estate. 
B  &  C,  partners,  as  B  &  Co.  Firm  creditor,  D,  attached  C's  property 
for  finn  debt.  A.  creditor  of  C,  brought  bill  to  prevent  any  part  of 
proceeds  from  being  paid  to  D,  and  to  establish  a  preference.  Both 
partners  bankrupt,  and  no  firm  assets.— Dismissed.  Separate  creditor 
has  a  nght  to  his  debtor-partner's  estate  onlv  when  there  are  both 
joint  and  separate  funds,  on  the  ground  that  the  firm  creditor  should 
resort  first  to  the  joint  fund,  and  exhaust  it,  before  taking  the  sepa- 


.356 


6 


\ 


Pt.  2,  Ch.  7.  Firm    Land.  §109. 

rate  creditor's  only  fund.     The  bankruptcy  rule  not  a  principle,  but 
a  rule  of  thumb.    Bardwell  v.  Perry,  19  Vt.  292  (1847). 

7.  Bell  V.  Newman,  ^  105,  n.  1. 

8.  Firm  creditors  not  entitled  to  share  separate  estate  luith  separate 
creditors  for  balance  unpaid  by  joint  dividend.  B  &  C,  partners, 
assigned  for  creditors  to  A.  Subsequently,  B  assigned  for  his  cred- 
itors to  A  &  D,  and  C  for  his  to  E.  F~irm  dividend  1 1  per  cent.  Firm 
creditors  claimed  payment  out  of  B's  separate  estate  for  amounts  not 
paid  by  joint  assets.  A  and  B  asked  instruction  of  court. — Firm 
creditors  excluded.  Davis  v.  Howell,  20  Am.  Law  Reg'r  N.  S.  461,  N. 
J.,  (1861),  with  note,  reviewing  the  authorities,  by  Prof.  H:eNRY 
Wade  Rogers. 


-O- 


CHAPTER  VII. 
§109. 

THE  TITLE  TO  PARTNERSHIP  LAND. 

^\\t  boctrincs  of  equitable  conversion  an^  of  equitable  lien  are 
tl)e  eipcLiients  a^opte^  to  onercome  tl)e  obstacle  of  tenure  in  making 
lanb  a  firm  asset. 

Land,  being  the  original  mould  of  Bnglish.  law,  so 
far  from  yielding  the  tenets  of  its  tenure  to  the  inno- 
vations of  a  partnership,  impressed  upon  it,  as  has 
been  remarked,  a  charac^ter  foreign  to  the  relation. 
A  joint  tenancy  is  the  best  expression  of  the  partner- 
ship title  to  land,  as  well  as  to  personalty.  The  notion 
of  a  tenancy  in  common,  as  the  legal  expression  of 
the  title  to  personal  property  vested  in  a  partnership, 
has  not  yet  entirely  let  go  its  hold  upon  the  Profes- 
sional mind.  It  was  repugnant  to  Common  law  in- 
stin(?ts  that  land  should  be  an  article  of  trade  at  all. 
And  for  this  reason  it  has  taken  longer  to  eradicate 
the  notion  of  tenancy  in  common  in  partnership  land, 
and  replace  it  by  the  theory  of  a  joint  title.     The 

357 


§ioQ^  Firm  Land.  Pt.  2,  Ch.  7. 

real  estate  owned  by  a  firm  was  held  in  common,  and 
the  legal  title  vested  in  the  partners,  as  tenants  in 
coiniiioii.  Upon  the  death  of  a  partner,  his  moiety 
descended  to  his  heir,  who  was  not  bound  by  the 
partnership  debts,  but  inherited  the  purpart  clear  of 
all  liabilities.  The  destination  given  to  the  property 
by  the  partners,  was,  in  this  manner,  defeated,  by 
making  the  legal  effe6l  of  tenure  override  the  par- 
tics'  will.  The  rights  of  the  firm,  in  real  estate,  had 
to  be  worked  out  in  subservience  to  the  exigencies  of 
the  legal  title.  A  long  development  of  equitable  ideas 
was  required,  in  order  to  make  intention  the  control- 
ling facl,  which  subordinated  the  estate  to  the  purposes 
for  which  it  was  created.  The  transition,  from  the 
Feudal  notion  of  tenancy  in  common  to  a  theory  which 
gives  full  effe6l  to  the  partnership  title,  and  adjusts  it 
to  the  partners'  interest,  was  effe6led,  in  some  cases, 
by  the  fi(5lion  of  a  conversion,  which  makes  personalty 
of  the  land,  and,  in  other  cases,  by  the  do6lrine  of  an 
equitable  lien,  which  gives  the  firm  and  its  creditors 
a  paramount  right  to  the  land.  The  lien  could  be  de- 
feated only  by  an  incumbrance  upon  a  partner's  title, 
which  was  concurrent  with  the  acquisition  of  the  title; 
such  an  incumbrance  was  recognized  in  equity,  as  well 
as  at  law.  The  legal  and  equitable  would  prevail  over 
the  merely  equitable  lien.  The  theory  of  lien  was 
suggested  by  and  worked  out  through  the  partner's 
equity,  to  have  the  land  applied  to  the  payment  of  the 
firm  debts.  By  this  equity  a  partner  is  restrained 
from  using  the  land,  except  for  the  firm. 

As  soon  as  creditors  were  permitted  to  proceed 
against  their  debtors'  land,  they  subjeded  to  their 
claims  lands  held  in  joint  tenancy.     If  the  claim  was 

358 


Pt.  2,  Ch.  7.  Firm  Land.  §109. 

against  one  co-tenant,  his  interest  might  be  taken, 
and  if  the  claim  was  against  both,  then  the  whole 
estate.  This  may  be  seen  in  an  early  case,  where  the 
claim,  though  originally  against  one  joint  tenant, 
subsequently  became,  by  the  acftion  of  the  parties,  a 
claim  against  both,  and  a  charge  upon  the  whole 
estate.^ 

The  title  of  the  partners,  though  made  subjeA  to 
the  debts  of  the  firm,  was  not  controlled  beyond  the 
exigencies  of  the  partnership.  The  land,  when 
cleared  of  the  firm  liabilities,  remained  vested  in  the 
partners."  They  held,  however,  not  in  the  proportion 
of  their  interests  in  the  partnership,  but  in  the  equal 
division  of  tenants  in  common,^  The  theory  of  a 
conversion  re6lifies  this  defeA.  In  England,  this 
theory  has  been  adopted,  without  qualification;  so 
that  upon  dissolution  the  land  or  its  proceeds  are 
diverted  from  the  heir,  and  given  to  the  personal  rep- 
resentatives.^ The  result  of  making  the  conversion 
extend  beyond  the  requirements  of  the  partnership, 
was  to  call  forth  a  readlion  against  the  fiAion  itself. 
The  abuse  of  the  principle  served  as  the  argument 
against  its  use.  The  counter-current  disclosed  itself 
in  the  decisions  which  sought  every  pretext  to  escape 
an  application  of  the  fi6lion,  although  the  equity  of 
the  partnership  was  acknowledged  and  enforced.  The 
facT:  that  the  purchase-money  did  not  come  direAly 
from  the  firm,  notwithstanding  the  purchase  was 
made  for  it ;  or,  on  the  other  hand,  that  the  price  was 
paid  b}^  the  firm,  but  the  use  was  not  declared  for  it, 
v/as  suf&cient  to  prevent  a  conversion.  In  either 
event,  the  firm  had  the  equity,  and  the  legal  title  was 
controlled  to  give  it  e£fe6l ;  but  not  by  means  of  a  con- 

359 


SlCX). 


Firm  Land.  Pt.  2,  Ch.  7. 


version.     Nor  if  the  partners  were  given  mortgages  b}^ 
will, and  they  purchased  the  equity  of  redemption  with 
firm  money,  or  the  devise  was  of  a  fee  to  them,  did  the 
land,  although  used  for  the  firm,  change  into  person- 
altv.     The  right  of  the  firm  to  the  land  is,  neverthe- 
less, recognized  in  equity,  and  the  courts  reverted,  in 
giving  effe(5l  to  the  title,  to  the  alternative  of  an  equit- 
able lien.      The  reason  for  giving  full  recognition  to 
the  dominion  of  the  firm,  by  converting  its  property 
into  personal  estate,  which  meets   the   requirements 
of  the  firm,  is  identical  with  the  principle  of  the  deci- 
sions which  establish  a  conversion.      It  is  the  after- 
eflfecl  of  altering  the  course  of  descent,  which  deters 
the  courts  from  resorting  to  a  ficftion  which  interferes 
with  the  canons  of  devolution,  without  any  legal  jus- 
tification.''    The  do6lrine  of  equitable  lien  and  of  con- 
version, are  both  mere  expedients.     If  the  right  of  the 
firm  is  conceded,  why  should  there  be  any  hesitation 
in  giving  full  efifecl  to  the  title?     How  the  title  came 
to  the  firm,  is  of  no  consequence.     The  fadi  of  im- 
portance, the  point  upon  which  everything  turns,  is 
that  the  firm  has  the  title.     The  mode  of  acquisition 
is  a  preliminary  incident,  which  could  have  no  bear- 
ing upon  the  right,  when  once  possessed.     What  has 
the  acquisition,  when  effe^led,  to  do  with  the  right  of 
property?    There  is  no  room  in  law,  or  in  reason,  for 
the  antagonism  of  two  theories  to  regulate  the  same 
right. 

The  dodlrine  of  con  version  is  brought  in  closer  accord 
with  the  requirements  of  partnership  by  reconverting 
the  personalty  into  land,  the  moment  the  objeAs  for 
which  it  was  converted  are  accomplished  and  the  part- 
nership is  wound  up.'     The  fidion,  when  thus  man- 

360 


I 


Pt,  2,  Ch.  7.  Firm  Land.  ^109. 

aged,  does  not  interfere  with  the  devolution  of  the 
property  as  land.  The  title  would  pass  to  the  part- 
ners, unaffe(5led  by  any  separate  judgments  recovered 
against  them,  or  separate  incumbrances  created  by 
them,  during  the  partnership.  The  land  would  be 
after-acquired,  and,  as  such,  would  not  be  bound  by 
the  lien  of  a  judgment.'  The  difhculty  with  the  theory 
is  in  defining  the  moment  when  the  re-conversion 
shall  take  place,  when  the  rights  of  creditors,  heirs, 
grantees,  or  others  claiming  through  the  individual 
partner,  shall  attach  to  his  interest  in  the  real  estate. 
If,  at  the  moment  of  dissolution,  by  death  or  otherwise, 
the  title  is  still  encumbered  with  outstanding  claims ; 
if,  at  the  final  settlement  of  account,  this  is  an  indefi- 
nite period,  and  the  title  to  the  real  estate  may  be 
held  in  abeyance  for  years.  How  could  the  devise  by 
a  partner  pass  the  land,  and  the  reconversion  relate  to 
the  decedent's  death,  when  the  will  could  not,  by  law^ 
convey  subsequently-acquired  land?  The  decedent 
would  either  die  intestate,  or  the  land  would  pass  as 
personal  estate.  The  devisee  would  not  acquire  the 
land,  even  if  the  title  could,  by  legerdemain,  shift 
from  the  distributees,  upon  a  subsequent  reconver- 
sion, as  he  must  establish  his  right  to  take  at  the  in- 
stant of  his  testator's  death.  The  subsequent  shift- 
ingf,  thouofh  it  were  feasible,  W'Ould  be  too  late.**  The 
fiAion  should  not  be  allowed  to  prevent  a  devolution 
upon  the  decedent's  death.  As  a  creature  of  equity, 
the  conversion  should  be  controlled  by  equity.  The 
land  might  vest  in  interest  upon  the  partner's  death, 
though  not  in  possession  until  a  reconversion  could 
be  effedled  by  a  settlement  of  the  partnership  accounts. 
This   would  be  inconsistent  with   the   theory  which 

361 


§iog^  Firm  Land.  Pt.  2,  Ch.  7. 

treats  a  partner's  share  in  firm  real  estate  upon  a  re- 
conversion as  after-acquired  land. 

A  judgment  against  a  partner  doesn't  bind  firm 
lands,  and,  it  has  been  held,  when  a  reconversion 
takes  place,  that  the  land  is  a  new  acquisition, 
which,  being  subsequent  to  the  entry  of  judgment,  is 
not  bound  by  its  lien.  But  it  has  also  been  held  that 
if  a  partner  died,  and  subsequently  a  reconversion 
took  place,  his  widow  would  be  entitled  to  dower." 
The  title  would  relate  back  to  the  husband  and  part- 
ner's life-time,  and  no  one  could  claim  except  through 
him.  If  the  widow's  dower  did  not  attach,  neither 
would  the  heirs  be  entitled  to  the  inheritance.  They 
nuist  claim  through  their  ancestor,  and  as  he  could 
acquire  only  as  a  living,  and  not  as  a  dead  man,  be- 
cause all  his  rights  devolved  upon  his  death,  the  title 
must  relate  back  and  vest  in  him  while  alive.  It  is 
subje6l,  therefore,  to  all  the  incidents  and  dedudlions 
which  would  have  affedled  it  if  he  had  been  living 
wlien  it  vested  in  him.  Why,  then,  would  not  a  judg- 
ment wliich  was  entered  against  him  during  his  life- 
time, bind  the  title  at  the  moment  of  reconversion? 
Certainly  not  for  the  reason  that  the  land  is  after-ac- 
quired, for  if  in  any  instance  the  title  is  carried  back 
by  relation,  the  hypothesis  of  after-acquired  land 
is  overthrown.  If  this  relation  is  allowed  for  the 
widow  and  heirs,  why  not  for  the  creditors  ?  Might  the 
tUle  have  been  personal  at  the  owner's  death,  and 
been  changed  afterwards?  Then  property  would  be 
shifted  from  executors  to  heirs  without  any  notice, 
and  by  matter  in  pais.  The  devolution  must  be  to 
one  class  or  to  the  other.     It  could  not  be  first  to  one 


362 


Ft.  2,  Ch.  7.  Firm  Land.  §109. 

and  then  to  the  other,  dependent  upon  some  extrane- 
ous event. 

1.  Lord  Abergavenny's  Case,  ^  103,  n.  2. 

2.  Title  to  finn  real  estate.  Partnership  owned  land.  B  left  his  share 
to  his  daughter,  who  died.  Her  husband  assigned  his  interest  to  A, 
who  claimed  the  whole  share  as  personalty. — Title  to  partnership 
land  passes  as  realty  to  heirs  of  deceased  partner.  A  acquired  only 
husband's  courtesy.     Buckley  v.  Buckley,  11  Barb.  43,  N.  Y.  (1850). 

3.  Title  to  firin  real  estate.  Partnership  held  land.  No  mutual  cov- 
enants, but  intention  to  use  it  for  firm  purposes.  Land  sold  on  mort- 
gages, executed  by  the  partners.  Wifeof  A  joined  in  mortgages.  The 
surplus  was  claimed  by  assignee,  and  by  A's  heir,  and  by  his  widow. — 
Widow  allowed  dower  in  a  moiety,  though  husband  had  a  two-thirds 
interest  in  the  firm.  Each  partner's  title  was  subjedl  to  co-partner's 
equity,  but  proceeds  remained  realty,  and  hence  widow  took  dower. 
Smith  V.  Jackson,  2  Edwards  Ch.  28,  N.  Y.  (1833). 

4.  The  intention  of  the  partners,  which  devotes  the 
land  to  the  firm  is  not  limited  to  the  efFedl  between  the 
partners  themselves,  but  is  extended  beyond  the  scope 
of  their  purpose,  and  alters  the  real  nature  of  the  prop- 
erty without  any  legal  reason. 

Partnership  land,  subjefl  to  taxatio7i  as  personalty,  unless  re-C07i- 
verted  by  contraH  of  partners.  Partner,  who  afterwards  retired, 
bought  with  firm  funds  and  for  the  firm  use  land,  which,  upon  retire- 
ment, he  conveyed  to  B  &  C,  the  continuing  partners,  as  joint  prop- 
erty. B,  by  will,  gave  C  option  to  buy  his  share  at  price  fixed  by 
last  stock-taking,  and  to  buy  or  rent  his  share  of  firm  land.  A,  tax 
gatherer,  claimed  probate  duty  upon  ^22,150,  price  C  paid  executors 
of  B's  widow  for  his  share  of  said  land. — Recovered.  Land  subjedl 
to  taxation  as  personalty.  B's  will  could  not  re-convert  asset  into 
land.  Binding  contra6l  requisite  to  effedl  withdrawal.  Att'y  Gen'l 
V.  Hubbuck,  10  Q.  B.  D.  488  (1883) ;   13  O.  B.  D.  275  (1884). 

5.  Law  of  Partnership,  by  Andrew  BissET,  Esq.,  Barrister  at  Law,  pp. 
47-56:  1847. 

A  covenant  or  agreement  was,  therefore,  required  to 
convert  the  lands  into  jDartnership  assets.  Coles  v.  Coles, 
§14,  n.  2. 

But,  in  time,  the  intention  of  the  partners  replaced  all 
formal  requirements,  and  any  acquisition  of  land  for  the 
firm  was  sufficient  to  give  it  the  beneficial  title. 

Land  used  by  nurserymen  in  partnership  as  nursery  farm,  becaine 
partnership  stock,  zuhefher  acquired  by  descent  or  by  purchase.  B  en- 
gaged in  the  nursery  business  with  his  sons,  C,  D  &  E,  devised  his 
estate,  including  good-will  of  business  to  them,  as  tenants  in  common. 
They  completed  a  purchase,  negotiated  by  him  for  a  farm,  and  took 
title  as  tenants  in  common.  C  &  D  bought  out  E,  for  ^^52,500,  mort- 
gaging the  land  for  ^23,000,  and  paying  balance,  ^"29,000  out  of  B's 
estate.  C  died,  and  his  widow  and  administratrix  brought  bill  for 
administration,  children  claimed  distribiition,  and  heir-at-law  the 
lands. — Lands  converted  in  personalty,  and  mortgages  payable  exclu- 

.363 


5 IOC).  Firm  Land.  Pt.  2,  Ch.  7. 

Nivclv  out  of  personal  estate.  Property  involved  in  partnership  busi- 
ness Wcanic  iirni  propertv.  Jamks,  L.  J. :  "It seems  to  me  immaterial 
•'how  it  may  have  been  acquired  by  the  surviving  partners,  whether 
"by  descent  or  devise,  if  in  facl,  it  was  substantially  involved  in  the 
••business."     Watererv.  Waterer,  L.  R.  15,  Eq-  402  (1873). 

6.  In  tlii.s  country  the  control  over  the  land  for  the  pur- 
jx)ses  of  the  business,  is  exerted  without  making  a 
break  or  change  in  the  course  prescribed  by  law  for  the 
devolution  of  real  estate.  The  courts,  therefore,  are 
nt)t  restrained  from  giving  efifecft  to  the  equity  of  the 
partners,  or  of  the  firm  creditors  by  the  relu6lance 
which  they  would  naturally  feel  if  they  were  compelled 
to  interfere  with  the  canons  of  descent.  The  laws  of 
descent  remain  intadl  and  unafife6led  by  the  devotion 
of  the  land  to  partnenship  uses.  The  eflfedl  of  deciding 
the  question,  whether  land  is  firm  assets  or  not,  apart 
b>'  itself  freed  from  the  consideration  of  its  ultimate 
devolution,  is  to  simplify  the  answer,  which  is  thereby 
limited  to  a  single  point:  Did  the  partners  intend  to 
make  the  land  available  for  partnership  purposes?  The 
intention,  if  disclosed  in  any  mode,  is  sufficient  to  pro- 
duce the  result. 

[Aind  taken  for  a  firm  debt  is  firm  property.  B  &  C  took  land  in 
payment  for  a  firm  claim.  Deed  to  them  as  tenants  in  common. 
Land  inventoried  on  the  books  as  firm  property,  and  assigned  b}-  the 
finn  for  its  creditors.  A  ct  at.,  creditors  of  B,  brought  billto  set  aside 
assignment  as  a  fraud  on  them. — Dismissed.  If  tenants  in  common, 
assignment  for  firm  creditors  void  as  to  separate  creditors.  If  land 
belonged  to  firm,  assignment  valid.  If  bought  with  firm  funds,  it  is 
a  f|uestion  of  facl:  whether  the  land  is  separate  or  firm  property.  If 
taken  for  a  firm  debt,  the  presumption  is  against  a  withdrawal  of  cap- 
ital and  .separate  titles.      Collumbv.   Read,  24  N.  Y.  505  (1862). 

7.  Conveyancing  in  Pennsylvania  is  founded  on  the 
lien  of  a  judgment  being  limited  to  the  defendant's  title 
at  the  date  of  its  entr}-. 

Juds^mcnt  does  not  bind  after -acquired  land.  B  confessed  judg- 
ment to  A  in  1S04.  B  bought  a  house  and  lot  after  entrv  of  judgment 
and  ultiniately  becoming  insolvent,  assigned  the  house  and  lot  to  C 
for  creditors,  in  1S06.  Judgment  on  set.  fa.  in  1807  against  P,  and 
terre  tenant.  Premises  sold  on  vend  ex.  in  1808.— C  entitled  to  pro- 
ceeds^    Colhoun  v.  Snider,  6  Binnev  135,  Pa.  (1813). 

Judirmeni  against  partner  does  not  bind  his  interest  in  partnership 
(and  In  a  partnership  to  buv  and  sell  lands.  A,  B  &  Co.  took  title 
in  the  name  of  trustees.  A  judgment  against  A  &  B.— It  did  not 
birnl  their  equitable  estate,  although  that  is  subjedl  to  the  lien  of  a 
juflgnicnt  in  Pennsylvania.  The  judgment  against  a  partner  does 
^1 /""^.  ^°''  ^^^  separate  debt,  nor,  if  confessed,  for  a  firm 

aet>t.  J  he  partner's  interest  is  a  share  in  the  net  proceeds.  Kra- 
mer V.  Arthurs,  7  Barr  165,  (1847). 

364 


Pt.  2,  Ch.  7.  Firm   Land.  §109. 

If  the  firm  could  not  sell  as  well  as  mortgage  clear 
of  liens,  it  could  not  sell  at  all. 

Fir}n  land  not  bound  by  judgment  against  partner  for  his  quota  of 
price.  B,  C  iSi  D  bought  land  for  the  linn,  and  took  a  deed  to  them- 
selves as  partners.  B  confessed  judgment  for  his  quota  of  the  price 
to  E,  the  vendor.  Subsequently.  B,  C  &  D  mortgaged  the  land  to 
A,  vi'ho  claimed  the  jiroceeds  of  sale  of  the  land  under  a  foreclosure 
of  his  mortgage. — Held,  that  the  mortgage  was  a  paramount  lien. 
The  title  was  in  the  partners,  not  as  tenants  in  common,  and  B  had 
no  tangible  interest  until  a  settlement  of  the  joint  estate;  and  the 
fatl  that  the  judgment  was  confessed  for  purchase-money,  made  no 
difference.    Lancaster  Bank  v.  My  ley,  i  Harris  544,  Pa.  (1850). 

If  the  judgments  against  a  partner  would  bind  his 
share  of  the  firm  land,  the  obje6l  of  the  partnership 
would  be  defeated. 

fudgment  against  partner  does  not  bind  his  interest  in  firm  land. 
A,  B  (&  Co.  bought  land  as  partnership  property.  Part  of  the  price 
was  paid,  though  B  gave  a  judgment  note  for  his  quota,  and  a  mort- 
gage was  given  for  the  balance.  B  sold  out  his  share  to  his  co-part- 
ners, and  they  conveyed  the  premises  before  a  set.  fa.  was  brought 
to  revive  the  judgment. — The  judgment  did  not  attach  B's  share, 
which  passed  clear  of  its  lien  to  co-partners  and  their  grantees. 
Meily  v.  Wood,  21  Sm.  488,  Pa.  (1872). 

8.  The  right  once  vested  could  not  be  devested  by  a 
subsequent  dissolution  and  liquidation. 

The  notion  that  a  firm  can  endure,  in  spite  of  a  part- 
ner' s  death,  is  not  tenable  (Ch.  I V).  The  representatives 
may  become  partners,  and  contribute  the  deceased  part- 
ner's estate  ;  but  his  personal  liability  is  at  an  end,  and 
their  liability  is,  if  enforced,  a  new  and  different  con- 
stituent. The  attempt  to  carry  out  the  notion  ends  in 
confusion.  The  deceased  partner's  title  would  not  pass 
upon  his  death,  but  would  be  suspended  upon  a  subse- 
quent and  contingent  event ;  and  yet  it  does  pass,  and 
must  pass  immediately  upon  his  death.  Nor  can  there 
be  a  provisional  descent  or  distribution  in  the  alternative 
subjedl  to  a  recall  and  reversal  of  the  course  of  devolu- 
tion. 

Death  of  partfier  does  not  re-convert  his  share  of  firm  land,  espe- 
cially if  articles  continue  partnership  in  spite  of  his  death.  B  et  at., 
manufa(5lurers  of  iron  in  partnership,  owned  plant  and  adjoining  land. 
Articles  provided  for  firm's  continuance  in  spite  of  a  partner's  death, 
and  substituted  his  representatives.  B  died,  leaving  widow,  C,  and 
three  children.  C's  second  husband,  A,  brought  bill  and  claimed, 
under  her  will,  1-3  of  B,  1-5  interest  in  the  partnership  furnace.  D  and 
other  children  of  B,  claimed  his  share  as  real  estate. — Decree.  Land 
not  re-converted  on  B's  death,  but  remained  converted  during  con- 
tinuance of  firm.     Leaf's  Appeal,  9  Out.  505,  Pa.  (1884). 

9.  Partner's  widow  takes  dower  in  husband's  share  of  partnership 
land.     A  &  B,  equal  partners,  owned  land,  some  of  which  had  been 

365 


I 


5iiQ,  Firm  Land.  Pt.  2,  Ch.  7. 

coiivfVC(l  to  them  as  tenants  in  common,  but  all  of  which  was  pur- 
chiiset'l  with  the  money  of  the  firm,  and  held  by  it  as  partnership 
property.  A  died.  Hy  a  decree  of  Orphans'  Court,  expressly  re- 
luoving  all  doubts  as  to  lands  conveyed  to  the  firm  as  tenants  in  com- 
uiun,  and  not  as  partners,  the  firm  lands  were  sold  to  B.  Under  a 
settlement  with  those  interested  in  A's  estate,  B  took  the  lands,  subjedl 
to  the  liabilities  of  the  firm,  for  #25,000  paid  to  A's  representatives. 
.\'s  widow  claimed  one-third,  absolutely,  on  the  ground  of  the  con- 
version, which  made  the  land  personalty. — Entitled  to  dower,  an 
interest  for  life.  In  fiRioue  juris  semper  subsistit  aequitas;  hence 
the  conversion  of  the  realty  ends  when  the  purpose  of  the  conver- 
sion is  attained.  Firm  real  estate  is  personalty  for  the  payment  of 
firm  debts.  The  time  of  reconversion  is  the  moment  the  partnership 
is  wound  up,  and  it  is  determined  that  the  real  estate  is  no  longer 
partnership  stock,  nor  required  for  its  purposes.  Foster's  Appeal,  24 
Smith  399,  Pa.  (1874)- 


§no. 

£a^^  inati  be  ma^c  a  firm  asset  n)itl)Out  resort  to  om  fiction. 

The  confusion  just  pointed  out  is  the  result  of  re- 
sorting to  a  fiction  in  order  to  make  land  a  firm  asset. 
It  is  not  necessary  to  declare  land  to  be  personalty  in 
order  to  subje^l  it  to  the  requirements  of  the  firm 
business.  All  that  is  necessary  is  to  apply  to  land 
the  principles  which  govern  the  partnership  relation. 
If  it  is  obje6led  that  there  is  a  necessary  conflict  be- 
tween partnership  principles  and  some  of  the  rules 
which  govern  the  title  to  land,  the  answer  is  that  this 
confli(5l  is  not  abrogated  by  the  interje(5lion  of  a  fic^tion. 
Why  not  do,  without  disguise,  what  is  done  in  fadl; 
that  is,  mould  the  rules  which  govern  real  estate  to 
the  requirements  of  the  partnership  relation.  Such 
a  course  would  certainl}^  be  more  consistent  with  the 
dignity  of  legal  reasoning. 

After  all,  what  is  meant  by  the  statement  that  land 
becomes  personal  property?  It  simply  means  that 
the  title  is  controlled  as  a  firm  asset.     The  incidents 

366 


PT.  2,  Ch.  7.  Firm  Land.  §110. 

of  land  remain  iinclianged.  It  can  be  proceeded 
against,  dealt  with,  conveyed,  encumbered,  or  devised 
only  according  to  the  rules  which  govern  land. 

The  land,  in  spite  of  its  conversion  in  equity,  re- 
tains all  the  physical  and  legal  incidents  of  real 
estate.  The  legal  holder  is  merely  converted  into  a 
trustee  for  the  partnership.  The  heir  might  as  well 
be  the  depositary  of  the  legal  title  as  was  his  ances- 
tor the  partner.  The  land  is  not  changed  in  any  of 
its  properties.  It  serves  as  a  qualification  for  a  mem- 
ber of  parliament.  The  partners,  in  selling,  have  a 
vendor's  lien  for  the  purchase-money.  The  land  is 
taxed  as  real  estate,  and  is  exempt  from  the  taxa- 
tion laid  upon  personal  property.  The  sheriff  could 
not  sell  the  land  on  ayf.y^.,  without  an  inquisition. 
A  division  of  the  partner's  share  would  require  a  par- 
tition. The  title  must  be  conveyed  according  to  its 
nature  as  land.  A  deed  or  mortgage  of  it  could  be 
made  by  a  partnership  only  in  the  form  of  a  convey- 
ance and  by  a  joinder  of  all  the  jDartners.  It  is  within 
the  statute  of  frauds.  If  a  conversion  affedled  the  legal 
attributes  of  the  land,  it  might  be  sold  by  a  consta- 
ble, who  has  no  power  to  touch  real  estate,  or  a  part- 
ner might  sell  it  as  a  chattel,  without  consulting  his 
co-partner.  Upon  the  death  of  a  partner,  the  land 
would  go  to  the  survivor,  who  would  be  compelled 
merely  to  account  for  it  as  an  asset. 

The  title  in  any  or  in  all  the  partners,  as  individu- 
als, will  be  controlled  for  the  firm.  The  destination 
of  the  land  controls  the  title,  and  no  partner  can  with- 
draw his  share  from  the  firm  or  prevent  the  firm's  use 
of  the  land  until  a  settlement.^  Where  equity  is  not 
available  in  Common-law  a(5lions,  proof  of  the  fadl 

367 


^,io.  Firm  Land.  Pt.  2,  Ch.  7. 

would  enable  the  firm  to  secure  the  enjoyment  of  land, 
if  the  title  was  in  the  partners  as  individuals.  The 
firm  claim  would  depend  upon  the  partner's  mutual 
covenants,  or  upon  an  inadequate  remedy  at  law  to 
raise  an  equity,  which  Chancery  would  enforce.  A 
partner  who  put  the  title  of  land,  bought  with  firm 
funds,  in  his  wife,  prevented  his  co-partner's  suit  at 
law,  and  gave  him  a  right  to  enforce  the  firm  title  in 
equit}'.^  If  a  purchaser  refused  to  accept  a  deed  of 
the  surviving  partner,  he  could  compel  the  co-part- 
ner's heir  to  join  in  the  deed.  The  equitable  title 
being  vested  in  the  firm,  the  legal  title  would  be  con- 
trolled for  the  beneficiary,  even  after  descent  cast.''  A 
partner  could  compete  with  the  separate  creditor  of 
his  co-partner.  If  the  balance  of  account  in  favor  of 
the  partner  would  absorb  the  proceeds  of  the  land, 
the  separate  creditor  would  be  excluded. 

The  separate  creditor  acquires  no  lien  by  means  of 
a  judgment  against  his  debtor  upon  the  equitable  title 
of  the  firm.  Nor  does  an  execution  or  attachment 
add  anything  to  the  creditor's  standing.  His  process 
is  without  avail,  because  it  is  against  the  legal  title, 
which  is  subordinated  to  the  equitable  estate;^ 

The  improvements  made  by  a  firm  upon  the  sepa- 
rate property  of  a  partner,  belong  to  the  firm.  The 
consideration  which  moved  from  the  firm  makes  the 
title-holder  a  trustee,  and  prevents  him  from  appro- 
priating the  land  without  making  compensation  for 
the  outlay.  A  foundry  ereded  upon  the  land  of  a 
partner  was  destroyed  during  the  partnership,  and  it 
was  rebuilt  with  firm  funds.  The  equitable  title  to 
the  increase  caused  by  the  struAure  was  in  the  firm, 


368 


Pt.  2,Ch.  7-  Firm  Land.  §iio. 

and  it  could  make  the  partner  account  for  the  en- 
hancement.'^ 

The  partner  holding  title  has  it  in  his  power  to 
convey  to  a  bona  fide  purchaser,  and  to  pass  a  good 
title  against  the  firm.  The  purchaser  would  take 
clear  of  the  firm,  unless  he  had  notice  of  its  title  be- 
fore he  contracted  his  claim.'  Notice  of  the  firm  title 
would  prevent  a  purchaser  from  claiming  against  it, 
and  make  him  take  subjeCl  to  it.*  If  he  had  not  paid 
the  whole  purchase-money,  he  would  account  to  the 
firm  for  the  balance."  A  separate  creditor  could  be 
compelled  to  sell  subjecft  to  the  firm  title.'" 

If  a  partner  delivers  firm  stock  to  his  separate 
creditor,  who  accepts  it  in  the  belief  that  the  propert}^ 
belonged  to  the  individual  debtor,  he  does  not  acquire 
title  against  the  firm."  No  consideration  moved  to  the 
firm  for  the  transfer.  The  partner  could  not  give 
away  firm  stock,  and  his  appropriation  of  it  to  his 
separate  debt  is  equivalent  to  a  gift  by  the  firm.  The 
disposition  by  the  title-holder  of  partnership  land 
stands  upon  a  different  footing.  The  legal  title  is 
vested  in  the  partner.  He  exerts  the  right  which 
corresponds  to  his  title.  The  purchaser,  \i  bona  fide ^ 
relies  upon  the  legal  investiture  of  title.  The  firm 
stock  is  personalty,  and  parties  deal  with  the  posses- 
sor at  their  risk.  They  cannot  assume,  but  must 
prove  his  capacity  to  dispose  of  the  property. 

I.      Land  survives  upon    the  partner's  death  to  his  co- 
partners for  a  settlement. 

Land  purchased  by  the  firm  becomes  firm  property,  though  the  con- 
veyance be  made  to  the  partners  in  common.  The  agent  of  B,  C  & 
Co.  bought  lands  with  firm  money,  for  firm  purposes,  but  had  the 
deed  made  to  the  partners  as  individuals.  Land  was  used  in  accord- 
ance with  original  intention.  C,  a  member  of  the  firm,  died  shortly 
before  the  land  was  sold  on  a  purchase-money  mortgage.  A,  who 
was  also   a    partner   with   B,    C  &  Co.,   and   his   executor,  claimed 


V 


jjjy  Firm  Land.  Pt.  2,  Ch.  7. 

uliciuot  shares  in  surplus,  after  payment  of  the  mortgage,  in  lieu  of 
their  purparts  in  the  land,  as  executor  of  C,  and  in  his  personal  ca- 
nncitv  H  t<:  Co.,  the  continuing  firm,  also  claimed  the  excess  as 
partiiership  assets'— Awarded  to  B  &  Co.  Abbott's  Ap])eal,  14  Wright 
2.U.  I'a.  (1865)- 
2  Equity,  to  make  co-partner  and  7vifc  account  for  lands  bought  with 
firm  funds,  not  barred  by  statute  of  limitations.  A  brought  bill  for 
account  against  co-partner  B,  who  had  bought  land  with  firm  funds, 
and  put  title  in  his  wife.  B  demurred. — Overruled.  A  had  no  ade- 
(lualc  remedy  at  law,  and  statute  of  limitations  no  bar,  if  A  an  equity, 
and  not  a  legal  right.    Partridge  v.  Wells,  3  Stew.  176,  N.  J.  (1878).' 

3.  Land  equitable  assets.  Land  bought  for  firm.  B  took  title  in  his 
own  name,  conveyed  to  A  undivided  half,  and  died,  leaving  child,  C. 
A  sold  a  portion  to  D,  to  raist  money  for  payment  of  firm  debts.  D 
refused  to  accept  deed,  because  A  owned  but  an  undivided  half.  A 
brought  bill  for  specific  performance,  and  made  C  a  (o-defendant,  to 
compel  him  to  join  in  executing  the  deed. — Decree.  Equitable  title 
and  control  in  A,  as  sur\-iving  partner.  C  trustee  of  his  moiety  for 
firm.  Between  partners  and  creditors,  firm  land  treated  as  person- 
alty.    Delmonico  v.  Guillaume,  2  Sandf.  Ch.  366,  N.  Y.  (1845). 

4.  iMnd  equitable  assets  of  firm.  A  &  B,  partners,  took  land,  sub- 
jecl  to  mortgage,  in  payment  of  firm  claim.  On  dissolution,  A  paid 
firm  debts  to  extent  of  |5,ooo  in  excess  of  his  proportion.  A  sepa- 
rate creditor  recovered  judgment  against  B.  The  premises  were  sold 
under  the  mortgage.  A  recovered  one-half  the  surplus  as  owner, 
ami  claimed  reimbursement  out  of  the  other  half  in  exclusion  of 
sey)arate  creditor.— Recovered,  because  land  belonged,  in  equity,  to 
the  firm,  though  held  by  the  partners  as  tenants  in  common.  A  was 
subrogated  to  rights  of  firm  creditors.  Buchan  v.  Sumner,  2  Barb. 
Ch.  165,  N.  Y.  (1847). 

5.  Shanks  v.  Klein,  ^  106,  n.  7,  a. 

6.  Clark's  Appeal,  ^,29,  n.  4. 

The  evidence  must  show  improvements  made  by  or 
for  firm. 

./  partner's  real  estate  not  contributed  to  firm,  unless  the  substance 
of  its  transaHions.  B,  in  1869,  took  his  sons,  C  and  D,  into  business. 
They  traded  as  B's  Sons.  He  built  a  brewery  and  fitted  it  up  on  his 
land.  The  firm  failed  in  1872,  and  assigned  for  creditors.  B  also  as- 
signed for  his  separate  creditors.  E,  firm  assignee,  petitioned  that 
I",  B's  separate  assignee  should  account  for  real  estate. — ^Judgment 
for  I".  No  proof  that  B  contributed  the  premises  to  firm.  Goepper 
V.  Kinsinger,  39  Ohio  St.  429  (1883). 

.   7.     At  least,  if  .secured  by  mortgage.  *| 

Mortgage  of  partner's  land  luithout  notice  carries  firm  improve- 
ments. A  &  B  were  partners  as  nurserymen.  Firm  planted  trees 
upon  B's  land.  At  a  .sale  of  the  land  on  a  mortgage  given  by  B,  A 
gave  notice  of  his  claim  for  half  the  value  of  trees.— Notice  to  pur- 
chaser of  no  avail,  unless  mortgagee  had  notice  when  the  mortgage 
was  executed.  Trees  would  not  have  been  fixtures  between  the  part- 
"""      Kmg  V.  Wilcomb,  7  Barb.  263,  N.  Y.  (1849). 


^D 


8. 


Equitable  title  of  firm  to  land  binds  purchaser  with  notice.  B,  C, 
i>  A:  E.  partners,  as  glass  manufadlurers.  The  land  for  the  glass- 
works was  bought  with  firm  funds,  though  title  was  taken  in  individ- 


370 


Pt.  2,  Ch.  7.  Firm  Land.  §iii. 

ual  names.  B  &  C  convej'ed  an  undivided  1-2  of  the  land  to  F,  who 
had  knowledge  of  firm's  equity.  Four  days  later,  the  firm  assigned 
for  benefit  of  creditors,  and  assignee  contested  F's  title.  F  had 
knowledge  of  firm's  equitable  claim,  and  took  subjedl  to  it.  Mat- 
tock V.  James,  2  Beas.  126,  N.  J.  (i860). 

9.  Improvements  in  partner'' s  land,  made  with  firm  goods,  belong  to 
firm.     Devoney  v.  Mahoney,  ^  28,  n.  3. 

10.  Where  a  firm  creditor  had  accepted  a  judgment  against 
the  partner  holding  title,  his  claim  was  merged  in  an 
individual  judgment,  and  yet  he  did  not  have  the  rights 
of  a  separate  judgment-creditor,  because  his  claim, 
having  been  joint,  was  a  credit  to  the  firm,  and  not  a 
reliance  upon  the  separate  title. 

Averill  v.  Loucks,  ^93,  n.  i. 

II.  Separate  creditor  paid  with  firm  goods  liable  for  price.  B  paid  pri- 
vate debt  to  C  with  goods  of  firm,  A  &  B.  A  bought  out  B,  and  sued 
C  for  price.  Defence  :  No  knowledge  of  firm  title. — Recovered. 
Knowledge  immaterial,  because  C  paid  no  consideration  to  firm,  and 
did  not  deal  on  the  firm  credit.  Geery  v.  Cockroft,  i  J.  &.  Sp.  146, 
N.  Y.  (1871). 


§111. 


If  tl]c  lanb  belonc(s  to  tlie  firm  m\)\k  \\)t  fitlc  is  in  one  or  more 
of  tl)e  partners,  a  purcljaser  tuitl)out  notice  may  rein  on  tl)e  legal 
title,  but  creditors  can  rein  onln  on  tl)e  substantial  ou)nersl)ip. 

Land  is  not  marshalled  for  the  joint  and  separate 
lien-holders.  Marshalling  does  not  extend  to  liens,  but 
they  bind  the  land  according  to  the  dates  of  record.^ 

The  effe(9:  of  the  lien  depends  upon  the  language 
of  the  title  papers.  A  firm  may  take  title  to  land  in 
either  of  two  ways :  The  deed  may  be  made  to  the 
partners  as  a  firm,  for  example,  to  A  and  B,  trading  as 
A  &  Co.  Then  they  will  hold  the  land  as  firm  stock.- 
The  conveyance  puts  the  title  in  the  firm,  and  exempts 
it  from  individual  control  or  disposition  by  a  partner, 
and  from  separate  liens.     Or  the  deed  may  be  made 

371 


§111.  Firm  Land.  Pt.  2,  Ch.  7. 

simply  to  the  partners.  Tlieu  they  will  hold  as  indi- 
viduals, and  the  separate  liens  will  bind  the  legal  title.'' 
A  judgment-creditor  of  the  firm  could  not  be  restrained 
from  proceeding  by  execution  against  the  separate 
partner's  real  estate."*  He  does  not  relinquisli  the 
privilege  secured  by  his  judgment,  by  making  proof 
in  bankruptcy,  for  the  claim  is  based  upon  the  judg- 
ment." The  separate  creditor's  equity  is  conceded,  if 
at  all,  only  against  unsecured  claims,  and  would  not 
avail  to  marshal  a  judgment-lien. 

If  the  title  is  in  the  firm,  it  is  bound  by  a  judgment 
obtained  against  the  firm,®  and  the  partner's  separate 
real  estate  is  also  bound  by  the  judgment.^  A  judg- 
ment against  the  firm  takes  precedence  of  a  subse- 
quent judgment  against  a  partner  upon  his  moiety, 
where  the  partners  hold  real  estate  as  tenants  in  com- 
mon.'^ The  judgment  against  the  firm  binds  each 
partner's  land  from  the  entry  of  the  j  udgment.  If  the 
legal  title  is  vested  in  one  partner,  though  the  land 
was  bought  with  firm  money,  and  for  firm  use,  and 
judgments  existed  against  the  co-partner,  and  subse- 
quent judgments  against  the  firm,  firm-creditors  would 
take  the  proceeds.  Neither  set  of  claimants  could 
avail  themselves  of  the  legal  title,  and  the  firm  cred- 
itors are  preferred,  because  the  equitable  ownership 
was  in  the  firm.''  If  the  co-partner  sought  to  prove  a 
title  as  tenant  in  common,  the  partner  might  rebut 
it,  by  proving  a  firm  title  in  equity.  If  the  legal  title 
was  in  both  partners  as  tenants  in  common,  the  sepa-  ■ 
rate  creditors  of  each  partner  would  have  a  legal  claim, 
but,  although  they  also  had  a  lien,  the  equity  of  the 
firm  creditors  would,  elsewhere  than  in  Pennsylvania, 
cut  them  out.'"     lu  Pennsylvania,  no  partner  has  the 

372 


Pt.  2,  Ch.  7.  Firm  Land.  §iii. 

right  to  contradi(5l  the  legal  title  after  a  lien  has  at- 
tached.'^ Land  held  by  partners,  as  tenants  in  com- 
mon, was  put  into  their  partnership  business,  which 
consisted  in  buying  and  selling  land.  The  articles 
of  co-partnership  were  in  writing.  They  sold  the  land, 
and  received  part  of  the  purchase-money.  The  bal- 
ance was  attached  by  a  separate  creditor,  under  his 
judgment  in  the  purchaser's  hands.  The  attachment 
was  an  election  to  treat  the  fund  as  personalty,  which 
could  be  proved  by  parol  to  be  partnership  assets ;  but 
the  proceeds  stood  in  the  place  of  the  title,  which  was 
bound  by  the  lien/^ 

A  judgment  against  a  partner  does  not  bind  his 
quota  of  the  land  when  the  title  is  put  in  the  firm. 
His  share  is  only  an  ultimate  balance  of  account,  and 
entitles  him  to  no  part  of  any  specific  asset.  The 
judgment  would  not  have  anything  to  bind  until  the 
balance  was  struck,  and  then  the  portion  of  land  would 
go  to  him  as  a  new  acquisition.^^ 

Land  will  be  marshalled  between  joint  and  separate 
creditors.  The  partner's  right  should  enure  to  the 
creditors,  and  entitle  them  to  claim  the  land  where 
the  firm  has  the  equitable  title,  as  a  partner  should  be 
subrogated  to  the  creditors  whom  he  has  paid  and  be 
reimbursed  out  of  the  equitable  title  of  the  firm  to  land 
held  in  common.  The  mortgage  by  a  partner  of  his 
separate  estate  for  a  firm  debt  makes  the  land  security 
for  a  joint  claim,  and,  to  the  extent  of  the  mortgage, 
firm  assets  between  joint  and  separate  creditors." 

After  the  liens  against  the  title-holder  are  satisfied, 
the  land  will  be  marshalled  in  favor  of  the  equitable 
owner.  A  purchaser  from  a  partner  of  land  bought 
with  firm  assets,  and  for  firm  purposes,  is  made  to  pay 

373 


§111,  Firm  Land.  Pt.  2,  Ch.  7. 

the  balance  of  the  price  to  the  firm,  although  the  legal 
title  is  in  the  vendor.'" 

1.  \o  fHiifshallitig  of  judgmenl-cr editor' s  lien.  D  took  real  estate  of 
each  partner  in  execution  on  his  judgment  against  B  &  C.  B  subse- 
tiucntlv  assigned,  ior  creditors,  to  A,  and  B  &  C  also  assigned  for 
crftlit<)rs,  to  K.  C  was  insolvent.  A  &  E  enjoined  D,  on  ground 
(  I )  estopped  by  proof  of  claim  luider  assignment  against  B  &  C  ;  (2) 
could  not  tike  separate  estate  until  separate  creditors  paid  in  full. 
C's  answer:  Claim  made  expressly  on  judgment,  and  no  relinquish- 
ment of  any  privilege  secured  by  his  judgment.  Injunction  dis- 
solved. Equitable  rule  can't  deprive  C  of  the  lieu  of  his  judgment. 
Howell  V.  Teel,  2  Stew.  490,  N.  J.  (1878).     Note  by  Reporter. 

2.  LauiTer  v.  Cavett,  \  10,  n.  2. 

3.  Nothiug  but  record  title  in  firm  a  bar  to  judgment  against  a  part- 
ner. A  recovered  judgment  against  B,  19  OcSlober,  1876,  forl511.11. 
23  0(flober,  1S76,  firm  of  B  &  C,  engaged  in  buying  and  selling  real 
estate,  assigned  for  creditors,  to  D.  29  September,  1881,  A  brought 
sci.fa.  to  revive.  D's  affidavit  of  defence:  B  no  interest,  except  as 
a  ])artner  in  the  real  estate,  which  "was  all  the  property  of  the  part- 
nership," and  not  sufficient  to  pay  its  lien  creditors.— Judgment  for 
want  of  a  sufficient  affidavit.  Fatfls  not  set  forth:  i,  deed  vesting 
title  in  firm;  2,  coutradl,  recorded,  by  partners  to  hold  real  estate  as 
firm  stock,  or,  3,  notice  to  individual  creditor  of  firm  title  before  debt 
contracled.  Revival  would  prejudice  nothing.  Kepler  v.  Erie  Dime 
Savings  &  Loan  Co.,  5  Out.  602,  Pa.  (1882). 

Supra,  u.  I. 

4.  Wisbam  V.  Idppincott,   ?  79,  n.  i. 

5.  Howell  V.  Teel,  supra  n.  i. 

6.  Judgment  against  the  firm  binds  its  real  estate.  B  &  C,  for  loans 
made  to  the  firm,  gave  judgment  notes  to  A  et  at.,  and  they  entered 
them  up  against  tlie  firm,  w^hich  owned  real  estate.  The  assignee 
in  bankruptcy  sold  the  real  estate,  and  claimed  the  proceeds,  which 
Aet.  at.,  disputed  with  him.  The  register  ruled  out  the  judgment 
creditors,  because  no  lien  could  attach  to  firm  real  estate,  which  is 
personal  property. — ^Judgment  for  A  et.  at.  Firm  real  estate  retains 
Us  incidents  for  lien  of  judgment,  as  well  as  by  mortgage.  In  re 
Codding,  9  Fed.  Reporter  849  (1881). 

7.  Judgment  against  fir^n  binds  partner's  separate  real  estate.  D  et  al. , 
firm  creditors,  recovered  judgmeut  against  B  &  Co.,  in  1852.  A,  sep- 
arate creditor  of  B,  recovered  judgment  against  him,  and  sold  his 
land.  A  claimed  priority  out  of  proceeds. — Judgment  for  D  et  al. 
Priority  of  record  lien  determines  who  takes  precedence  in  payment. 
Cumming's  Appeal,  i  Casey  268,  Pa.  (1855). 

8.  Equitable  title  bought  for  a  firm,  and  ivith  its  money,  is  bound  by 
judgment  against  a  partner,  zvhere  articles  do  not  call  for  a  convey- 
ance to  the  firm.  A,  B,  C  &  D,  partners,  by  articles,  in  1872,  agreed 
to  buy  of  Iv,  for  themselves,  their  heirs  and  assigns,  a  tradl  of  land 
for  their  lumber  business.  D  did  not  sign  the  articles,  and  no  deed 
was  made.  The  land  was  used  in  the  business,  and  part  payment 
made  with  finn  funds.  Judgments  were  recovered  against  C  &  D. 
The  firm,  1875,  agreed  to  .sell  the  tradl  to  F,  who  refused  the  title. 
In  1876  the  firm  assigned  their  interest  to  E,  and  all  brought  specific 

374 


Pt.  2,  Ch.  7.      ■  Firm  Land.  §111. 

performance. — Decree,  with  deducfbions  of  judgments  against  C  &  D. 
E  agreed  to  convey  to  the  four,  and  his  renouncing  D's  covenant  for 
payment  would  not  alter  the  conveyance.  Holt's  Appeal,  2  Outer- 
bridge  257,  Pa.  (1881). 

9.  Separate  judgment  against  partncrnot  holding  title,  gives  110  lien. 
B,  partner  with  C,  purchased  land  with  firm  money,  taking  the  title 
in  his  own  name.  The  land  was  intended  for  firm  purposes,  and 
so  used.  A  recovered  judgment  against  C,  his  private  debtor,  and 
subsequently  B  confessed  judgment  to  D,  a  firm  creditor.  Other  firm 
creditors  had  judgments  against  the  firm  on  which  executions  issued. 
The  proceeds  of  sheriff's  sale  were  paid  into  court  for  distribution. — 
The  lot  was  partnership  property,  and  the  partners  were  not  tenants 
in  common.  The  judgment  of  A  was  no  lien.  At  most  he  could  only 
have  sold  C's  interest,  and  that  was  personal  and  not  subje6l  to  a  lien. 
Proceeds  awarded  to  firm  execution-creditors.  Erwin's  Appeal,  3  Wr. 
535,  Pa.  (1861). 
ID-  Judgineiit  against  separate  partners  holding  legal  title  to  firm  land 
bind  o)ily  their  iyiterests  after  firm  debts,  though  subsequently  con- 
traced,  are  paid.  B  &  C,  partners,  bought  and  used  for  firm,  land, 
taking  title  as  tenants  in  common.  A  recovered  a  judgment  in  1871, 
and  another  in  1876,  against  B  and  C  for  separate  liabilities.  Subse- 
quently D  obtained  judgment  against  B  &  C  for  a  firm  debt.  Upon 
C's  death  and  insolvency  of  firm,  A  claimed  priority  by  virtue  of  his 
statutory  liens. — Judgment  for  D.  A's  liens  subjecft  to  D's  equity  to 
apply  assets  to  firm  debts.    Page  v.  Thomas,  43  Ohio  St.  38  (1885). 

II.  Where  the  deed  is  made  to  the  partners  as  individu- 
als, without  more,  they  will  hold  as  tenants  in  common, 
and  no  equity  will  arise  to  the  firm,  although  the  con- 
sideration may  have  moved  from  the  partnership,  and 
the  property  have  been  used  for  firm  purposes,  and  im- 
proved with  firm  funds.  No  oral  evidence  will  be  ad- 
mitted to  contradict  the  record,  to  transfer  title  and 
affe6l  creditors. 

Record  settles  zvhethcr  land  is  joint  or  separate.  E  &  B  held  land 
during  partnership  as  tenants  in  common.  C,  on  judgment  against  E 
for  a  private  debt,  levied  on  and  sold  moiety  of  the  land  which  he 
had  sold  to  D.  A,  a  creditor  of  the  firm  E  &  B,  claimed  paramount 
title,  offering  parol  evidence  to  prove  that,  while  the  deed  was  to 
E  &  B  as  tenants  in  common,  it  was  purchased  with  partnership  funds 
for  partnership  purposes,  and  E  had  retired,  leaving  land  to  B  for 
settlement  of  firm  debts ;  urging  that  being  firm  property,  by  a  re- 
sulting trust,  according  to  the  principles  of  equity,  it  was  pledged 
to  partnership  creditors,  and  that  lien  of  separate  creditors  should 
be  subordinated  to  equities  of  the  partners. — vSuch  evidence  is  forbid- 
den by  Statute  of  P^rauds  and  recording  acfts;  the  part  performance 
claimed  will  not  avail.  The  intention  to  rebut  the  deed  must  also 
,^e  by  deed.  The  partners  owned  the  money,  and  might  appropriate 
it  to  themselves  as  individuals,  and  it  was  their  intention  to  do 
this  in  the  present  case,  because  there  was  no  assertion  on  the  deed 
of  a  partnership  taking.  D  took  E's  interest  without  reference  to 
the  partnership  liabilities.  Hale  v.  Henrie,  2  Watts  143,  Pa.  (1834). 
Land  was  bought  by  A  &  B,  partners,  as  individuals,  and  the  first 
instalment  of  the  price  was  paid  by  them.  C  then  joined  the  firm, 
and  the  balance  of  the  price  v.?.s  paid  by  the  new  firm.     The  part- 


^,,2.  Firm  Land.  Pt.  2,  Ch.  7. 

iitTsliip  funds  were  also  expended  in  making  improvemenls  on  the 
premises.      It  was  agreed  that  C  should  have  one-third  ot  the  prop- 

^.riv. The  jjarol  agreement  vested  no  title  in  him  as  an  individual, 

and  did  not  raise  a  "resulting  title  in  the  firm.     Lefevre's  Appeal,  19 
Smith  22,  I'a.  (1X71)- 

12.     tieddes'  Appeal,  3  Norris  482,  Pa.  (1877). 

13-     i  '09.  'loles  7  and  9. 

Rirltitr's  i>iortf!^as;e  0/  his  land  for  fir })i  -makes  it  pro  tanto  firtn 
assets.  Lands  of  B  &  Co.,  in  Wisconsin,  were  encumbered  by  B's 
debts,  incurre<l  before  C  joined  him  in  the  business.  To  obtain  an 
extension  ol  the  indebtedness,  B  &  Co.  exchanged  notes  with  D  &  Co., 
and  C  gave  a  mortgage  on  his  land  in  New  Jersey  as  collateral  security. 
The  mortgage  was  assigned  to  A,  who  brought  bill  for  the  claim,  and 
H's  alienee  brought  cross-bill  to  restrain  him.  Defence :  IMortgage  for 
balance  of  debt  and  Wisconsin  land  should  be  exhausted  first.  C,  a 
surelv  for  B  (S:  Co.,  and  should  compel  sale  of  Wisconsin  lands.  The 
debt  B's  separate  obligation. — A  entitled  to  decree.  Payment  of  B's 
debt  enured  to  firm  of  B  &  Co.,  and  C  not  a  suretj'.  Tiffany  v.  Craw- 
ford, I  McCart.  Ch.  278,  N.  J.  (1862). 

15.     Devoney  v.  Mahoney,  'i  28,  n.  3. 


14 


§112, 


;3lpart  from  tl^c  rule  in  |)ennsTilt)ania,  v:s\\txt,  nn^er  a  recorb- 
snstcni,  tl)e  creiiitars  arc  mtitleii  to  rtlti  upon  tl)e  legal  title,  tljerc 
is  no  reason  to  eiduiie  proof  tl)at  tl)e  equitable  title  belongs  to  tl)e 
firm. 

,The  original  method  of  converting  land  into  firm 
assets  was  by  mutual  stipulation  in  the  partnership 
articles.  Without  a  contrad,  the  land  would  be  held 
in  common.'  Subsequently,  conversion  became  a 
question  simply  of  intention,  and  all  evidence  of  in- 
tention became  competent.'  Taking  land  by  the  part- 
ners for  a  firm  debt  establishes  a  firm  ownership. 
Although  they  might  intend  to  take  separate  titles, 
and  hold  in  common,  yet  taking  the  land  in  satisfac- 
tion of  a  firm  debt  would  disprove  a  withdraM^al,  be- 
cause the  title  would  be  acquired  in  the  transadlion 

376 


Pt.  2,  Ch.  7-  Firm   Land.  §112. 

of  firm  business.  If  land  held  by  one  partner  is  pur- 
chased with  firm  money,  the  inference  is  that  the  title 
belongs  to  the  firm,  which  paid  for  it.^  Using  land 
by  the  firm,  and  improving  it  with  firm  funds,  make 
it  firm  property.'^ 

The  consideration  for  a  deed  to  the  partners  can 
always  be  enquired  into.  The  legal  title,  standing  in 
them  as  tenants  in  common,  does  not  correspond  to 
their  interests  as  partners  in  the  firm  stock.  Their 
interests  are  not  necessarily  equal  in  amount,  but 
vary,  according  to  the  quotas  of  the  partners.  Nor 
are  they  ascertained  by  a  balance  of  account,  struck 
upon  a  computation  of  all  the  assets.  The  interests 
of  the  partners  in  the  land  are  fluctuating,  although 
their  shares  in  the  partnership  are  equal.  Fixed 
quotas  of  the  land,  therefore,  would  not  represent  the 
interests  of  the  partners,  even  when  they  had  equal 
shares  in  the  firm. 

The  question  arises :  Is  the  creditor  entitled  to  his 
debtor's  equity?  The  creditor  of  a  firm  would  stand 
in  his  debtor's  shoes,  and  take  the  proceeds  of  its  real 
estate.  Would  the  separate  creditor  be  wronged  b}^ 
the  appropriation?  He  gets  all  that  his  debtor  had; 
is  a  creditor  entitled  to  more  ?  The  separate  creditors 
have  no  standing  to  interfere  with  the  partnership  in 
the  exertion  of  its  right  of  dominion  over  land  held  for 
the  firm  by  the  individual  partners.'^  The  debt  of  a 
partner  is  not  a  lien  upon  the  legal  title.  The  claim 
does  not  attach  itself  to  any  property  of  the  debtor,  but 
remains  simply  his  personal  obligation.  Without  a 
definite  hold  upon  the  land,  how  can  a  separate  cred- 
itor prevent  the  real  owner  from  retaking  it?  More- 
over, the  debt  does  not  outrank  a  firm  debt,  even  upon 

377 


^112.  Firm  Land.  Pt.  2,  Ch.  7. 

the  debtor's  separate  estate,  but  stands  merely  upon  a 
footing  of  equality.  The  creditor,  too,  knew  that  he 
had  no  preference  over  firm  creditors  when  he  gave  the 
debtor  credit. 

The  payment  of  the  purchase-money  out  of  part- 
nership funds  establishes  the  beneficial  ownership  in 
the  firm,  although  the  conveyance  is  made  to  the  part- 
ners, as  individuals."  The  argument,  that  the  part- 
nership might  do  what  it  pleased  with  its  own,  and 
had  manifested  its  will  to  give  away  the  land  by  the 
deed,  proves  too  much.  No  resulting  trust  would 
arise  in  equity,  if  this  argument  should  prevail.  In 
all  cases,  the  deed  might  be  treated  as  a  donation,  and 
the  enquiry  into  the  consideration  would  be  immate- 
rial. If  the  legal  title  stood  in  one  partner,  the  consid- 
eration would  be  still  more  controlling,  for  the  title 
could  not  remain  in  him  without  defrauding  his  co- 
partner, who  paid  his  proportion  of  the  price,^ 

Notice  brought  home  to  the  separate  creditors  takes 
away  their  right  to  hold  against  the  firm  creditors.^ 
A  bill  by  the  firm  to  assert  its  equity,  would  be  lis 
pendens^  and  prevent  a  separate  creditor  of  the  part- 
ner holding  the  legal  title  from  claiming  against  the 
firm.'"  Even  a  purchaser"  or  mortgagee,^'  with  knowl- 
edge of  the  firm's  equitable  title,  would  take  subje(5l 
to  it,  unless  he  is  vested  with  a  right  by  statute.  The 
enactment  gives  him  a  positive  right,  which  notice 
does  not  take  away. 

The  wife  of  a  deceased  partner  has  no  right  to  dower 
m  land  held  by  her  husband,  in  common  with  his  co- 
partners, for  the  firm.  The  dower  is  subjeA  to  the 
paramount  title  of  the  firm,  and  the  husband's  interest 
in  the  firm  assets  may  not,  on  a  settlement,  amount 

37S 


Pt.  2,  Ch.  7.  Firm  Land.  §ii3, 

to  anything/^  The  firm  creditors  cut  out  the  widow 
of  a  partner.  She  is  dowable  of  what  he  leaves  at  his 
death.  The  debts  accrued  during  his  life-time,  and 
he  leaves  only  the  balance  after  the  debts  are  paid.'^ 
If  the  partner  was  married  before  he  went  into  part- 
nership, the  debts  attached  after  the  dower;  but  the 
land  is  only  the  surplus  after  the  payment  of  debts. ^'^ 

The  dower  attaches  subje(5l  to  the  firm's  equitable 
title,  or  it  awaits  a  reconversion  of  the  land,  according 
to  the  theory  which  prevails  of  the  firm  title  to  real 
estate.  In  New  York,  dower  attaches  pending  the 
firm,  and  follows  the  legal  title.  As  the  legal  title  is 
a  tenancy  in  common  of  partnership  land,  the  widow 
takes  dower  but  in  a  moiety,  although  her  husband 
had  a  two-thirds  interest  in  the  firm.^*^  In  New  York, 
also,  her  interest  attaches  under  the  equitable  lien. 
The  dower,  in  either  event,  is  a  life  estate  in  the  land, 
and  not  an  absolute  right  in  the  personal  estate.  Con- 
versely, the  husband's  curtesy  is  limited  to  a  life  in- 
terest in  the  share  of  a  partnership  left  by  a  father  to 
his  married  daughter.'^ 

The  partner  holding  title  for  the  firm  can  convey 
it  without  his  co-partner  joining  in  the  deed.  He  can 
alien  it  for  firm  purposes,  with  the  same  efifedl  as  he 
can  dispose  of  personal  assets.'*^  A  partner  could  not 
assign  a  lease  made  to  his  co-partner,  because  no  legal 
title  is  vested  in  him,  which  he  could  assign.^"  He 
might  sell,  it  seems,  his  share  of  firm  real  estate,  sub- 
je6l  to  his  co-partner's  equity.  He  sells  out  his  interest 
in  land,  which  is  specific,  as  he  sells  out  his  share  of  the 
personal  assets.  He  cannot  be  restrained  from  sell- 
ing out,  although  the  sale  of  his  interest  in  the  prop- 
erty might  result  in  breaking  up  the  business.'-'' 

379 


5 1, 2,  Firm  Land.  Pt.  2,  Ch.  7. 

1.  Coles  V.  Coles,  J  14,  n.  i. 

At  the  present  day,  a  contradl  would  extend  the  con- 
version and  assimilate  land  to  personalty,  by  making 
it,  with  the  personal  assets,  the  joint  and  primary  fund 
for  the  payment  of  debts. 

Jiv  coiilniil  partners  may  convert  hnid  into  a  chattel,  liable  in  the 
first,  and  not  mcrclv  in  the  second,  instance  for  firm  debts.  B  &  C,  by 
oontxacl.  made  land  joint  assets.  C,  by  will,  repeated  terms,  giving  B 
power  to  dispose  of  land  for  settlement  of  business.  B  conveyed  land 
in  satisfaclion  of  firm  del)t  without  reference  to  power.  A  et  al.,  heirs 
of  C,  l)rout;ht  ejeclment. — ^Judgment  for  defendant.  Contradl  and  will 
converted  land,  and  made  it  liable  as  well  as  personalty  in  first  instance 
for  firm  debts.    Davis  v.  Smith,  2  S.  Rep'rSgy,  Ala.  (1887). 

2.  \  109,  n.  5. 

3.  '',,  109,  n.  6. 

4.  Partner  who  receives  commission  from  co-partners  for  furnishing 
purcliasc-money  to  buy  laud  for  firm,  holds  title  as  trustee.  A  having 
option  to  buy  laud,  formed  partnership  with  B  &  C  to  divide  the  tracr 
and  sell  off  lots  for  building.  C  agreed  to  advance  the  purchase- 
money,  and  received  commission  for  obtaining  it  from  A  &  B.  He 
took  notes  from  B  for  reimbursement  in  part.  Profits,  A  4-10,  and  B  & 
C  eacli  3-10.  C  took  title  for  security,  and  after  selling  part  of  tradl, 
B  &  C  refused  to  continue  business  with  A,  and  excluded  him.  A 
brought  partition.— Decree.  C  trustee  for  A's  quota,  4-10.  Tenney 
V.  Simpson,  15  P.  Rep'r  187,  Kan.  (1887). 

The  New  York  statute  prohibits  a  concealment  of  the 
beneficial  ownership  in  land,  and  prevents  a  trust  from 
resulting  to  the  purchaser,  if  he  puts  the  legal  title  in 
another.''  The  adl  does  not  apply,  if  the  title  is  taken 
in  tlie  other's  name  without  the  purchaser's  knowledge. 
Tlie  beneficial  ownership  will  then  result  to  him. 

Partner  takins;  tide  to  land  without  co-partners''  knowledge  bought 
for  the  firm,  and  with  its  funds,  is  a  trustee  of  the  land  as  personalty. 
.V  bought  city  lots  with  firm  money,  but  without  co-partners'  knowl- 
edge, took  title  in  his  individual  name.  They  w  ere  entered  on  the 
books  as  firm  property,  and  the  taxes  and  encumbrances  were  paid 
by  the  funds,  and  entered  to  the  credit  of  the  firm.  A  died,  and  his 
heirs  brought  partition  for  the  lots  among  themselves.  The  co-part- 
ners and  the  heirs  of  another  deceased  partner  claimed  the  land  as 
partnership  property.  Defence :  By  New  York  statute,  vendee  not 
trustee  for  another  who  pays  the  price.— A  bought  the  land  for  the 
partnership,  and  w^as  a  trustee  for  the  firm  during  its  continuance, 
and  after  dissolution  for  the  partners  and  their  heirs,  i.  Statute 
speaks  of  different  persons.  Vendee,  as  partner,  paid  part  of  the 
price.  2.  There  is  equitable  conversion  of  land  bought  for  the  firm, 
and  the  purchasing  partner  becomes  a  trustee  of  personalty.  Fair- 
child  v.  Fairchild,  64  N.  Y.  471  (1876). 

a.     I  R.  S.  728,  ?5i. 

The  distindlion  taken  by  the  court,  that  the  partner, 
or  partners  taking  title  as  individuals,  were  not  differ- 
ent persons  within  the  meaning  of  the  statute,  is  criti- 

380 


I 


f 


Pt.  2,  Ch.  7.  Firm  Land.  §113, 

cised  by  Mr.  Guy  C.  H.  CorliSvS,"  and  the  point  did 
not  arise  in  the  case,  as  the  co-partners  were  not  aware 
of  the  fa(5l  that  the  partner  had  taken  title  in  his  indi- 
vidual name.  Their  ignorance  of  the  fadl,  brought  the 
case  within  the  saving  of  sedlion  53. 
a.     Partnership  Real  Estate,  32  Alb.  Lawjourn.  2S4,  304,  326  (1885). 

5.  Land  used  by  firm  and  itnproi'ed  with  its  funds  becomes  Jirtn  prop- 
erty, which  partner  ho/ding  title  cannot  assign  for  creditors.  A  &  B 
partners.  B  contributed  lands,  which  were  used  for  firm  business, 
retaining  title  in  his  name ;  but  the  lands  should  belong  to  firm  when 
A  completed  certain  payments.  A  made  some  payments,  and  firm 
money  was  expended  in  improving  the  lands.  B  sold  out  to  C,  whom 
A  received  as  partner.  C  assigned  for  creditors,  lands  to  D,  goods  to 
E,  without  A's  knowledge.  A  enjoined. — Decree.  Lands  partnership 
property,  but  assignment  invalid,  because  partner  cannot  delegate  his 
discretion.  Demmy  v.  Colt,  3  Sandf.  284,  N.  Y.  (1850). 

Black's  Appeal,  ?  11,  n.  i. 

6.  Judgment  against  partner  holding  title  of  firm  land,  no  lien  against 
firm  creditors.  B  &  C,  in  1874,  bought  land  with  firm  funds,  but  B 
took  title.  The  land  was  conveyed,  in  1876,  when  firm  was  insolvent, 
to  D,  who  sold  to  A,  the  wife  of  B.  Under  judgments  against  B,  the 
land  was  seized.  A  enjoined  his  creditors. — Decree.  Land  firm  prop- 
erty, and  plaintiff  derived  title  from  firm.  Judgment  against  B  gave 
no  lien,  and  separate  creditors  entitled  only  to  excess  after  payment 
of  firm  debts.     Bowen  v.  Billings,  13  Neb.  439  (1882). 

The  partner's  lien  would  prevail  against  the  separate 
creditors,  even  with  judgments,  and  exclude  them  from 
the  firm  land. 

Partner  may  be  creditor  of  firm,  and  has  equitable  lien  07i  firm, 
land  held  in  individual  name  of  partner.  A  contributed  ^15,000, 
and  B,  C  &  D,  iron  manufadlurers  in  Pennsylvania,  contributed  the 
same  amount  in  tools  and  machinery,  which  they  transferred  to  New 
Jersey,  where  the  firm  bought  land,  taking  title  in  the  individual 
names  of  the  partners,  and  eredled  buildings.  B,  C  &  D  confessed 
judgment  to  their  individual  creditors,  who  sold  the  firm  land  and 
stock  in  New  Jersey.  A  claimed  that  his  debt  was  an  equitable  lien, 
which  was  paramount  to  the  confessed  judgments. — .\  entitled,  as  a 
firm  creditor,  to  be  paid  out  of  proceeds  before  judgment  creditors 
of  individual  partners.  L^hler  v.  Semple,  5  C.  E.  Gr.  288,  N.  J. 
(1869). 

7.  Title  of  land  in  partners,  as  tenants  in  common,  results  to  firm, 
which  pays  the  price.  Account  to  date,  and  maybe  made  up  anew, 
if  book  inadequate.  A  &  B,  partners.  Land  bought  for  firm  place  of 
business,  and  paid  for  in  part,  and  mortgaged  for  balance  by  firm. 
Title  taken  by  A  &  B  as  tenants  in  common.  A  brought  adlion  for 
distribution  and  account.  From  B's  bookkeeping,  balance  for  A  $100, 
but  not  corre<5l,  and,  by  agreement,  experts  opened  a  new  set  of  books. 
They  found  balance  of  f8,6oo.35,  including  a  payment  of  naortgage 
since  aAion  brought,  and  charging  B  premium  of  |i,796,  which  he 
had  not  paid  for  becoming  partner. — Decree.  Land  belonged  to  firm. 
Expert  books  a  necessity.  Mortgage  properly  included  in  account, 
and  if  premium  antecedent  to  partnership,  no  demurrer  to  complaint. 
Roberts  V.  Eldred,  15  P.  Rep's  16,  Cal.  (1S87). 

381 


h 


5ii2.  Firm  Land.  Pt.  2,  Ch.  7. 

8  Parttitts  co-oivncrs  of  land  not  Jinn  assets.  B  &  C  were  partners. 
U  had  title  to  house  subjetfl  to  mortgage;  house  never  used  for  Lrm; 
question:  Whether  bought  with  firm  money.  B  conveyed,  without 
cousideration,  to  his  mother,  and  died.  C  assigned,  for  firm  creditors, 
his  interest  in  the  house.  Assignee  sold  the  interest  of  D.  Surplus 
of  sale  mider  mortgage  was  claimed  by  mother  and  by  D. — If  house 
purchased  with  firm  money,  C  owned  a  moiety,  which  would  go  to 
his  separate  creditors,  because  use  of  firm  funds  for  purchase,  not 
made  for  firm  purposes,  was  a  withdrawal.  B's  deed  a  prima  facie 
fraud  upon  creditors.  C  was  estopped  by  his  approval,  but  his  cred- 
itors might  disregard  the  conveyance.  If  B  &  C  had  no  separate 
creditors,  the  surplus  goes  to  firm  creditors,  and  under  assignee's 
deed  to  D.     Cox  v.  McBurney,  2  Sandf.  561,  N.  Y.  (1849). 

9.     Matlack  v.  James,  I  no,  n.  8. 

10.  fiill  In'  firm  for  lands  held  by  individual  member,  lis  pendens,  and 
affefls  subsequent  purchaser  with  notice.  A  et  at.  brought  bill  for 
lands  as  firm  property,  though  title  was  held  by  B.  C  recovered 
judgment  against  B,  and  sold  the  lands  at  sheriff's  sale  to  D,  who 
brought  ejectment.  A  enjoined  him  from  proceeding. — Maintained. 
Bill  lis  pendens,  and  construdlive  notice  to  purchaser.  Ettenborough 
v.  Bishop,  II  C.  E.  Gr.  262,  N.  J.  (1875). 

11.  Matlack  v.  James,  ^  no,  n.  8. 

An  heir  could  assert  no  title,  because  he  is  a  volun- 
teer. 

Juds;vient  against  surviving  and  executor  of  deceased  partner 
charges  firm  land  in  hands  of  heirs.  B  executed  bond  to  A  in  name 
of  B  &  C.  C  died,  appointing  B  his  executor,  and  A  obtained  judg- 
ment against  B  personally,  and  de  bonis  testatoris,  and  upon  return 
of  milla  bona,  brought  bill  to  satisfy  debt  out  of  firm  land. — Decree. 
Logan  V.  Greenshaw,  25  P'ed.  Rep'r  299  (1885),  and  note. 

12.  Landlord's  claim  for  rent  of  firm  pretnises  has  priority  over  lien 
of  separate  partner's  mortgage  of  his  interest.  Firm  of  B  &  C  were 
lessees  of  a  mill.  B  mortgaged  his  interest  in  mill  and  machinery  to 
A,  who  filed  a  bill  to  foreclose,  and  claimed  priority  over  rent,  which 
had  accrued  since  date  of  mortgage. — Disallowed.  Rent  a  firm  debt, 
which  was  paramount  to  A's  individual  debt.  Mortgage  of  a  part- 
ner's interest,  unlike  an  assignment,  does  not  work  a  dissolution. 
Mechanics'  Bank  v.  Godwin,  i  Hal.  Ch.  334,  N.  J.  (1846). 

13.  Land  bought  with  firm  funds,  and  used  exclusively  for  firm  pur- 
poses, not  liable  to  dower  by  widoiv  of  partner  indebted  to  firm.  B 
and  his  co-partner,  who  had  agreed  that  at  dissolution  firm  property 
should  be  sold  for  firm  debts,  bought  land  and  eredled  buildings 
upon  it  for  their  brass  and  iron  foundry  Creditors  recovered  judg-  -j 
ments  against  them,  and  took  the  premises  in  execution.  B,  who  :») 
had  1-5  of  the  profits,  died,  indebted  to  the  firm.  A,  B's  widow,  t 
brought  bill  for  dower.— Dismissed.  B's  beneficial  interest  subjedl  \t 
to  firm  debts,  and  his  possession  a  technical  seizin  which  gave  wife 
no  right  to  dower.  Agreement  converted  land  into  personal  estate. 
Greene  v.  Greene,  i  Ohio  535  {1823). 

14.  Debts  a  lien  on  partnership  land,  and  paramount  to  dower.  B  &  C, 
m  partnership  as  builders,  bought  land  with  firm  funds.  B  died  in- 
testate, and  at  his  death  the  firm  required  this  land  for  payment  of 
Us  debts.  A,  B's  widow,  claimed  dower.  Statutory  dower  limited 
to  husband's  estate  of  inheritance.— Disallowed.     Firm  debts  con- 

382 


Pt.  2,  Ch.  7.  Firm  Land.  §112. 

stitute  a  lien,  which  dates  from  the  acquisition  of  title,  and  enures 
to  creditors  as  well  as  co-partners.  Sumner  v.  Hampton,  8  Ohio 
328-365(1838). 

Dower  in  partnership  lands  subjeSl  to  equitable  claims  betzveen 
partners.  B  &  C  owned  firm  lands.  B  died,  leaving  his  widow,  A, 
and  heirs.  A  claimed  dower. — Entitled  to  assignment.  Land  bought 
with  iirtn  funds,  or  for  firm  use,  retains,  subjecft  to  equitable  claims 
between  partners,  its  legal  incidents.  Campbell  v.  Campbell,  3  Stew. 
415.  N.  J.  (1879). 

Code  which  endows  widow  of  any  legal  or  equitable  estate  possessed 
by  husband  at  any  time  during  marriage,  does  not  extend  to  land  held 
for  firm.  B  &  C  formed  partnership  to  speculate  in  lands.  Trustee 
took  title,  and  each  subscriber  shared  profits  in  proportion  to  his  con- 
tribution. Death  of  member  did  not  dissolve  partnership,  but  substi- 
tuted representatives.  A  bought  land  of  trustee,  B's  widow  claimed 
dower. — Judgment  for  A.  Mallory  v.  Russell,  32  N.  W.  Rep.  102,  Iowa 
(1887). 

Widow  not  entitled  to  doiver  in  land  held  by  husband  for  his  firm. 
Firm  B  &  C  bought  saw-mill  property,  and  paid  for  it  with  firm 
funds,  but  took  title  as  individuals.  B  died,  and  the  firm  was  insol- 
vent. A,  widow  of  B,  claimed  dower. — Disallowed.  Firm  creditors 
entitled  to  land.     Paige  v.  Paige,  N.  \V.  Rep'r  360,  Iowa  (1887). 

15.  The  dower  of  the  widow,  which  the  decedent  could 
not  at  the  Common  law  cut  out  during  his  lifetime  by 
any  lien,  is  cut  out  by  the  creditor's  title.  Yet  the 
widow's  interest  attached  at  marriage,  and  the  heir's 
title  does  not  begin  until  the  decedent's  death.  The 
debts  operate  ipso faflo^  as  a  diminution  of  the  estate, 
and  leave  the  dower  as  an  interest  only  in  the  residue. 
The  heir  during  the  decedent's  lifetime  had  no  inter- 
est, and  when  he  acquired,  at  his  ancestor's  death,  the 
title,  it  had  already  been  diminished  by  the  amount  of 
debts  against  the  decedent.  Noakes  v.  Smith,  i  Yeates 
238,  Pa.  (1793). 

After  the  firm  uses  are  exhausted,  how  does  the  land 
go?  It  goes  back  to  the  partners,  and  vests  in  them  as 
land,  giving  the  widow  of  a  deceased  partner  dower, 
and  not  a  third  outright,  and  goes  to  the  heirs  and  not 
to  the  personal  representatives.  * 
a.     Foster's  Appeal,  \  109,  n.  9. 

16.  In  New  York,  dower  attaches,  pending  the  firm,  to 
the  partner's  title,  which  is  deemed  separate,  on  the 
theory  of  a  tenancy  in  common  ;  so  that  the  widow  has 
a  legal  right,  and  her  dower  is  also  an  equity.  The 
legal  and  equitable  right  prevail  over  the  equitable  lien 
of  the  firm  creditors.  '"■  / 

a.     Smith  V.  Jackson,  \  109,  n.  3.  ^ 

17.  Buckley  v.  Buckley,  §  109,  n.  2. 

383 


I 


$ii.V 


Firm  Land.  Pt.  2,  Ch.  7. 


18  Partner  liolJini^  Icj^al  title  to  real  estate  for  the  firm,  has  the  same 
Pourr  over  it  as  over  firm  personalty.  15  conveyed  an  undivided  half 
of  real  estate  to  C,  and  look  him  in  as  partner.  The  firm  being  in.sol- 
vent  C  eonveved  the  said  moiety  to  D,  in  part  payment  ol  a  firm 
debt'  Upon  dissolution,  B  &  C  conveyed  the  premises  to  A,  the  re- 
ceiver, who  l)rouKht  bill  against  D  fo."  a  reconveyance.  Argument: 
Real  estate  j)ersonal  property,  and  subjedled  to  partner's  equitable 
lieii,  and  conveyance  must  be  by  both  partners,  under  seal.  Partner 
holding  legal  title  for  one-half,  holds  moiety  of  it  for  himself,  and 
moiety  for  his  co-partner.— Judgment  for  D.  Partner  holding  legal 
title  for  the  firm  has  the  same  power  over  it  as  over  finn  personalty, 
and  his  conveyance  for  firm  purposes  passes  the  title  free  of  the 
firm's  e(iuity.  If  trustee  to  co-partner  for  a  moiety  of  one-half,  the 
separate  deeds  of  both  partners  to  D  would  leave  one-half  of  the 
tracl  unconveyed;  but  joint  deed  not  necessary  to  convey  firm  title. 
Van  Brunt  v.  Applegate,  44  N.  Y.  544  (1871). 

19.  .Issif^nment,  thoiiffh  for  firm,  must  be  executed  by  lessee.  B  &  C 
were  partners.  B  was  lessee  of  premises  used  by  the  firm.  C  assigned 
the  lease  for  a  firm  debt.  A  claimed  possession  under  assignment. 
No  evidence  that  lease  belonged  to  firm. — Only  lessee  can  assign. 
i^uer}':  Is  evidence  of  firm  title  competent  in  acSlion  at  law?  Otis  v. 
Sill,  «  Barb.  102,  N.  Y.  (1849). 

20.  Partner  has  the  right  to  sell  his  share  affirm  real  estate,  subjeH.  to 
co-partner's  equity.  A,  B  &  C,  hotel  proprietors  in  partnership.  C 
sold  his  interest  in  firm  real  estate  to  D.  A  and  B  sued  to  avoid  the 
conveyance,  because  it  injured  firm  credit. — Judgment  for  defendants. 
Partners,  unlike  creditors,  have  no  control  over  co-partner's  disposi- 
tion, which  is  always  subjedl  to  the  partner's  equity.  Treadwell  v. 
Williams,  9  Bosw.  649,  N.  Y.  (1862). 


§H3. 


Jn  pcnnsnlnania  tl)c  legal  title  is  uscli  to  protect  not  onlp 
iuLioimeut-treiiitors  toljo  are  not  U)itl)in  tl)e  rerorbing  acta,  but 
also  general  crebitors  ot  tl)e  title-l)oliicr.  yllje  title  cannot  be 
sl)iftcLi,  to  tijeir  fircjubice,  bn  parol  eDibence. 

As  the  deed  is  evidence  of  the  partners'  intention, 
they  should  put  the  title  either  in  the  firm,  or  in  the 
partners  as  tenants  in  common.  If  no  intention  is 
expressed,  they  will  take  as  tenants  in  common.  The 
facl  that  partnership  money  is  used  to  make  the  pur- 
chase, will  not  change  the  title,  for  they  may  prefer 
to  own  as  individuals.     Nor  will  using  the  land  for 

384 


If  t 


Pt.  2,  Ch.  7.  Firm  Land.  §113. 

firm  purposes  overcome  the  form  of  the  conveyance. 
The  purchase,  either  with  firm  funds  or  for  firm  pur- 
poses alone,  does  not  contradi6l  the  deed,  which  con- 
veys the  title  to  both.  The  means  to  procure  the 
property,  or  the  mode  of  its  enjoyment,  is  not  the  test 
'of  ownership.  If  both  are  combined,  they  do  not 
negative  the  intention  declared  by  the  deed,  that  the 
property  belongs  to  the  grantees,  as  the  parties  to  the 
instrument.  The  price  and  the  use,  together  do  not 
show  that  the  purchasers  took  in  the  capacity  of  part- 
ners, or  that  the  title  vested  in  them  as  partners  for 
the  business  undertaken  by  them.  The  natural  in- 
ference, that  they  took  like  ordinary  grantees,  which 
is  the  legal  effe6l  of  the  grant  arising  from  its  terms, 
can  not  be  overcome  or  explained  by  parol." 

May  the  partnership,  by  its  derelicftion  create  in 
the  separate  creditor  a  right  by  estoppel,  which  the 
debtor  did  not  possess?  If  the  firm  induces  a  credit 
by  holding  out  a  partner  as  the  owner  of  property, 
which  belonged  to  the  firm,  the  partnership  cannot 
assert  its  title  against  the  creditor  of  the  partner. 
The  title  which  the  partnership  suffered  to  stand  in 
the  partner's  name,  cannot  be  shifted  by  parol  evi- 
dence, after  the  rights  of  his  creditors  have  attached. 
The  firm  cannot  assert  an  equity  without  doing  equity 
to  the  separate  creditors  whom  it  misled.^ 

The  title  might  be  put  in  the  names  of  all  the  part- 
ners, as  tenants  in  common,  or  in  the  name  of  one, 
or  of  any  member  less  than  all.  It  is  the  creditors 
of  the  legal  holder  of  the  land  who  are  protedled 
against  a  change  of  title.  No  other  separate  credit- 
ors could  obje6l  to  the  equity  of  the  firm,  or  of  its 


385 


5i , ,  Firm  Land.  Pt.  2,  Ch.  7. 

creditors.     The  title  of  the  firm  would  prevail  over 
any  partner  who  did  not  hold  the  legal  title.'' 

The  foundation  for  this  argument  is,  that  the  cred- 
itor contrails  upon  the  faith  of  his  debtor's  record- 
title,  which  is  pledged  for  the  debt.  The  law  creates 
uo  such  pledge.^  But  the  creditor  knew,  it  is  said, 
that,  upon  insolvency,  the  law  sets  apart  the  property 
vested  in  his  debtor  for  his  individual  creditor,  and 
excludes  the  firm  creditor  from  recourse  to  it.  The 
pinch,  ever}^  creditor  knows,  is  not  during  the  solv- 
ency of  the  firm,  when  there  are  assets  to  pay  all 
the  debts,  and  when  there  is  no  thought  of  resorting 
to  the  separate  estate.  The  competition  arises  only 
when  the  assets  are  insufficient,  and  then,  in  time  of 
need,  the  separate  creditor  knows  that  he  can  look 
with  assurance  to  his  debtor's  estate  for  satisfacftion. 
The  right  of  severance,  which  the  'rule  of  conveni- 
ence' establishes  upon  insolvency,  creates  a  distin6l 
preference  in  favor  of  the  separate  creditor,  and  gives 
him  a  lien  upon  the  estate.  He  is  invested  with  a 
right  which  enables  him  to  enjoin  the  partnership 
from  intruding  upon  his  allotted  field. 

The  argument  begs  the  question  in  dispute.  It 
assumes  that  the  title  belongs  to  the  individual  part- 
ner. If  he  merely  holds  the  title  for  the  firm,  his 
creditors  can  abstra6l  it  from  the  firm  or  its  cred-- 
itors  with  as  little  show  of  right  as  he  could  appro- 
priate it  for  himself.  Upon  insolvency  the  rights  of 
the  joint  and  separate  creditors  are  fixed.  The  com- 
mission operates  as  a  general  execution,  and  a  joint 
is  paramount  to  a  separate  levy,  and  intercepts  the 
firm  title,  at  any  time  prior  to  a  sale." 


386 


Pt.  2,  Ch.  7.  Firm  Land.  §113. 

The  argument  did  not  originate  in  partnership  law, 
but  was  transplanted  by  analogy  from  the  do6lrine  of 
the  lien  of  a  decedent's  debts.  The  peculiar  do6lrine 
of  Pennsylvania,  which  makes  land  an  asset  for  the 
payment  of  debts,  accounts  for  the  anomaly  in  partner- 
ship land.  In  Pennsylvania  judgment-creditors  w^ere 
assimilated  to  purchasers  and  mortgagees,  who  con- 
tradled  on  the  faith  of  the  record  title/  The  judgment- 
creditors  were  not  protected  by  the  recording  a(5ls,  which 
apply  only  to  deeds  and  mortgages,  but  they  were  pro- 
te(5led  against  any  shifting  of  title,  without  notice,  by 
parol  evidence.^  The  inference  from  giving  the  judg- 
ment a  lien  was  inevitable  that  the  debtor  pledged  his 
title  when  the  debt  was  contraAed,  not  when  the  judg- 
ment was  entered.  His  creditor,  therefore,  acquired 
a  lien,  which  existed,  apart  from  the  judgment,  and 
took  effe6l  without  reference  to  it. 

I.  Land  is  not  floating  capital,  and,  unless  involved  in 
the  business,  by  being  the  substance  of  its  transa(5lions, 
does  not  become  firm  property.    ^67, 

The  deed  settles  the  question  of  title  to  the  land.  If 
the  partners  are  the  grantees,  they  will  hold  the  title  as 
tenants  in  common.  The  title  does  not  result  to  the 
firm,  when  it  pays  the  price  and  uses  the  land  for  its 
business.''^  The  firm  could  appropriate  its  money  to  the 
partners  as  individuals,  and  the  investment  would  be  a 
withdrawal  by  the  partners  of  property  from  the  firm.^ 
There  is  nothing  in  the  price  aud  use  to  rebut  the  title 
declared  in  the  deed.*^  Parol  evidence  is  incompetent  to 
convert  the  title,  and  vest  it  in  the  firm. 

Parol  evidence,  though  incompetent  to  change  the 
legal  title,  is  admitted,  to  show  whether  the  firm  or  a 
co-partner  is  the  beneficial  owner. 

a.  Title  in  partner  makes  land  separate  estate.  A  &  B  owned  land, 
purchased  with  partnership  assets,  conveyed  to  A  as  an  individual. 
It  was  used  in  carryincr  on  the  partnership  business,  and  while  it  was 
so  employed,  A  transferred  to  B  one-fifth  part  of  it,  which  represented 
his  interest  in  the  firm.  Upon  bankruptcy  of  firm,  in  controversy 
between  creditors  of  firm  and  individual  members. — Held,  resulting 

387 


§113- 


Firm  Land.  Pt.  2,  Ch.  7. 


trust  if  any  ceased  to  exist  on  conveyance  to  B ;  land  became  pri- 
vate 'nropcrt'v  according  to  record.  A  &  B  held  as  tenants  in  com- 
mon hence  'separate  creditors  entitled  to  preference.  In  re  C.  Zug 
&  Co.,  34  Legal  Int.  402  (ib??)- 
b  Use  of  land  does  not  make  the  proceeds  firm  assets,  especially  if  di- 
videdamor.^ partners.  B,  partner  in  railroad  construction  firm,  con- 
vfved  undivided  parts  of  a  slate  quarry  to  his  partners.  They  worked 
the  (luarrv,  and  subsequently  sold  it,  making  the  price  payable  to 
each  in  equal  parts.  B  received  payment,  and  A  claimed  two  parts, 
havini,'  bou^'ht  out  a  co-partner's  quota.  Defence  of  B's  administra- 
tors •  buarry  partnership  property.— Recovered.  No  evidence  that 
quarrv  bought  with  firm  funds,  and  if  used  for  firm,  sale  and  divi- 
sion of  price  a  withdrawal.  Shafer's  Appeal,  10  Out.  49,  Pa.  (1884). 

c.  Hale  V.  Henrie,  <!  in,  n.  11. 

If  the  title  is  taken  in  the  individual  name  of  a  part- 
ner, it  will  not  result  to  the  firm  for  the  benefit  of  a  co- 
partner. The  possession  is  explained  by  the  use,  that 
is,  to  carry  on  the  business.  The  title  need  not,  for  that 
purpose,  be  vested  in  the  firm,  but  might  remain  in  the 
buying  partner.*^ 

d.  Lefevre's  Appeal,  ?  iii,  n.  11. 

The  title  would  not  be  shifted  by  parol  from  an  indi- 
vidual to  a  firm,  which  he  forms  to  transadl  business  on 
the  land.  The  co-partner's  going  into  possession  with 
him  did  not  exclude  him,  and  answer  for  a  feudal  in- 
vestiture, but  was  consistent  with  his  ownership,  as  the 
possession  might  be  limited  to  doing  business  on  the 
land.  There  is  no  part-performance  to  take  the  transfer 
out  of  the  statute  of  frauds,  because  the  possession  is 
joint  and  the  owner  is  not  excluded.** 

e.  McCormick's  Appeal,  \  10,  n.  8;    Foster's  Appeal,  g  109,  n.  9. 

A  decree  of  court,  which  sold,  as  firm  property,  the 
title  taken  by  the  partners  as  tenants  in  common,  would 
not  convey  the  land.  The  decree  could  not  invest  the 
firm  with  the  individual  partner's  title,  or  estop  any 
one  not  a  party  to  the  bill  from  disregarding  the  sale, 
and  proceeding  against  the  record  title.  ^ 

/.  Record  title  in  partner  fixes  right  of  separate  creditors.  D  &  B,  who 
held  land,  used  for  partnership  purposes,  as  tenants  in  common,  re- 
ceived C  into  the  firm,  and  conveyed  to  him  one-third  interest  in  the 
land.  B  died,  decree  for  an  account,  a  receiver  appointed,  and,  on 
petition  of  B's  administrator,  court  sold  land  to  pay  firm  debts.  A, 
had  entered  judgment  against  C,  which  bound  his  title  as  an  individual, 
though  he  received  it  on  coming  into  the  firm  as  partner.— Sale  could 
not  pass  title  to  real  estate  sold  as  firm  property,  but  which  did  not 
really  belong  to  the  partnership.  The  parties  to  proceedings  in 
equity  were  estopped  from  denying  that  the  land  belonged  to  the 

388 


MX 


Pt.  2,  Ch.  7.  Firm   Land.  §113. 

firm,  and  their  interests  passed  by  the  sale ;  but  as  to  all  not  parties 
to  bill,  it  remained,  so  far  as  sale  was  concerned,  an  open  question 
whether  or  not  the  land  was  partnership  assets.  But  a  verdi6t  and 
the  paper  title  had  determined  this  in  the  negative,  and  title  to  C's 
share  did  not  pass,    Foster  v.  Barnes,  31  Sm.  377,  Pa.  (1876). 

2.  Contrail  to  buy  land  as  tenants  in  couivion  vests  title  in  individuals, 
thoughfirui  furnished  the  money,  and  firm  i}>iprovcd  premises  for  its 
business.  B  &  C,  partners,  contracted  for  land,  and  ere<5ted  a  building 
upon  it,  for  the  clothing  business,  which  the  firm  carried  on.  The 
money  for  the  purchase  and  improvement  was  furnished  by  the  firm. 
The  contraA  w-as  upon  payment,  to  convey  to  B  &  C,  their  heirs  and 
assigns,  the  lot  in  fee.  No  deed  was  made.  A  obtained  judgment 
against  B. — A's  lien  bound  by  B's  moiety.  Erb's  Estate,  i  Pearson 
98,  Pa.  (1856). 

3.  If  the  title  is  vested  in  the  partners  as  tenants  in  com- 
mon, the  separate  creditors  contrail,  it  is  held,  on  the 
faith  of  the  record-title,  which  cannot  be  changed  with- 
out their  knowledge.  A  partner  could  not,  by  a  judg- 
ment against  his  co-partner,  devest  any  part  of  the 
moiety  on  the  ground  that  the  partnership  account 
showed  a  balance  in  favor  of  the  plaintiff  partner.*^ 

g.  Judgment-creditor  of  partner  holding  title  proteBed  against  any 
shifting  of  title  to  firm  by  parol.  A  &  B,  partners,  bought  lots  adjoin- 
ing their  place  of  business  with  firm  funds,  but  took  title  as  tenants 
in  common.  A  recovered  judgment  against  B  on  a  settlement  of 
partnership  accounts,  and  claimed  payment  out  of  fund  raised  by 
sheriff's  sale  under  a  subsequent  judgment  recovered  against  the 
firm. — The  judgment-creditors  of  the  title-holder  were  not  protedled 
by  the  recording  acfls,  which  apply  to  deeds  and  mortgages,  but  they 
were  protected  against  a  shifting  of  the  title  without  notice,  by  parol 
evidence.   Ebbert's  Appeal,  20  Sm.  79,  Pa.  (1871). 

A  moiety  descends,  upon  the  partner's  death,  to  his 
representative,  and  the  surviving  partner  has  no  claim 
to  administer  the  proceeds,  even  if  the  only  creditors 
are  firm  creditors.*^ 

h.  Land  descends  to  representative,  and  surviving  partner  no  right  to 
administer  proceeds,  even  if  there  are  only  firvi  crcditojs.  B  &  C, 
partners  in  lumbering,  bought  land,  with  firm  mone}^  for  partnership 
use,  but  took  title  as  tenants  in  common.  C  died  intestate,  and  his 
administrator,  D,  obtained  O.  C.  order  of  sale  for  payment  of  debts. 
The  only  debts  were  partnership  debts.  A,  the  assignee  in  bank- 
ruptcy of  B,  claimed  proceeds. — Proceeds  awarded  D.  O.  C.  sold 
estate  of  C,  not  of  the  partnership.  A  has  no  standing.  Jones'  Appeal, 
20  Smith  169,  Pa.  (1871). 

Demmy  v.  Colt,  3  Sandf.  2S4,  N.  Y.  (1850). 

4.  The  fa(5ls  of  Erwin's  Appeal'  do  not  raise  a  resulting 
trust  to  the  firm  against  creditors  of  the  holder  of  the 
legal  title.  The  contest  was  between  the  creditors  of 
the  firm  and  the  creditors  of  the  partner  who  did  not 

389 


§ij.  Firm  Land.  Pt.  2,  Ch.  7. 

hold  the  leo-al  estate.  Of  course,  between  them,  the  firm 
title  prevailed.  It  was  a  domestic  affair  between  the 
partners  themselves,  who  were  entitled  to  the  land,  and, 
as  they  had  the  right  to  it,  their  creditors  were  also  en- 
titled to  come  upon  it  as  a  firm  asset.  It  was  disputed 
to  be  for  firm  purposes,  and  hence  no  resulting  trust  to 
the  firm,  but  a  resulting  trust  as  to  a  moiety  to  the  other 
partner,  whose  creditors,  therefore,  would  be  entitled 
to  half  the  proceeds  of  a  sale.  The  law  of  Pennsylvania, 
therefore,  is  that  the  legal  title  governs,  not  only  as  to 
mortgagees  and  purchasers,  but  also  as  to  creditors, 
against  any  resulting  trust  to  the  firm,  and  Erwin's 
Appeal  forms  no  exception  to  the  rule.  The  principle 
for  this  policy  is  that  the  partners  can  invest  as  they 
please.  Taking  title  in  the  name  of  a  partner,  or  in  part- 
ners, as  tenants  in  common,  indicates  the  firm's  eledlion 
to  hold  not  as  a  firm.  If  the  partner  makes  the  invest- 
ment in  his  own  name,  although  the  a6l  is  a  fraud,  never- 
theless as  the  co-partners  made  him  their  partner  and 
agent,  his  act  within  the  powers  of  the  combined  mem- 
bers of  the  firm  will  commit  them  against  bona  fide 
dealers  with  him. 

t.    \  III,  n,  9. 

If  sufficient  to  change  the  title  at  all,  the  evidence 
must  shift  it  to  the  firm.  The  transfer  to  the  partners 
as  tenants  in  common,  would  be  but  a  stage  in  its  pro- 
gress, for  the  same  evidence  which  took  the  title  to  the 
partners,  as  individuals,  would  carry  it  on,  and  vest  it 
in  them  as  a  finn.  If  the  use  was  a  joint  user,  but  not  for 
a  partnership-purpose,  then  the  title  would  result  to  the 
co-partner,  as  to  a  moiety.  The  same  amount  of  evi- 
dence is  required  to  alter  the  title  in  either  case;  the 
price  or  the  use  would  show  a  common,  or  a  firm  equity, 
which  will  control  the  legal  title. 

5.  ^  "The  analojijy  *  is  all  in  favor  of  requiring  express  or  construdlive 
I' notice  lo  a  purchaser  or  mortgagee  of  the  land  to  affeA  him  with 
II  such  a  trust,  and  against  it  in  the  case  of  a  general  or  judgment- 
al creditor.  Such  a  one  trusts  the  general  credit  of  his  debtor,  and 
II  not  any  specific  property,  and  pra^ically  the  man  who  sells  goods 

or  lends  money  to  another  rarely  searches  the  recorder's  ofl&ce  to 
'see  whether  he  has  declared  a  trust  of  the  property  he  holds." 
Sharswood,  J.,  Calkett  v.  Thomas,  i  Phila.  463  (1853). 

6.  Though  subsequent,  a  joint  execution,  if  levied  prior  to  a  sale  on 
^^■parale  executions,  cuts  them  out.  B  obtained  judgment,  August, 
'^\^  aRamst  I).  C  also  obtained  judgment  against  E,  September  i, 
each  before  a  Justice  of  the  Peace.    F,  constable,  seized  firm  stock  of  D 

390 


Pt.  2,  Ch.  7-  Firm  Land.  §113. 

&  E,  for  sale  September  7.  D  &  E  gave  A,  September  4,  a  judgment- 
note,  which  he  entered  up  September  6.  A  issued  execution  Septem- 
ber 7,  before  F,  who  sold,  under  separate  writs,  to  A.  G,  sherift,  sold 
stock,  September  22,  to  H,  and  delivered  possession.  A  sued  G  for 
trespass. — Judgment  for  G.  Interests  of  D  and  of  E  intercepted  by 
joint  levy  before  sale.  Seinble.  After  sale  of  separate  interests,  no 
joint  stock  left.  Richards  v.  Allen,  44  Leg.  Int.  432,  Pa.  (1887). 

7.  The  A61  of  1798,  which  limited  the  lien  of  a  judg- 
ment upon  revival  to  five  years,  was  read  into  the  A(5l 
of  1897,  to  prevent  the  lien  of  a  decedent's  debts  from 
again  becoming  indefinite  in  duration  upon  prosecution 
by  the  creditor  of  his  claim,  according  to  the  provisions 
of  the  A61.  The  ground'  for  extending  the  statutory 
language,  which  was  confined  to  bona  jide  purchasers, 
was  that  the  title,  if  it  descended  to  the  heir,  would,  in 
the  language  of  the  preamble,  be  'insecure'  for  the 
creditors  who  dealt  with  him,  inasmuch  as  it  would  be 
subjedl  to  recall  by  the  creditors  of  the  ancestor.  ^ 

j.  The  re-enadlment  of  the  Adl  19  April,  1794,  §11,  3  Smith's  Laws 
144,  states  the  reason  for  the  provision  in  the  preamble  to  be  that 
"  inconvenience  may  arise  from  the  debts  of  deceased  persons  remain- 
"ing  alien  on  their  lands  and  tenements  an  indefinite  time  after  their 
"decease,  whereby  bona  Jide  purchasers  may  be  injured  and  titles 
"become  insecure."  A61  4  April,   1797,  3  Smith's  laws  297-8. 

The  preamble  referred  to  two  classes,  who  would  be  affetfhed  by  un- 
known liens.  They  were,  first,  bofia  jide  purchasers,  who  could  not 
know  what  they  were  buying  until  the  liens  were  ascertained ;  and, 
second,  the  heirs  or  volunteers  who  succeeded  to  the  decedent's  title. 
The  heirs  deal  as  owners;  they  have  the  possession,  and  hold  them- 
selves out  to  their  creditors,  who  would  be  misled  by  a  title  which  is 
insecure,  because  subjedl  to  recall  at  the  suit  of  the  ancestor's  cred- 
itors. 

The  lien,  assimilated  to  the  judgment,  in  turn  moulded 
the  charadler  of  the  judgment  by  the  principle  of  the 
lien.  The  lien  arose  in  the  days  when  Pennsylvania 
was  a  Province,  and  when  the  main  resource  of  the 
colonists  was  land.  They  dealt  on  the  credit  of  the 
land. 

The  shifting  of  title  by  parol,  after  the  title-holder 
had  incurred  debts,  was  the  mischief  to  be  remedied  by 
the  creation  of  a  lien.  He  was  deemed  to  own  only 
what  remained  after  his  debts  were  dedudled,  like  the 
ancestor  who  transmitted  only  this  balance  to  his  heir. 
If  a  partner  held  the  legal  title,  his  creditors  must  be 
satisfied  before  the  firm  could  assert  its  title  in  equity. 
The  beneficial  title  of  the  firm  consisted  only  of  the 
residue  after  all  the  separate  debts  of  the  partner  had 
been  dedudled. 

391 


(5j,^.  Powers.  Pt.  2,  Ch.  8. 

8.     Jud^nent-creditors  are  prote(5led  like  purchasers  and 
incuiubrances,  although  not  within  the  recording  a(5ls.'' 

/■.     The  Acl  of  18  March,  1775,  mentions  only  "  purchasers  and  mort- 
gagees. "  Preamble  and  first  sedlion,   i  Smith  Laws  422-3. 


-o- 


CHAPTER  VIII. 

THE  IMPLIED  POWER  OF  A  PARTNER. 

§114. 

3  partner  [)as  tl]£  autljoritg  to  sdl  tl)e  firm  stock  in  tl)£  course 
of  tratie. 

The  power  is  a  necessary  prerogative  of  a  partner, 
because  the  purpose  of  partnership  is  buying  and  sell- 
ing. The  sale  of  all  the  firm  stock  might  be  sustained 
as  a  valid  exercise  of  a  partner's  authority.  If  the 
stock  were  out  of  style,  the  custom  of  trade  might 
justify  closing  out  at  a  single  sale  the  antiquated 
merchandise,  which  could  not  be  retailed  to  advantage. 
The  stock  might  be  replaced  by  articles  or  materials 
of  superior  fitness  for  the  business.  The  stock  might 
be  perishable,  or  a  forced  sale  imminent.  In  such  an 
emergency  it  is  better  to  entrust  an  unrestricted  power 
of  sale  to  one  in  interest  than  to  allow  the  goods  to 
perish  for  want  of  such  power,  or  to  let  it  be  exerted 
by  a  stranger.  The  question,  however,  depends  upon 
the  condition  of  the  business,  and  upon  the  usage  of 
merchants  in  reference  to  such  a  state  of  business. 
The  authority  is  by  no  means  absolute,  and  must  be 
justified  by  exceptional   circumstances,  as  it  is  the 


Pt.  2,  Ch.  8.  Powers.  §114, 

exertion  of  an  exceptional  power/  To  make  such  an 
unusual  transa6lion  the  standard,  and  to  give  a  part- 
ner general  authority  to  sell  the  whole  stock,  would 
break  down  the  safeguards  established  by  the  habits 
and  customs  of  business  men,  who  are  the  most  com- 
petent judges  and  experts  in  reference  to  the  due 
exercise  of  the  power.^  The  attempt  to  define  the 
power  by  statute,  establishes  a  hard  and  fast  rule  upon 
the  subje6l,  and  either  prohibits  the  sale  or  allows  it 
under  any  and  all  circumstances.^ 

1.  Partner  must  join  if  accessible,  or  sale  void.  A  &  B  were  partners 
in  the  publication  of  a  newspaper.  A  short  time  before  the  partner- 
ship was  to  expire,  A  filed  a  bill  in  equity  against  B,  alleging  disa- 
greement as  to  the  settlement  of  firm  affairs,  and  praying  for  a 
receiver  and  an  injuncftion  against  B.  B  filed  an  answer,  averring 
willingness  to  buy  A's  share,  and  objedting  to  the  appointment  of  a 
receiver.  Soon  after,  B  sold  to  C  the  newspaper  and  everything  per- 
taining to  it,  and  delivered  possession.  Supplementary  bill  by  A, 
prayed  for  an  injuncflion  to  restrain  C  from  publishing  the  paper  and 
renewing  his  other  prayers.  Answer  by  B. — Sale  decreed  void ;  per- 
petual injundlion  granted;  and  receiver  appointed.  B  appealed. 
Decree  affirmed.    Sloan  v.  Moore,  i  Wright  217,  Pa.  (i860). 

2.  Firm  may  recover  on  policy,  though  partner  has,  without  author- 
ity, assigned  firm  stock.  A  &  B  insured  firm  property  with  C&B 
in  A's  presence,  but  without  his  consent,  assigned  the  property  to  D, 
with  intent  to  dissolve  the  firm  and  form  a  company.  Arrangement 
not  consummated.  A  &  B  sued  C  for  loss  by  fire. — Recovered.  As- 
signment void  as  to  A.  Kimball  v.  Hamilton  Fire  Ins,  Co.,  8  Bosw. 
495,  N.  Y.  (1861). 

Partner  may  sell  entire  stock  in  consideration  of  an  agreement  to 
pay  a  firm  debt.  B  &  C,  partners  for  three  years,  bought  goods  of  D 
on  credit,  with  A  &  E  as  sureties.  D  took,  in  addition,  a  chattel  mort- 
gage on  the  goods  for  the  price.  After  three  months,  though  firm 
solvent,  B  assigned,  without  C's  knowledge,  all  the  firm  stock  to  A, 
whc  undertook  to  pay  D.  When  C  heard  of  the  sale,  he  objedled, 
and  put  D  in  possession.  A  brought  replevin — Recovered.  A  part- 
ner has  authority  to  assign  any,  or  all,  the  stock  for  the  payment  of 
debts.  Dissent. — Partner  cannot  break  up  the  business  by  a  sale  of 
all  the  stock.     Graser  v.  Stellwagen,  25  N.  Y.  315  (1862). 

Contra.  Partner  has  power  to  sell  whole  firm  stock  for  payment  of  a 
debt,  without  consulting  co-partner.  B  &  C,  partners,  at  Evergreen, 
wereindebt.  B,  while  at  Mobile,  without  C's  knowledge,  soldoutfirm 
stock  to  A  &  Co.,  who  were  creditors  of  the  firm,  in  payment  of  the 
debt.  Conflict  of  evidence  as  of  C's  ratifying  sale.  D,  sheriff,  at  in- 
stance of^other  creditors,  attached  stock.  A  &  Co.  sued  D  and  his 
sureties  for  damages. — Recovered  value  of  stock  at  seizure,  and  inter- 
est to  trial.    Ellis  v.  Allen,  2  S.  Rep'r  676,  Ala.  (1887). 


393 


|jj^  Powers.  Pt.  2,  Ch.  8. 

1  Partner's  pozvrr  of  sale  extends  to  entire  stock  of  firm.  A  &  B, 
partners  for  dealing  in  cattle.  B  sold  the  whole  brand  to  C.  A  sued 
H  and  C  for  conspiracy  to  defraud  him  of  his  stock.  If  Court  found 
that  C  believed  B  had  authority  to  sell— Judgment  for  C.  Civil  Code, 
l  24 "10,  subdivision  3,  enables  partner  to  sell  whole  stock  of  merchan- 
dise"!  'Crites  v.  Wilkinson,  65  Cal.  559  (1884). 


§115. 


(Tlic  limit  of  tl)e  piircl)asing  poracr  of  a  partner  is  ktermtmti 
bii  tl)c  usual  course  of  business  among  firms  of  tl)c  gicen  rlass. 

Buying  and  selling  are  correlative  elements  of  trade. 
A  partner's  right  to  buy,  like  the  right  to  sell,  is  co- 
extensive with  the  usage  established  in  the  particular 
trade.  This  is  the  foundation  of  the  partner's  power 
to  buy.'  Third  persons,  dealing  with  one  partner  as 
the  representative  of  the  firm,  are  charged  with  notice 
of  the  nature  and  extent  of  the  firm's  business,  and 
the  partner  cannot  bind  the  firm  upon  a  contracft  for- 
eign to  its  purpose,  or  largely  in  excess  of  its  prima 
facie  resources.  There  is  a  point  where  the  extent 
of  the  firm  business  becomes  a  question  of  its  nature ; 
it  becomes  simply  a  question  of  degree.  A  partner  in 
a  small  retail  house  cannot  bind  his  firm  upon  con- 
trails for  a  wholesale  business.  Ordinarily,  the  firm 
stock  is  furnished  by  the  contributions  of  the  part- 
ners, and  must  be  replaced  as  it  is  sold.  If  the  whole 
firm  stock  has  been  sold  out,  any  partner  may  replace 
it,  in  order  to  carry  on  the  business,  for  in  the  excep- 
tional instances,  as  well  as  in  the  ordinary  course  of 
trade,  the  right  to  buy  always  corresponds  with  the 
right  to  sell. 

394 


Pt.  2,  Ch.  8.  Powers.  §115. 

Suppose  parties  sign  articles  of  co-partnersliip,  and 
agree  that  contributions  shall  be  made  in  kind,  and 
afterwards  a  partner  purchases,  on  the  firm  credit, 
the  goods  which  he  agreed  to  contribute.  Ordinarily, 
the  firm  is  not  liable  for  the  price  of  a  partner's  con- 
tribution, but  this  principle  applies  only  where  the 
contribution  was  bought  in  the  name  of  the  single 
partner,  or  previous  to  the  existence  of  the  firm.  In 
the  case  stated,  the  firm  would  clearly  be  liable  to  the 
innocent  seller,  for  although  the  articles  did  not  con- 
template the  purchase  in  question,  yet  the  firm  was 
established  by  the  signing  of  the  articles,  and,  at  that 
time,  each  partner  acquired  all  the  prerogatives,  and 
assumed  all  the  responsibilities,  incident  to  the  rela- 
tion. The  purchase,  being  in  the  line  of  the  firm 
business,  bound  the  firm,  for  the  partners  are  liable 
for  the  fraudulent  a6ls  of  their  co-partner,  to  all  per- 
sons who  innocently  deal  with  him  on  their  credit." 

A  partner's  implied  power  to  buy  enables  him  to 
bind  his  co-partner  for  the  price  of  goods  bought,  in 
spite  of  a  restriction  against  any  purchase  which  is 
not  made  for  cash.  The  seller's  knowledge  of  the 
restri(5lion  will  not  prote(5l  the  co-partner.  Nothing 
but  a  return  of  the  goods  will  relieve  him  from  liability 
for  the  price.  The  receipt  of  the  goods  by  the  part- 
ner, and  his  use  of  them  in  the  firm  business,  charges 
the  partners  for  the  benefit  which  they  derived  from 
the  increase  of  the  firm  stock.  It  is  not  requisite  that 
the  co-partner's  separate  estate  should  derive  any 
benefit  from  the  purchase.  He  is  liable  for  the  price, 
because  he  did  not  disavow  the  sale  and  return  the 
goods,  as  he  was  entitled  to  do.'* 


395 


{ii6.  Powers.  Pt.  2,  Ch.  8, 

1.  The  poiver  of  a  partner  to  purchase  in  the  name  of  the  firm,  is  the 
correlative  of  his  poivcr  to  sell  the  firm  stock.  B  &  C  were  partners 
ill  harness-making.  V,  bought  of  A  a  great  number  of  bits  to  be 
made  up  into  bridles,  which  he  carried  away  himself;  but,  instead  of 
bringing  to  the  shop,  he  pawned  them.  A  sued  B  &  C  in  assumpsit. 
—Recovered.  Lord  Ellenborough:  "Unless  the  seller  is  guilty 
"of  collusion,  a  sale  to  one  partner  is  a  sale  to  the  partnership,  with 
"whatever  view  the  goods  may  be  bought,  and  to  whatever  purposes 
"thev  may  be  applied.  I  will  take  it  that  [B]  here  meant  to  cheat 
"his  co-partner;  still  the  seller  is  not  on  that  account  to  suffer.  He 
"is  innocent;  and  he  had  a  right  to  suppose  that  the  individual  adled 
"for  the  partnership.'       Bond  v.  Gibson,  i  Camp.  185  (1808). 

2.  .\spinwall  v.  Williams,  \  17,  n.  i. 

3.  Partner  restriRed  to  buying  for  cash,  charges  co-partner  for  pur- 
chase on  credit,  if  merchandise  went  into  firm  stock.  B  &  C's  busi- 
ness was  buying  and  selling  sewing  machines.  C,  active  partner,  and 
B,  capitalist.  C  restridled  by  agreement  to  buying  for  cash.  A,  with 
knowledge  of  restri(ftion,  sold  machines  on  credit  to  firm,  and  upon 
its  failure  sued  B  for  balance  of  account.  Court  charged  that  unless 
B  was  benefitted  by  the  purchases,  he  was  not  liable. — Reversed. 
B  charged  by  addition  to  firm  stock,  although  his  separate  estate 
was  not  increased.    Johnston  v.  Bemheim,  86  N.  Car.  339  (1882  ). 


§116. 

^  partner's  implied  autljoritti  is  limited  to  simple  contracts. 

The  right  of  a  partner  to  contract  for  his  co-partners 
arose  from  trade,  which  enabled  him  to  sell  his  co- 
partner's share.  As  negotiation  is  incident  to  a  sale, 
a  contrail  is  included  in  the  transadion,  as  a  part  of 
it.  The  right  is  defined  by  trade,  and  must  be  exerted 
in  the  usual  form,  that  is,  by  simple  contradl,  which 
includes  commercial  paper. 

If  agency  is  the  principle  which  gives  a  partner 
the  power  to  adl  for  his  firm,  what  is  the  limit  of  the 
partner's  agency?  The  transaction,  it  is  said,  must 
be  within  the  scope  of  the  business  undertaken  by 
the  firm,  and  the  authority  to  do  anything  incident 

396 


Pt.  2,  Ch.  8.  Powers.  §ii6. 

to  the  business  is  implied,  as  a  part  of  the  undertak- 
ing. The  statement,  though  it  is  corre(5l  as  a  sum- 
mary of  the  extent  of  his  authority,  does  not  bring 
out  into  prominence  the  barrier  which  confines  a  part- 
ner to  the  firm  business.  The  counter-interest  which 
necessitates  the  limitation  upon  the  partner's  power, 
is  the  liability  of  his  co-partners,  in  their  separate 
estates,  for  the  firm  liabilities.  The  moment  a  part- 
ner overleaps  the  boundary  which  circumscribes  the 
firm  business,  he  calls  forth  into  the  arena  his  co- 
partner, who  is  impelled,  by  his  separate  interest,  to 
contest  the  claim  against  the  firm,  and  who  is  invested 
with  a  full  standing  in  equity  by  virtue  of  his  inde- 
pendent right. 

The  restri(5lion  imposed  by  the  partnership,  which 
limits  a  partner's  authority  to  transa(5lions  within  the 
province  of  the  firm,  is  legal.  The  co-partner  is  not 
liable,  at  law,  for  any  a(5l  done  beyond  the  range  of  part- 
nership business,  and  his  defence  would  be,  that  the 
adl  was  ultra  vires.  The  independent  right  of  a  co- 
partner to  prote6l  his  individual  estate,  and  confine 
the  firm  creditor  in  the  first  instance  to  the  firm  fund, 
is  equitable.  The  law  does  not  discriminate  between 
the  joint  and  separate  estates,  but  charges  both  upon 
a  firm  obligation.  It  is  the  equity  of  the  co-partner 
to  repel  the  liability  from  his  separate  estate  which 
prevents  an  immediate  recovery.  The  right  of  the 
claimant  to  charge  the  firm  assets  is  admitted,  but 
when  he  advances  against  the  separate  estate,  his 
right  is  met  and  counterbalanced  by  the  co-partner's 
equity.     The  result  is  a  collision  of  rights. 

Should  the  firm  be  recognized  as  a  distin(5l  person, 
which  exists  apart  from  its  members,  the  collision  of 

397 


5ii6.  Powers.  Pt.  2,  Ch.  8. 

rights  would  come  to  an  end.  The  partnership  cred- 
itor would  look  to  his  debtor,  the  firm,  for  satisfac- 
tion, and  the  creditor's  equity  could  be  circumscribed 
to  the  partnership  funds.  The  partner  would  be 
charged  in  his  capacity  of  partner,  but  would  not  be 
charged  as  an  individual,  and  his  separate  estate 
would  not  be  liable  for  firm  debts.  The  interference 
between  the  right  of  the  partner  and  the  right  of  the 
firm  creditor  is  created  by  confounding  the  distindlion 
which  the  Romans  made  between  a  partnership  bo7io- 
runi  univcrsoriim  and  a  business  firm,  or  the  distinc- 
tion between  different  capacities.  With  all  rights  and 
duties  in  common,  the  partners  in  a  brotherhood  are 
merged  in  the  fraternity,  and  cease  to  exist  apart  from 
it.  They  can  do  nothing,  except  through  the  firm; 
can  acquire  no  independent  rights,  and  can  have  no 
separate  estate.  In  such  a  partnership,  the  rights 
and  liabilities  of  the  partners  are  co-extensive  with 
the  firm.  But  a  partnership  for  gain  is  an  association 
for  a  limited  objecfl.  The  partner  is  identified  with 
the  firm  only  to  the  extent  of  the  undertaking.  In 
all  other  transac1:ions,  he  is  a  stranger  to  the  firm. 
The  Common  law  ignores  his  situation,  and  imputes 
to  him  a  liability,  which  is  independent  of  the  firm, 
on  the  assumption  that  he  has  contributed,  not  only 
a  portion,  but  the  whole  of  his  estate  to  the  firm. 

Furthermore,  the  collision  would  be  obviated,  if  the 
partners  were  allowed  to  set  apart  property  for  firm 
assets.  By  devoting  funds  to  a  special  purpose,  the 
debtor's  right  would  be  established,  to  withdraw  prop- 
erty from  at  least  subsequent  creditors,  and  prevent 
them  from  taking  it  in  execution  for  the  satisfaAion 
of  their  claims.     The  right  to  withdraw  property  is 

398 


Pt.  2,  Ch.  8.  Powers.  §117. 

exceptional,  and  the  Civilians  instance  onl}^  the/^^w- 
litwi  of  the  Roman  law  to  justify  the  segregation.^ 

I.     Supra  \  loi,  n.  3. 


§117, 

^  partner  rannot  binb  Ijis  firm  bri  a  specialty 

The  seal,  which  precludes  an  inquiry  into  the  con- 
sideration, takes  away,  by  anticipation,  the  co-part- 
ner's defence  to  the  claim.  Each  partner  is  entitled 
to  make  a  defence.  The  judgment,  if  obtained  against 
the  firm,  binds  each  partner's  separate  estate,  becomes 
a  lien  upon  his  land,  and  entitles  the  plaintiff  to  take 
his  personal  property  in  execution  without  first  ex- 
hausting the  firm  assets. 

An  exception  has  been  established,  which  permits 
a  partner  to  bind  the  firm  by  a  seal.  An  executed 
contract,  it  is  said,  which  discharges  the  firm,  may 
be  made  under  seal,  for  example,  a  partner's  assign- 
ment of  a  mortgage  in  payment  of  a  firm  debt,  or  his 
release  of  it  under  seal.  The  firm  is  not  bound  be- 
cause of  the  seal  in  such  cases,  but  the  transa6lion  is 
valid  without  the  seal.^ 

A  partner  is  forbidden  by  law  to  use  a  seal  in  firm 
trans  anions.  He  can  add  nothing  to  his  capacity  by 
means  of  a  seal,  as  it  is  an  abuse  of  his  position  and 
a  usurpation.  The  law  is  consistent,  and  recognizes 
in  the  seal  only  its  worthlessness.  If  the' transaction 
is  valid  when  taken  by  itself,  it  will  stand  apart  from 
the  seal,  which  is  disregarded  as  surplusage.      A  re- 

399 


5ii7.  Powers.  Pt.  2,  Ch.  8. 

lease  is  110  exception'  To  admit  the  validity  of  a  release 
by  a  partner  withont  the  receipt  of  payment,  would 
enable  him  to  give  away  all  the  firm  assets  by  a 
feigned  sale,  followed  by  a  release  of  the  price.  It  is 
the  receipt  of  the  money  which  extinguishes  the  debt, 
and  unless  payment  accompanies  the  release,  it  ope- 
rates as  a  gift.  As  the  seal  does  not  enlarge  the  part- 
ner's capacity,  the  release  does  not  empower  him  to 
give  away  the  firm  property. 

The  implied  authority  of  a  partner  is  limited  to 
contra(5ls  which  do  not  anticipate  the  eventual  lia- 
bility of  his  co-partners,  and  charge  them  with  liabil- 
ity as  individuals  in  the  first  instance.  No  partner 
can  deprive  his  co-partner  of  his  defence  to  an  adlion, 
and  commit  him  in  advance.  Hence,  a  seal,  which 
admits  a  consideration,  and  excludes  a  defence  to  a 
claim,  cannot  be  attached  by  a  partner.  The  seal  can 
stand,  and  not  avoid  the  instrument  only  when  it  is 
surplusage.  In  the  release  of  a  debt,  the  payment  is 
satisfaction ;  the  deed  is  simply  evidence  of  the  trans- 
action. If  no  payment  were  made,  and  a  release 
nevertheless  given,  it  would  not  bind  the  co-partner. 
He  is  entitled  to  make  a  defence  to  any  claim  against 
the  firm,  and  cannot  be  precluded  in  advance  of  a 
hearing  or  investigation  of  the  claim.  The  deed  would 
not  be  simply  evidence  of  the  transadtion ;  it  would 
be  equivalent  to  charging  the  firm  with  a  like  amount. 
The  reason  why  a  partner  cannot  execute  a  bond  in 
the  firm  name,  is  because  it  might  operate  as  a  gift, 
by  preventing  the  firm  from  disputing  the  considera- 
tion.' But  if  a  partner  could  make  a  release  which 
would  discharge  the  firm  debtor  without  payment,  he 
could  make  a  gift. 


400 


Pt.  2,  Ch.  8.  Powers.  §117. 

An  executed  contraA  imposes  no  additional  obliga- 
tion upon  the  firm,  and  is,  on  that  account,  sustained. 
The  deed  is  but  evidence,  and  does  not  affe(5l  the  trans- 
adlion.  Is  a  power  of  attorney  an  executed  contradl? 
In  form  it  is  a  deed.  What  is  the  engagement?  Take 
a  power  of  attorney,  which  accompanies  a  certificate 
,  of  stock.  The  power  of  attorney  enables  the  trans- 
feree of  the  certificate  to  have  himself  invested  with 
the  rights  of  a  stockholder  by  the  corporation.  If  the 
certificate  invested  him  with  the  rights  of  a  stock- 
holder, why  would  a  power  of  attorney  be  necessary  ? 
The  necessity  of  a  power  of  attorney  shows  that  the 
certificate  does  hot  invest  the  holder  with  the  rights 
of  a  corporator.  The  power  of  attorney  binds  the 
maker,  until  it  is  exercised,  to  let  the  grantee  use  the 
grantor's  rights.  The  covenant  is  to  let  another  do, 
or  in  other  words,  to  do  something  by  another,  as  an 
agent  or  attorney.  Such  a  covenant  is  executory. 
Can  an  executor}'-  covenant  fail  to  charge  the  cove- 
nantor? If  it  cannot,  a  partner  has  no  implied  power 
to  execute  the  instrument.  The  executory  contradl 
cannot  be  changed  by  a  seal.  If  a  seal  is  attached,  it 
must  be  disregarded,  as  surplusage.  No  implied  au- 
thority exists  to  add  a  seal,  and  if  express  authority  is 
given  to  contract,  the  seal  is  rejeAed.  The  only  way 
to  retain  the  seal,  is  by  the  authority  of  the  co-partners 
to  the  use  of  it.  Then  the  deed  is  executed  by  all 
the  partners,  and  no  question  of  its  being  sustained 
by  commercial  usage,  and  the  partner's  implied  au- 
thority under  it,  arises.  The  denial  of  e£Pe(5l  to  a 
seal,  when  the  right  to  contrail  exists,  shows  that  no 
deed  can  stand.  The  transaction  stands  simply  b}^ 
virtue  of  the  express  authority,  and  the  deed  goes  for 

401 


5ij-  Powers.  Pt.  2,  Ch.  8. 

nothing.  If  implied  authority  should  be  relied  on, 
it  would  be  to  sustain  the  transa(5lion,  and  disregard 
the  deed.  This  is  unsafe,  unless  the  thing  is  done. 
When  the  transaction  is  finished,  and  nothing  remains 
to  be  done,  it  is  feasible  to  pronounce  upon  the  a6l, 
and  declare  it  valid,  independent  of  its  legal  embodi- 
ment. No  point  is  decided  but  the  chara(5ler  and 
effecl  of  the  transadlion  itself.  It  is  different  when 
the  adl  is  prospective.  Then  the  legal  form  in  which 
the  undertaking  is  embodied,  becomes  the  test  of  its 
validit}'.  The  transa<ftion  cannot  be  severed  from  its 
legal  integument,  and  judged  apart  by  itself;  the 
construction  is  no  longer  of  the  transaAion,  but  of  the 
legal  instrument  which  embodies  it.  The  legal  effeA 
of  the  instrument  is  now  the  point  of  decision.  If  an 
instrument  of  the  class  could  not  be  executed  by  a 
partner,  without  exceeding  his  authority,  then  the 
transa(flion,  which  depends  on  the  instrument,  is  in- 
valid. 


Partner  has  implied  authority  to  assign  mortgage  as  security  for 
firm  debt.  B,  C  &  D,  trading  as  B,  C  &  Co.,  recovered  judgment 
against  E,  and  levied  on  his  wife's  land.  E  and  wife  mortgaged  the 
land,  as  security  for  this  judgment,  to  B,  C  &  D.  B  assigned,  in  the 
finn  name,  all  its  claims  to  F,  as  security  for  debt,  and  sealed  the 
assignment.  It  was  not  recorded.  Subsequently  C  &  D  assigned 
their  interest  in  the  mortgage  to  G.  A  claimed,  as  his  assignee,  2-3 
of  proceeds  raised  by  sale  under  a  different  mortgage. — F  entitled  to 
fund.  Record  unnecessary,  l)ecause  no  trust,  and  creditors  not  con- 
cerned in  controversy  between  different  assignees.  Mortgage  not  in 
purparts  to  B,  C  &  D,  but  accessory  to  firm  debt.  As  assignment  an 
executed  contract  which  discharged  the  firm,  the  seal  was  surplus- 
age.    Dubois'  Appeal,  2  Wright,  231,  Pa.  (1861). 

Partner  may  assign  a  finn  judgment.  After  dissolution  members' 
repurchase  of  firm  judgment  presumably  as  partners.  A,  B  &  C, 
partners,  recovered  judgment  against  D,  in  1857.  In  1859  they  as- 
signed for  creditors.  Judgment  was  sold  by  assignee  at  r.u6tion,  and 
bought  m  for  partners  by  E,  but  never  marked  to  anybody's  use.  C 
died,  and  B,  acting  for  himself  and  r.s  attorney  for  A.  assigned  the 
judgment  to  !•,  in  1S66.  In  1874  H  assigned  the  judgment  to  A,  who 
sued  I)  upon  it.— Judgment  belonged  to  F.  Firm,  though  dissolved 
by  insolvency  and  assignment,  having  owned  judgment  originally  as 
partners,  presumably  intended  to  repurchase  it  as  such.     Therefore, 

402 


Pt.  2,  Ch.  8.  Powers.  §117. 

B  could,  as  partner,  assign,  and  E  had  no  title.     Thursby  v.  I^idger- 
wood,  69  N.  Y.  198  (1877J. 

Partner  may  assign  mortgage  of  firm.  B  &  C,  partners.  Mort- 
gage assigned  by  B  to  A,  who  foreclosed. — Decree.  ISIortgage  secur- 
ity for  debt,  and  either  partner  could  assign.  Moses  v.  Halfield,  3 
S.  E.  Rep'r  538  (1887). 

2.  Partner'' s  release  without  consideration,  void.  A  &  B,  who  had 
been  partners,  sued  C  for  merchandise.  B  released  the  debt,  and  in- 
dorsed on  summons  in  firm-name,  that  all  claims  embodied  in  the 
trust  had  been  settled.  The  understanding  between  A  &  B  was  that 
A  should  coUecft  the  debts,  B  being  insolvent.  No  money  paid  for 
release,  and  it  did  not  appear  what,  if  any,  consideration  was  given. 
— Judgment  for  plaintiff.  Release  void.  Beatson  v.  Harris,  60  N.  H. 
83  (1884);  s.  c.  19  Cent.  Iv.  I.  275  and  note. 

Yet  it  is  stated,  in  an  endless  array  of  cases,  that  a 
release  is  an  exception  to  the  rule  that  a  partner  cannot 
bind  his  co-partner  by  a  seal. 

a.  Release  by  partner  bars  aftion  by  firm.  A  &  B  dissolved,  making 
A  liquidating  partner.  He  released  firm  claim  against  C,  in  order  to 
get  benefit  of  his  assignment  for  creditors.  A6tion  by  A  &  B.  A 
offered  to  prove  that  each  received  moiety  of  claim,  that  B  forbade 
A  to  sign,  and  that  acTiion  was  brought  for  B's  use. — Non-suit.  Tes- 
timony irrelevant.  .  Release  barred  the  action.  Salmon  v.  Davis,  4 
Binn.  375,  Pa.  (1812). 

Release  the  exception  to  rule  that  partner  can't  bind  firm  by  a  seal. 
Parke  v.  Smith,  4  W.  &  S.  290,  Pa.  (1842). 

"A  Pra6tical  Treatise  on  the  Law  of  Partnership,"  by  John  Coll- 
YER,  Barrister  at  law,  \  468,  5th  Am.,  from  2d  Eng.,  Ed.  :  1861. 

"The  Power  of  One  Partner  to  Bind  the  Firm  by  a  Sealed  Instru- 
ment," by  J.  M.  L.     9  Am.  Law  Reg'r  265,  1870. 

"The  Law  of  Partnership,"  by  Clement  Bates,  ^383:  188S, 

3.  If  an  outgoing-  partner  releases  a  firm  debtor,  the  co- 
partners may  disregard  the  release  and  recover  from 
the  debtor,  or  may  sue  the  outgoing  partner  for  the 
debt.  The  suit  would  operate  as  a  satisfaction  of  the 
release,  and  discharge  the  debtor. 

If  outgoing  partner  releases  firm  claim,  co-partners  may  sue  him 
or  the  debtor.  A  &  B  bought  out  C.  D  &  E,  firm  debtors,  having 
knowledge  of  the  dissolution,  took  a  receipt  from  C  in  exchange  for 
a  receipt  which  they  gave  him  for  his  separate  debt.  A  &  B  sued  C 
for  amount  of  D  &  E's  debt  to  firm. — Recovered.  A  &  B  might  affirm 
C's  acflion,  and  recover  of  him.  Though  adlion  might  release  D  &  E, 
they  were  not  released  by  the  exchange  of  receipts.  Ross  v.  West, 
2  Bosw.  390,  N.  Y.  (1858). 

4.  Bond  and  warrant  of  attorney  executed  by  partner  in  firm  name, 
do  not  bind  co-partner  ignorant  of  the  obligation.  B  executed  a  bond 
and  warrant  of  attorney  to  D,  a  bank,  for  a  loan,  and  obtained  from 
individual  partners  signatures  of  their  firms  as  principals,  though 
the  signers  intended  them  to  be  only  sureties,  among  them,  A  &  C, 
signed  by  C.  B  died.  D  entered  up  judgment  against  all  of  the 
obligors,  and  subsequently  sued  B's  administrator,  who  confessed 
judgment.  Not  obtaining  satisfaction,  D  levied  on  lands  of  A,  and 
he  brought  bill  to  enjoin  a  sale. — Decree.     Bond  bound  only  indi- 

403 


§ii8.  Powers.  Pt.  2,  Ch.  8.  J 

viduals  who  signed  the  firm  names.     McKee  v.  Bank  of  Mt.  Pleas- 
ant, 7  Ohio  463  {1836). 


§118. 

lll|)ftl)cr  a  seal  will  be  \xtattif  as  enrplusage,  or  as  conrcrting ' 
tl)c  ciccutorn  contract  into  a  spccialtij,  ticprntis  upon  tl)e  question 
uihctl)cr  tl)c  case  innobes  a  general  rule  or  is  conttneti  to  a  par- 
ticular instance. 

The  courts  could  say,  they  would  consider  the 
transacT:ion  by  itself,  and  disregard  its  legal  panoply. 
They  have  said  it  in  regard  to  executory  contradls 
made  by  express  authority.'  The  reason  is  obvious. 
The  principal  keeps  the  control  of  his  a<5lions.  The 
agent  may  bind  him  by  the  a6l,  but  not  by  any  other 
of  the  same  class.  If  the  delegation  can  be  limited 
to  a  single  transaction,  the  authority  covers  it  by  ex- 
press reference.  There  is  no  danger  of  making  the 
authority  extend  to  other  adls  not  contemplated,  as  it 
would  if  the  authority  was  implied  from  the  relation 
of  the  parties.  The  severance  of  the  contra(5l  from 
its  integument,  cannot  be  effec^led  where  implied  au- 
thority is  in  question.  The  authority  extends  to  a 
cla.ss  of  transactions,  and  cannot  be  confined  to  a  sin- 
gle transa(5lion.  The  a(5l  cannot  be  individualized 
and  interpreted  by  itself.  The  law  generalizes,  and 
lays  down  a  principle  of  adion,  which  governs  all 
cases.-  A  man  ads  in  a  single  instance.  If  the  seal 
might  be  disregarded,  and  the  transadion  construed 
as  if  done  without  a  deed,  because  the  ad  belonged 
to  a  class  which  a  partner  could  perform,  no  legal 

404 


Pt.  2,  Ch.  8.  Powers.  ^ii8. 

effe6l  would  be  given  to  the  instrument.  The  classi- 
fication of  documents  by  the  law,  according  to  the 
dignity  and  solemnity  of  the  adl,  which  it  embodied, 
would  be  undone.  If  a  specialty  could  not  operate 
as  a  deed,  it  would  take  effecft  as  a  contradl,  and  no 
merger  or  conversion  of  the  agreement  into  a  cove- 
nant with  its  different  legal  charadleristics  would  take 
place.  The  risk  of  charging  the  co-partners  would 
be  removed  by  taking  away  the  seal,  and  leaving  a 
simple  contradl,  which  a  partner  can  make,  by  virtue 
of  his  implied  power.^  But  as  the  law  did  not  create 
the  distinction  between  contracts  and  specialties  solely 
for  the  sake  of  partners,  neither  can  it  vitiate  the  dis- 
tindlion  merely  to  facilitate  their  transaAions. 

I.  If  the  firm  gives  the  partner  authority  to  make  the 
contradl,  his  making  it  under  seal  will  not  vitiate  the 
contrail.  It  will  be  sustained  according  to  the  author- 
ity given,  and  the  excess  will  be  disregarded.  The 
seal  will  be  surplusage.^ 

a.  If  a^enl  /las  express  authority  to  contraEl,  a  seal  is  disregarded  as 
surplusage.  A  sold  B  oil  rights,  or  leases,  in  West  Virginia,  for  a 
price  which  was  payable  in  instalments.  B  authorized  C,  his  agent, 
to  procure  an  extension,  which  C  obtained  for  60  days,  by  giving  B's 
note  for  I750  as  a  bonus.  C  sealed  the  note.  A  sued  B  upon  it  in 
assumpsit. — Recovered.  Seal  surplusage.  Jones  v.  Horner,  10  Smith 
214,  Pa.  (1S69). 

2.  The  partner  has  no  implied  authority  to  bind  his  firm 
by  a  contract  under  seal.  The  seal  changes  the  char- 
a6ler  of  the  obligation,  precludes  any  inquiry  into  the 
consideration,  and  takes  away  the  benefit  of  the  statute 
of  limitations.'* 

b.  Pariner  no  itnplied  authority  to  make  executory  contraH  uttder 
seal.  A  &  B  sued  C  &  D  in  debt  for  failure  to  deliver  petroleum  ac- 
cording to  a  contra(fl  which  D  sealed  without  C's  authority. — Charge, 
that  no  such  authority  implied,  affirmed.  Schmertz  v.  Shreeve,  12 
Smith  457,  Pa.  (1869).' 

3.  The  implied  authority  was  held  sufficient  in  Illinois 
to  sustain  the  contrail  made  in  pursuance  of  it.  The 
seal  being  disregarded,  the  authority  existed  to  make 

405 


§!,().  Powers.  Pt.  2,  Ch.  8. 

the   contract,  and  the  execution   corresponded  to  the 

power.'' 

<-.  S^ii^  surplusas^e  under  partner's  implied  authority.  Lender  may 
'  disregard  a  specialty  executed  by  a  partner  for  a  loan,  and  recover  it 
in  assumpsit.  B  executed  a  joint  and  several  note,  under  seal,  in  B 
&  C's,  and  also  in  B's  name  to  D,  for  money  lent  the  firm,  with  war- 
rant of  attorney  attached,  to  confess  judgment.  A  sued  the  firm  in 
assumpsit.  C's  defence :  B  no  authority  to  bind  firm  by  specialty ; 
which  converted  the  note  into  a  deed,  and  being  givenat  the  time 
of  loan  merged  the  simple  contradl. — Recovered.  B's  implied  au- 
thority to  borrow  for  the  firm  enabled  him  to  bind  it  for  the  loan. 
The  action  not  on  the  specialty.  The  seal  disregarded  as  surplusage. 
Walsh  V.  Lennon,  98  111.  27  (:88i). 


§119. 


2.  partner  cannot  tnttx  an  appearance  for  tl)e  firm,  so  as  to 
binb  l)is  co-partner. 

The  question  depends  upon  the  relation  of  attorney 
and  client.  The  authority  would,  it  was  held  at  one 
time,  be  implied  from  the  official  recognition  of  an  at- 
torney's standing  in  court.  He  could  bind,  it  was 
said,  any  one  whom  he  assumed  to  represent.  The 
vi6lim  must  look  for  redress  to  the  attorney.  This 
was  the  English  pradice,  established  by  some  early 
cases  in  disregard  of  a  decision,  in  1785,  by  Lord 
M.\NSFiELD.  Recently  the  soundness  of  Lord  Mans- 
field's position  has  been  recognized,  and  the  attorney 
has  been  stripped  of  any  authority  which  has  not 
been  conferred  upon  him  by  a  client.^ 

The  requirement  of  service  upon  all  the  partners 
throws  light  upon  the  question  of  a  partner's  right 
to  appear  for  the  firm.  The  service  is  the  initial  step 
to  bind  the  partner's  separate  estate.  Without  a  ser- 
vice upon  him  the  judgment  does   not  extend  to  a 

406 


Pt.  2,  Ch.  8.  Powers.  §119. 

partner  or  aifeA  him.  If  a  partner  could  appear  for 
his  co-partner,  why  could  he  not  accept  service  for 
him?  The  fadl  that  no  attempt  is  made  by  a  part- 
ner to  accept  service  for  his  co-partner,  is  an  admis- 
sion that  the  authority  is  not  implied.  The  creditor 
gets  all  the  satisfa6lion  he  can  obtain  by  access  to  the 
firm  assets,  and  by  exhausting  the  defendant,  or  sev- 
ered partner^ 

I.  Payment,  though  by  court,  under  judgment  in  a£iion  by  attorney 
for  plaintiff,  who  never  authorized  attorney,  is  not  a  bar  to  a  subse- 
quent recovery.  A  sued  B  in  assumpsit.  He  pleaded  a  former  re- 
covery, when  B  paid  the  money  into  court,  and  A's  attorney  of  record 
received  the  money  out  of  court.  A  denied  employing  the  attorney. 
— A  had  judgment.  Robson  v.  Eaton,  i  T.  R.  62.  Lord  Mans- 
field. 

The  credit  of  corre(5ling  the  blunder  belongs  to  the 
writer,  who  signs  himself  'E.  W.,'  of  a  critique  upon 
the  position  taken  by  the  courts  with  reference  to  the 
"  Retainer  of  Attorneys. "   37  Law  Mag.  72,  1847. 

No  costs  infliRed  upon  plaintiff  before  aflion  stayed,  which  attor- 
ney did  not  have  plaintiff's  authority  to  bring.  A,  plaintiff,  applied 
for  stay  of  proceedings,  because  the  adlion  was  brought  without  his 
authority  or  knowledge.  The  attorney  was  insolvent.  Defence: 
Court  would  not  relieve,  unless  attorney  insolvent,  and  then  only  on 
payment  of  costs. — A6lion  stayed  without  pa3'ment  of  costs.  Rob- 
son  V.  Eaton  conflidls  with  Salkeld,  upon  which  practice  is  founded 
and  overrules  it.     Reynolds  v.  Howell,  L,.  R.  8  Q.  B.  398. 

In  Ohio,  before  the  change  in  England,  the  judges 
refused  to  let  an  attorney  steal  clients,  because  he  was 
an  officer  of  the  court.''  The  Supreme  Court  of  the 
United  States  has  expressed  a  didluni  to  this  effe(5l,  but 
the  fadls  did  not  call  for  a  decision  of  the  point.  The 
partner  appeared  for  his  co-partner,  who  was  not  subject 
to  the  jurisdiction,  and  after  the  firm  was  dissolved.  ** 
Vide  comment  by  Mr.  Wm.  Green,  in  i  Virginia  Law 
Journal  127  (1877).  New  York'^and  Penns^/lvania '^  fol- 
low the  obsolete  English  practice,  by  which  the  a(5lion 
will  not  even  be  stayed,  unless  the  misrepresented  client 
pays  the  costs. 

a.  Judgment,  though  tmwarranted  appearance  bv  attorney,  void.  A 
was  sued,  with  B  &  C  as  co-defendants,  but  was'  not  served.  B  &  C 
employed  an  attorney,  who  appeared  and  pleaded  for  A  by  mistake. 
Judgment  went  against  A,  and  he  brought  a  bill  for  a  new  trial.— 
Dismissed.  Adequate  remedy  at  law,  as  judgment  would  be  set  aside 
as  void  on  his  application.    'Critchfield  v.  Porter,  3  Ohio  519  (1828). 

407 


§119. 


Powers.  Pt,  2,  Ch. 


I).  I'artticr  cannot  authorize  an  attorney  to  appear  for  his  co-partner, 
at  least,  if  the  co-partner  is  not  subjefl  to  the  jurisdiclion  of  the  court, 
or  if  after  dissolution,  li,  in  Illinois,  was  in  partnership  with  C.  in 
NfW  York.  A  sued  them  in  New  York  for  a  firm  debt,  though  alter 
ilu-  dissolution.  C  employed  an  attorney,  and  A  recovered  judg- 
ment. He  brought  suit  in  Illinois  on  the  judgment.— Judgment  for 
plaintiff  reversed.  New  Y'ork  court  had  no  jurisdiction  over  B.  C 
had  no  authoritv  to  employ  an  attorney,  or  enter  an  appearance  for 
B  during  the  partnership,  much  less  after  its  dissolution.  Service 
measures  the  lack  of  implied  authority;  for  judgment  binds  only  a 
served  partner  and  firm  assets,  but  not  non-served  partner's  separate 
estate.     Hall  v.  Lanning,  i  Otto  160  (1875). 

<•  fudgment  confessed  by  unauthorized  attorney  binds  defendant  until 
he  disproves  cause  of  aflion.  B,  an  attorney  for  the  drawer,  agreed 
to  enter  special  bail  for  A,  the  acceptor,  who  had  not  employed  him, 
and  subsequently  confessed  judgment  against  A.  Defence:  Judgment 
void. — ^Judgment  maintained  as  security,  but  A  let  into  a  defence. 
Denton  v.  Noyes,  6  Johns.  295,  N.  Y.  (1810). 

d.  Attorney  may  appear,  at  husband's  request,  for  a  married  woman, 
confess  judgment  without  warrant  and  pass  her  title  by  the  sheriff's 
sale.  B  joined  C,  her  husband,  and  executed  a  mortgage  of  her  laud 
to  D.  To  a  sci.fa.,  which  he  sued  out,  E  appeared  as  attorney  for  B 
and  C,  at  C's  request,  and  waived  service.  E  subsequently  confessed 
judgment.  B  died.  To  a  sci.fa.  to  revive,  C  appeared  in  person,  and 
confessed  judgment  individually,  and  as  administrator  of  B.  The 
premises  were  sold  on  a  lev.  fa.  to  F.  Ejedlment  by  A,  heir  of  B  and 
C.  against  grantees  of  F.  A's  claim:  Without  sem'ice,  B  not  bound 
to  appear.  Her  warrant  necessary  to  confess  judgment,  and  she 
couldn't  execute  one.  No  title  passed  under  void  judgment.  No 
defendant,  as  C  not  administrator  and  B  dead,  when  ^rz'.ya.  issued 
to  revive.  Defence:  Husband  can  employ  attorney  for  wife,  original 
judgment  sufficient,  and  administrator  joined  on  sci.  fa.  only  for 
regularity.  C  entitled,  and  presumed  to  be  administrator. — Judg- 
ment for  defendants  affirmed.  Attorney,  as  an  officer  of  court,  may 
api)ear  for  any  competent  person,  and  want  of  authority  don't  inval- 
idate judgment.  Wife  entitled  to  service  only  for  her  separate  estate, 
but  husband  may  appoint  attorney  for  her  title,  which  he  represents. 
B's  death  made  her  separate  estate.  C's  interest  established  when 
original  judgment  is  entered.  A  not  entitled,  as  heir  is  unable  to 
make  any  defence  which  she  could  not  have  made  on  sci.fa,  Evans 
V.  Meylert,  7  Harris  402,  Pa.  (1862). 

j-Ittorney  can  steal  a  client.  In  a  joint  suit  A  was  returned  'nihil 
hahct,'  and  B  'served,'  An  attorney  appeared  for  both,  and  Judgment 
was  entered  against  them.  A  moved  to  set  aside  execution  against 
him. — Refused.  Appearance  sufficient  to  support  judgment.  M'Cul- 
lough  V.  Guetner,  i  Binn.  214,  Pa.  (1807). 

2.  Gibson,  C.J. :  "For  a  partnership  debt,  the  entire  property  in  the  spe- 
"  cific  thing  must  be  sold,  even  in  a  judgment  against  one  of  the  part- 
"ners;  l)ecause  through  the  medium  of  the  execution,  the  law  com- 
II  pels  him  to  make  the  same  application  of  the  joint  funds  to  the 
||jomt  debts,  that  it  was,  undoubtedly,  competent  for  him  to  make 
"voluntarily.  The  sheriflF  levies  and  sells  the  entire  property,  be- 
ll cause  the  partner  defendant  has  no  specific  share  that  may  be  levied 
II and  solrl  separately;  and  even  were  that  otherwise,  yet,  unless  the 
II sale  should  work  a  dissolution  of  the  partnership /);o  tanto,  the  re- 
"mainder  would  not  be  the  property  of  the  other  partners  individu- 

408 


Ft.  2,  Ch.  8.  Powers.  ^120. 

"ally,  but  of  the  firm,  and  liable  to  execution  by  any  other  joint 
"  creditor ;  so  that  the  sheriff  might  as  well  go  on  and  levy  the  whole 
"  at  once.  Besides,  as  the  other  partners  would  be  liable  to  contri- 
"bution,  their  remaining  interest  in  the  effects  sold,  being  carried 
"  into  the  partnership  account,  would  entitle  them  to  a  credit  exactly 
"  equal  to  what  should  be  necessary  to  reimburse  the  partner  defend- 
"ant  the  loss  of  his  individual  share;  so  that  the  efiect  of  selling  a 
"part  or  the  whole,  would,  as  lietween  the  partners  themselves,  be 
"  exacflly  the  same,  nothing  being  gained  by  the  sale  of  an  undi- 
"  vided  interest  but  the  embarrassment  incident  to  a  joint  ownership 
"by  the  purchaser  and  the  firm."  Taylor  v.  Henderson,  17  S.  &  R. 
453,  Pa.  (1828.) 


§120. 

Qi  partner  cannot  submit  a  tlrm  claim  to  arbitration. 

On  principle,  the  reason  for  denying  to  a  partner 
the  right  to  appear  in  an  adlion,  prevents  him  from 
submitting  a  claim  for  his  co-partner  to  arbitration. 
The  propriety  of  adjusting  firm  claims  without  liti- 
gation is  obvious,  and  if  the  separate  liability  of  the 
co-partner  was  not  involved  in  the  award,  there  would 
be  no  doubt  about  the  right.  In  fa6l,  unless  a  co- 
partner can  defend  his  co-partner,  he  cannot  sue  for 
him.  Bringing  suit  involves  the  risk  of  a  counter- 
claim, which  might  turn  the  judgment  against  the 
plaintiffs,  and  charge  their  separate  estates.  As  a 
partner  can  sue  for  a  firm,  unless  the  defendants  ob- 
je6l  to  the  non-joinder  of  his  co-partner,  it  would 
seem  natural  that  a  partner  might  also  defend  or 
submit  for  his  co-partner.  But  the  remedy  is  worked 
out  in  a  different  way.  The  submission  or  appear- 
ance binds  the  party,  and  also  the  firm  assets,  which 
he  represents,  but  does  not  bind  the  co-partner's  sep- 
arate estate.^ 

409 


§I20. 


Powers.  Pt.  2,  Ch.  8. 


Though  a  suit  against  a  firm  would  require  service 
upon  all  the  partners,  in  order  to  make  them  parties 
to  the  action,  and  bind  them  by  the  judgment,  a  part- 
ner would  seem  to  have  the  authority  to  enter  an  ap- 
pearance for  his  co-partners,  or  in  a  State  where  arbi- 
tration enters  into  the  system  of  procedure,  to  submit 
a  controversy  to  arbitration.  The  proof,  or  liquida- 
tion of  the  claim  by  legal  process,  may  be  an  incident 
of  the  business,  and  is  within  the  province  of  a  part- 
ner. This  is  recognized  to  its  full  extent  in  States 
where  no  execution  can  issue  against  the  separate 
estate  of  a  non-consenting  partner  under  a  judgment 
or  award  so  obtained  against  the  firm.  As  the  reason 
which  restrains  a  partner  from  prejudging  a  claim  does 
not  exist,  he  is  empowered  to  settle  the  controversy 
himself,  and  to  confess  judgment  for  the  amount 
against  the  firm.' 

I.  The  leading  case  in  Pennsylvania  did  not  warrant 
any  decision  beyond  this,*  as  the  fadls  limited  the  deci- 
sion to  the  firm  assets.  Even  in  the  last  case,  although 
the  opinion  ignores  the  distinction  and  charges  the  part- 
ner by  a  judgment  on  a  submission  by  a  co-partner,  the 
decision,  in  spite  of  the  sweeping  language,  is  limited 
to  firm  property.'' 

a.  C.J.  Gibson's  dicflum  as^ainst  submission  by  partner.  7  W.  &  S.  143. 
Partner's  adi)iission  binds  him,  and  suhjeEls  the  firm  stock  to  execu- 
tion. A,  for  A  &.  Co.,  and  B,  for  B  &  Co.,  sulmiitted  by  parol  the 
accounts  between  the  firms  to  arbitrators,  and  made  their  award  final, 
upon  which  execution  might  issue.  They  awarded  I847.82  to  plaint- 
ifts,  who  issued  a  capias,  and  arrested  B,  and  he  gave  bail,  but  his  co- 
jiarlners  could  Jiotbe  found. — B's  submission  bound  him,  and  enabled 
jilaiutiffs  to  take  firm  assets  without  a  distriuf^as,  or  outlawry,  as  in 
Kngland,  against  non-served  yjartners.  Decision  general,  and  based 
M\  ])artner's  right  to  appear  for  co-partners.  Taylor  v.  Coryell,  12  S. 
&R.  243,  Pa.  (1824). 

b.  Partner  who  buys  out  co-partner  may  submit  to  arbitration.  B  sold 
out  to  C,  who  assumed  firm  debts.  He  submitted  A's  claim  to  arbitra- 
tion, and  A  sued  B  &  C— Recovered.  Authority  to  submit  inferred 
fron^i  B's  sale  of  his  interest.   Becker  v.  Boon,  61  N.  Y.  317  (1874.) 

Partner  implied  authority  to  submit  by  parol.     A  sued  B  &  C  on  a 
parol  award  made  by  arbitrators  upon  'B's  submission  for  the  firm. 

410 


ft.  2,  Ch.  8.  Powers.  §121. 

C  denied  B's  authority,  if  they  were  partners,  to  submit  the  contro- 
versy to  arbitration.  The  jury  found  a  partnership. — ^Judgment  for 
plaintiff.  Partner  has  inipUed  authority  to  make  submission  for  co- 
partner.    Gay  V.  Waltman,  8  N.  453,  Pa.  (1879). 

Partner  710  implied  authority  to  submit  firm  claim  to  arbitration. 
A  &  B  sued  D  alleging  breach  of  coutracft  to  co-operate  iu  driving  logs. 
D's  defence :  B  submitted  controversy  to  arbitrators,  and  awarded  D. 

Recovered.     B  no  implied  authority  to  submit  claim  to  arbitration. 

Walker  v.  Bean,  34  Minn.  427  (1886). 

Partner'^  submission  of  firm  claim  to  arbitration  does  not  bind  co- 
partners, who  may  recover  in  spite  of  partner' s  bar  as  co-plaintiff.  B, 
C  &  D,  partners.  Suits  brought  before  and  after  dissolution  and  con- 
solidated, and  B  against  C's  protest  submitted  the  controvery  to  arbi- 
tration.— Award  not  binding  upon  C  &  D,  who  could  recover  on  firm 
title,  although  B  had  disabled  himself  Fanchon  v.  Bibb  Furnace  Co., 
2  S.  Rep'r  268,  Ala.  (1887). 

2.  Judgment  confessed  by  partner  after  dissolution,  and  a  sale  of  firm 
stock  to  co-partner,  subjeFls  it  to  execution.  B  &  C  dissolved  partner- 
ship, B  selling  out  to  C,  who  indemnified  him  against  firm  debts. 
Two  months  afterwards  B  confessed  judgment  to  A,  and  took  C's 
separate  property  and  the  firm  stock  in  execution.  C  moved  to  strike 
off  judgment  against  him. — Rule  alsolute.  Judgment  bound  B,  sub- 
jedted  assets,  although  transferred  to  C  and  no  longer  firm  stock,  to 
execution,  with  no  less  effedl  than  if  the  judgment  had  been  against 
both  A  &  B.     Mair  v.  Beck,  4  E.  Rep'r  855,  Pa.  (1889). 

DefcEl  in  partner' s  confessed  judgment  against  firm  cured  by  knoiul- 
edge  of  subsequent  lien-holder.  B  &  C,  partners.  B  confessed  judg- 
ment in  partnership  name  for  firm  debt  to  A,  and  subsequently  con- 
fessed judgment  in  names  of  both  partners  to  himself,  as  guardian  for 
D.  A  postponed,  because  Judgment  Index  did  not  show  who  were 
his  debtors. — Reversed,  because  D  had  knowledge  of  A's  judgment. 
Adlual  equivalent  to  construdtive  notice.  Hamilton's  Appeal,  7  Out. 
368,  Pa.  (1883). 


§121 


(^Q.i\)  partner  rcpresmts  tl)e  firm  in  tl)e  transaction  of  its 
business  anb  ran  binD  l)is  to-partner  bn  ^w  ainnission. 

At  the  Common  law  a  partner  was  disqualified  by- 
interest  from  testifying  in  reference  to  the  partner- 
ship. If  sued,  he  could  not  testify  that  another  was 
his  partner,  because  his  testimony  would  charge  the 
other  with  one-half  the  debt.'  If  the  other  was  sued 
the  partner  might  testify  to  his  own  membership,  but 

411 


§121.  Powers.  Pt.  2,  Ch.  8. 

this  would  be  an  admission,  not  testimony.^  If  three 
contradled  to  buy  merchandise,  and  the  first  sued  the 
second  for  advances,  the  third  would  be  an  incompe- 
tent witness.  He  might  admit  his  own  membership, 
but  his  testimony  that  the  second  was  also  a  mem- 
ber, would  change  the  liability  of  the  witness  from  a 
half  into  a  third.  The  preliminary  fa(5l  of  partner- 
ship must  be  established  before  he  is  constituted  a 
partner,  and  is  vested  with  the  power  to  bind  his  co- 
partner by  an  admission.^ 

When  the  disqualification  of  interest  was  removed 
by  statute,  an  exception  was  made  to  the  abrogation 
in  reference  to  transa6lions  which  aJBfecfled  a  deceased 
partner.  In  Pennsylvania  the  death  of  an  individual 
excluded  testimony  against  his  estate  in  actions  by 
or  against  executors,  administrators,  guardians  or  as- 
signees.^ The  deceased  partner  was  regarded  by  the 
Pennsylvania  courts  in  interpreting  the  statute  as  an 
assignor,  and  upon  his  death  his  share  devolved  by 
operation  of  law  upon  his  co-partner.  The  quota  re- 
ceived by  assignment  of  law  disqualified  the  surviving 
partner,  who,  to  the  extent  of  the  quota,  represented 
the  deceased  partner.  New  York,  on  the  contrary, 
repudiated,  upon  this  point,  the  theory  of  separate 
titles  in  the  partners.  The  surviving  partner  takes 
upon  his  co-partner's  death  the  whole  estate,  not  by 
devolution  or  assignment  from  his  co-partner,  but  by 
virtue  of  the  original  joint  title,  which  covers  the  en- 
tire firm  property.^ 

Might  the  surviving  partner  in  Pennsylvania  tes- 
tify to  a  contract  made  by  him  either  before  or  after 
his  co-partner  died?  An  Ad  of  Assembly'  permits  a 
"party,"  and  an  amendment'  permits  a  "person,"  to 

4T2 


Pt.  2,  Ch.  8.  Powers.  §121. 

testify  to  anything  occurring  since  the  co-partner's 
death  in  an  allien  by  or  against  his  representatives. 
The  courts  refused  to  let  the  plaintiff,  in  an  adlion 
against  the  surviving  partner,  prove  a  contradl  made 
with  the  deceased  partner,  because  the  plaintiff  would 
make  out  his  own  case,  and  the  deceased  could  not 
reappear  to  contradi(5l  it.^  If  the  transactions  were 
with  the  partner  who  survived,  but  were  performed 
before  his  co-partner  died,  the  courts  excluded  the  tes- 
timony.^" But  a  subsequent  a(5l  admits  the  testimony 
of  a  party  to  transacftions  between  him  and  the  sur- 
viving partner,"  It  might  be  a  quibble  whether  a  con- 
tract could  be  proved  as  made  with  a  surviving  part- 
ner. But  it  is  not  probable  that  the  adverse  party 
would  be  excluded,  if  the  contra6l  was  made  wath  the 
partner  who  survived,  although  made  before  the  co- 
partner died.  The  reason  for  the  enadlment  would 
control  its  interpretation. 

If  the  contrail  was  made  with  the  partner  who  sur- 
vived, but  before  his  co-partner  died,  a  third  person, 
for  example,  a  dormant  or  special  partner,  would  be 
incompetent.  The  adl  of  1878  speaks  of  "parties  to 
the  record,"  and  does  not  admit  any  other  person  to 
testify  generally  to  transadlions  with  the  surviving 
partner.  A  co-partner,  who  is  not  sued  with  the  part- 
ner defendant,  is  not,  within  the  acl  which  allows  a 
partner  to  compel  his  adversary,  or  the  adverse  bene- 
ficiary of  the  suit  to  testify,'"  although  the  suit  was  on 
a  firm  contra6l.  Where  the  bar  of  interest  is  removed 
between  adverse  parties  on  the  record,  one  partner 
cannot  testify  in  a  suit  against  the  firm  for  the  plain- 
tiff. He  is  not  adverse  to  his  co-partner,  who  would 
be  charged  by  his  testimony  for  half  the  debt."' 

413 


§121.  Powers.  Pt.  2,  Ch.  8. 

A  recent  statute  has  attempted  to  restate  the  pro- 
visions of  the  prior  a(5ls." 

1.  Meason  v.  Kaine,  §  lo,  n.  6. 

2.  Drennen  v.  House,  supra  I  69,  n.  5. 

3.  Supra  I  10,  n.  6. 

4.  After  the  relation  is  established,  any  admission  made 
by  one  partner,  within  the  scope  of  the  firm  business, 
binds  his  co-partner. 

Joint  note  made  by  one,  charges  makers  only  if  partnership  which 
gives  him  implied  authority.  A  sued  B,  C  &  D,  trading  as  B  &  Co., 
and  offered  in  evidence  a  ncte  of  B  &  Co.,  in  B's  handwriting. — In- 
competent until  partnership  proved,  which  would  give  B  implied  au- 
thority.    Tellers  V.  Muir,  Pen.  749,  N.J.  (1811). 

Evidence  0/ partnership  makes  partner's  admission  binding.  A  & 
E  employed  B,  C  &  D  as  their  attorneys,  and  A  sued  them  as  partners, 
for  money  collected.  B  and  C  neither  denied  nor  admitted  partner- 
ship, but  did  deny  all  other  averments  of  the  bill.  D  admitted  part- 
nership and  employment.  A  put  in  evidence  an  assignment  by  E  to 
his  attorneys,  B,  C  &  D,  of  all  his  interest  in  the  claim  to  be  collected ; 
and  the  complaint  in  the  acflion  to  colle<£t,  which  was  signed  B,  C  & 
D,  attorneys. — Evidence  competent  to  prove  partnership  and  to  make 
B's  admission  bind  the  firm.  Fogerty  v.  Jordan,  2  Rob.  319,  N.  Y. 
(1S64). 

Court  decides  if  evidence  0/  joint  interest  sufficient  to  admit  declara- 
tions 0/  one  against  the  other  alleged  partner.  B  and  C  owned  a  gold 
mine.  A  testified  that  B  asked  him  if  he  had  seen  C,  who,  he  told 
him,  was  at  the  hotel,  and  that  B  said,  if  you  will  sell  lumber  right 
we  will  take  a  good  deal.  A  went  to  the  hotel  and  made  a  contract 
with  C  for  the  lumber.  The  conversation  with  C  admitted  as  evidence 
of  partnership  against  B. — Competent.  Hilton  v.  McDowell,  87  N.  C. 
364(1882). 

5.  The  di.sqnalification  of  interest  was  abrogated  with 
this  proviso  :  "  This  A61  shall  not  apply  to  actions  by 
"  or  against  executors,  administrators  or  guardians,  nor 
"where  the  assignor  of  the  thing  or  contracfl  in  a(5lion 
"may  be  dead."  Adl  15  April,  1869,  P.  L.  30. 

6.  Supra  ?  100,  n.  5. 

7.  ' '  Where  the  assignor  of  the  thing  or  contradl  in  adlion 
"may  be  dead,  no  interest  or  policy  of  law  shall  exclude 
"any  party  to  the  record  from  testifying  to  the  matters 
"occurring  since  the  death  of  the  person  whose  estate 
"  through  a  legal  representative  is  a  partv  to  the  record. ' ' 
Act  9  April,  1870,  P.  L.  40. 

8.  Amendment  subsritutes  "or  person,"  for  the  first 
"party  to  the  record."     A61  11  May,  1881,  P.  L.  20. 

^-  PJainliff  suing  surviving  partner  cannot  testify  as  to  transactions 
between  himself  and  deceased  partner.     A  brought  assumpsit  against 

414 


Pt.  2,  Ch.  8.  Powers.  i,i2i, 

B,  C  &  D,  partners.  On  A's  motion,  the  name  of  C  was  stricken 
from  the  record.  After  the  cause  was  at  issue  B  died.  The  jury  were 
sworn  as  to  D  onlj^,  as  surviving  partner.  At  the  trial,  A  was  per- 
mitted to  testify  as  to  transadlions  between  himself  and  B. — Error. 
But  qucere  whether  his  testimony  as  to  transactions  between  himself 
and  D  alone,  would  be  competent.     Hanna  v.  Wray,  27  Smith  27,  Pa. 

(1874)- 

Surviving  partner  cannot  testify  as  to  contra^  of  deceased  partner 
zvith  defendant.  A,  surviving  partner  of  A  &  C,  brought  assumpsit 
against  B.  A  testified  as  to  the  making  of  the  contrail,  and  the  de- 
livery of  the  goods,  but  admitted  that  the  contradt  was  not  made  in 
his  presence. — B  incompetent  to  show  what  was  the  verbal  contracfl 
with  C,  but  was,  at  least,  competent  to  refute  A's  testimony.  Gavit 
v.  Supplee,  2  W.  N.  C.  561,  Pa.  (1876). 

Plaintiff  suing  surviving,  incompetent  to  prove  contraH  made  with 
deceased  partner.  A,  a  surviving  partner,  brought  assumpsit  against 
B,  surviving  partner  in  another  firm,  for  putting  case  around  organ 
in  a  church.  Defence:  That  the  order  had  been  given  by  C,  who 
had  no  connedtion  with  B's  firm.  A  proved,  by  D,  a  contra<5l  made 
by  deceased  member  of  B's  firm  with  deceased  member  of  A's  firm. 
B  was  offered  as  a  witness  to  prove  "that  the  defendant's  firm  never 
"ordered the  case,  which  is  the  subjecfl  of  the  suit,  and  that  the  same 
"  was  not,  in  facft,  delivered  to  them." — B  incompetent.  Stanbridgev< 
Catanach,  2  Norris  368,  Pa.  (1877). 

10.  Plaintiff  suing  surviving  partner  incompetent  to  prove  contra^  with 
partner,  who  survived,  if  made  during  co-partner's  lifetime.  A  sued 
the  firm  of  B  &  Co.,  which  consisted  of  B,  active  partner,  and  C, 
silent  partner.  Writ  was  served  on  both  B  and  C.  C  died  after  the 
commencement  of  the  adlion,  and  his  death  was  suggested  upon  the 
record.  At  the  trial,  A's  deposition  was  offered  in  evidence,  especially 
to  prove  transadlions  between  A  &  B.  Obje(5lion :  That  under  the 
Adl  of  1869,  A  was  incompetent  as  a  witness,  for  C  was  dead.  Depo- 
sition admitted.  But  afterwards,  sur  rule  for  new  trial. — New  trial 
granted  on  the  ground  that  to  admit  A's  deposition  was  error.  '  'Hanna 
"  v.  Wray,  Gavit  v.  Supplee,  and  the  more  recent  case  of  Stanbridge 
"v.  Catanach,  establish  that  a  deceased  partner  is  an  assignor  to  his 
"surviving  partner  within  the  letter  of  the  exceptions  to  the  A&.  of 
"  1869.  It  is  true  that  this  case  differs  from  all  those  cited,  because, 
"here,  the  evidence  given  was  only  of  transactions  between  the  sur- 
"viving  partner  and  the  plaintiff;  and  there,  the  evidence  was  as  to 
"  transactions  between  the  deceased  partner  and  the  witnesses.  It  is 
"also  true,  that  in  both  Hanna  v.  Wray  and  Gavit  v.  Supplee,  the 
"Supeme  Court  intimates  that  the  difference  is  material,  but  we  do 
"  not  think  that  it  is  for  us  to  depart  from  the  principles  announced. 
"  In  all  the  cases  cited  it  is  held  that  a  deceased  partner  is  an  assignor, 
"and  Hanna  v.  Wray  decides  that  devolution  of  a  deceased  partner's 

'  "liability  to  a  surviving  defendant,  is  an  assignment  within  the 
"meaning  of  the  exception."  Noble  v.  Mortimer,  4  W.  N.  C.  300,  Pa. 
(1877). 

11.  In  a<5lions  "brought  by  or  against  surviving  partners, 
"  no  interest  or  policy  of  law  shall  exclude  any  party  to 
"  the  record  from  testifying  to  matters  having  occurred 
' '  between  the  surviving  partner  and  the  adverse  party  on 
"the  record."   A61  25  May,  1878,  P.  L.  153. 

415 


§122.  Powers.  Pt.  2,  Ch.  8. 

12  In  suit  a  (gainst  partner  plaintiff  cannot  call  co-partner,  because  not 
a  parly  ot'^ adverse  beneficiary  of  suit.  A  el  at.  brought  assumpsit 
against  H,  the  executor  of  C,  for  a  debt  alleged  to  have  been  con- 
tracfled  bv  C,  D  &  E,  as  partners.  At  the  trial  the  deposition  of  I) 
■was  offered  in  evidence  by  the  plaintiff,  inter  alia,  to  prove  the  part- 
nership.— In  the  Supreme  Court,  Paxson,  J.,  said:  "The  witness 
"  (I))  being  incompetent  on  the  ground  of  interest,  he  was  not  made 
"  competent  by  the  Adl  of  27  March,  1865,  *  *  for  the  reason  that 
"he  is  neither  an  adverse  party  on  the  record,  nor  a  person  for  whose 
"immediate  and  adverse  benefit  such  adlion  was  instituted,  prose- 
"  cuted  or  defended. "  Hogeboom's  v.  Gibbs,  7  Norris  235,  Pa.  (1879). 
By  the  terms  of  the  A(5l  of  1865,  above  referred  to,  it  is  enadled: 
"That  any  party,  in  any  civil  adliou,  or  proceeding,  whether  at  law, 
"or  in  equity,  may  compel  any  adverse  party,  or  any  person  for 
"whose  immediate  and  advv°rse  benefit  such  adlion,  or  proceeding  is 
"instituted,  prosecuted  or  defended,  to  testify,  as  a  witness  in  his 
"behalf,  in  the  same  manner,  and  subjecfl  to  the  same  rules,  as  other 
"witnesses:  Provided,  however,  That  no  party  shall  be  allowed  to 
"  compel  an  answer  to  a  bill  of  discovery,  from  an  adverse  party,  and 
"also,  to  compel  him  to  testify."   A<51  of  27  March,  P.  L.  38. 

Partner  an  incompetent  witness  to  prove  firm  liability,  because  of 
right  to  t07itribtition.      B  gave  A  his  separate  note  for  an  alleged  firm 
debt  of  B  &  C.     A  sued  both,  and   called  B  to  prove  that  note  was 
given  for  firm  debt.     Objection  by  C:   Ad  1847  removes  bar  of  inter- 
est only  between  parties  adverse  on  the  record. — Sustained.     B's  tes- 
timony-would charge  C  for  contribution,  and  B  is  not  adverse  to  C  on 
the  record.     Rich  v.  Hasson,  4  Sandf.  115,  N.  Y.  {1850). 
14.     The  disqualification  of  interest  is  not  abrogated:     "Nor  where  any 
"party  to  a  contra<5l  in  adlion  is  dead  *  or  his  right  thereto  or  therein 
"  has  passed  *  by  adl  of  the  law  to  a  party  on  the  record,  who  represents 
"his  niterest  in  the  subjedl  in  controversy,  shall  any  sur\'iving  or 
"remaining  party  to  such   *   contra(5l,  or  any  other  person  whose  in- 
"terest  shall  be  adverse  to  the  said  right  of  such  deceased  *  party  be 
"  a  competent  witness  to  any  matter  occurring  before  the  death  of 
"said  party    *    unless  the  proceeding  is  by  or  against  the  surviving 
"  or  remaining  partners  *  of  such  deceased  *  party,  and  the  matter 
"occurred  between  such  surviving  or  remaining  partners   *   and  the 
"other  party  on  the  record,  or  between  such  surviving  or  remaining 
"partners  and  the  person  having  an    interest  adverse  to   them,  in 
"which  case  any  person  may  testify  to  such  matters."    Adl  23  May, 
1887,  'i  5,  P.  L.  158. 


13 


§122 


^  partner's  confcaseb  jubgincnt  toill  not  binb  \)\q  to -partner. 

The  judgment  is  restrided  in  its  operation,  so  as 
to  bind  only  the  firm  assets  and  the  partner  who  con- 
fessed.    The  analogy  was  followed  up  of  a  jugment 


416 


Pt.  2,  Ch.  8.  Powers.  §123. 

where  service  was  obtained  upon  one  partner  and  not 
upon  the  others.  The  firm  stock  is  sold  under  the 
judgment,  and  also  the  separate  estate  of  the  served 
or  confessing  partner.^  The  other  partners  may  have 
the  judgment  against  them  stricken  off  the  record, 
so  that  no  execution  can  be  issued  against  their  sep- 
arate estates.^  They  are  not  necessary  as  defendants 
in  the  judgment  to  enable  the  execution-creditor  to 
take  the  firm  assets.^ 

The  joint  or  separate  chara(5ler  of  the  judgment 
would  be  determined  by  the  claim.  If  a  partner's 
confession  of  judgment  should  intercept  any  inquiry, 
the  court  would,  it  can  hardly  be  doubted,  open  the 
judgment  upon  the  co-partner's  application  and  let 
him  prove  that  the  plaintiff  had  no  claim  against  the 
firm.  Execution  would  be  stayed  in  the  meantime.^ 
The  execution  would  conform  to  the  judgment,  which 
is  general,  and,  except  by  the  special  yz.y^,  under  the 
Pennsylvania  A61  of  1873,  would  make  no  distin6lion 
between  a  separate  and  a  joint  claim.  Unless  the  char- 
a6ler  of  the  judgment  was  ascertained,  it  would  be 
held  to  embody  a  debt  against  the  partner  as  a  repre- 
sentative, and  the  execution  would  seize  the  firm  title 
vested  in  him  and  sell  it. 

The  reason  why  New  York  and  Louisiana  permit 
a  partner  to  confess  a  judgment  against  the  firm  is, 
that  the  judgment  is  confined  by  the  laws  of  those 
States  to  the  firm  assets,  and  does  not  bind  the  co- 
partner's separate  estate.^ 

A  judgment  confessed  by  a  partner  will  not  revive 
a  lien  barred  by  the  statute  of  limitations.  The  part- 
ner, if  a  liquidating  partner,  can  only  continue  an 
existing  liability;  he  cannot  create  a  new  obligation." 

417 


I 


§122.  Powers.  Pt.  2,  Ch.  8. 

Evidence  which  tends  to  show  that  the  judgment 
was  confessed  to  defraud  firm  creditors  puts  the  judg- 
ment-creditor upon  proof  of  his  bona  fides.  He  must 
prove  the  consideration.' 

1.  Confessed  judgtnent  by  a  partner  authorizes  sheriff  to  seize  and  sell 
firm  stock.  D,"of  the  firm  of  C  &  U,  amicably  confessed  judgment 
ajjainst  the  firm,  and  in  favor  of  E  for  |^50o,  upon  which  execution 
issued,  was  placed  in  the  hands  of  B,  the  sheriff,  and  was  levied  on 
the  defemlauts'  personal  property.  To  relieve  the  property  levied, 
1>  paid  B  the  amount  of  the  execution  in  notes  of  a  bank,  which 
about  that  time  failed,  and  the  notes  became  worthless.  A  rule  was 
obtained  by  A,  the  assignee  of  E,  to  show  cause  why  the  judgment 
should  not  be  opened  and  vacated  as  to  C  ;  and  upon  B  to  return  his 
fo.j'a.  and  bring  the  money  into  court.     Judgment  was  set  aside  as 

to  C ;  and  B  returned  the  fadls  as  to  the  worthless  notes.  The  court 
below  instrucled  the  jury  to  find  for  B. — On  writ  of  error,  reversed. 
B  received  the  notes  as  cash,  and  must  account  for  them  as  cash ; 
but  to  whom?  not  to  C,  unless  the  money  was  made  out  of  his  sepa- 
rate estate,  which  does  not  appear.  "A  partner  has  power  to  dis- 
"po.se  of  the  joint  effecfts  by  his  separate  act;  and  that  he  may  not 
"bind  the  firm  by  .submission  to  arbitration,  or  confession  of  a  judg- 
"ment,  is  because  it  would  bind  the  persons  and  separate  estates  of 
"the  members,  and  thus  transcend  the  limits  of  partnership  author- 
"itv.  *  *  .\  judgment  may  be  recovered  against  a  less  number  than 
"all  the  members;  if  there  be  not  a  plea  in  abatement;  and  the 
"effecls  of  the  partnership  may,  consequently,  be  seized  in  exe- 
"cution  of  it."  The  judgment  may  be  confessed.  The  New  York 
praClice  restrains  the  execution,  in  a  case  like  this,  "to  the  joint 
"effecls,  and  the  separate  estate  of  the  partner  personally  bound; 
"and  certainly  the  objects  of  the  law  may  be  lawfully  attained  by 
"it."  In  this  case,  it  appears  that  the  money  was  paid  by  the  part- 
ner to  release  the  partnership  property.  A  is  therefore  entitled  to 
recover  his  whole  demand,  for  he  is  entitled  to  all  that  was  not  made 
from  (!'s  separate  estate.    Harper  v.  Fox,  7  W.  &S.  142,  Pa.  (1S44). 

2.  Bitzer  V.  Shunk,  supra  §95,  n.  2,  c. 

3.  Confessed  jitd,^tnent  by  a  partner  and  e.vecuiion  under  it  constitute  a 
lien  prior  to  subsequent  execution  on  judgment  recovered  against  the 
finn.     C  &  I),  partners,  were  indebted  to  B  &  Co.,  and  C  executed  a 

bond  in  the  name  of  C  &  D  for  the  amount  of  the  firm  debt,  to  B  & 
Co.,  with  power  of  attorney  to  confess  judgment.  Judgment  on  this 
bond  was  accordingly  entered  against  C  &  D ;  execution  issued,  and 
the  sheriff  sold  the  personal  property  of  C  &  D,  partners.  In  a  dis- 
tribution of  the  proceeds,  .\  &:  Co.,  subsequent  creditors,  who  had  re- 
covered judgment  regularly  against  the  firm,  claimed  the  fund. 
About  the  same  time  the  judgment  of  B  &  Co.  was  vacated  as  to  D, 
on  the  ground  that  he  had  not  authorized  the  confession.  The  au- 
ditor appointed  to  distribute  the  proceeds  of  the  sheriff 's  sale,  awarded 
priority  to  B  &  Co.'s  execution,  and  his  report  was  confirmed  by  the 
court  below.  A  &  Co.  appealed.— Decree  aflSrmed.  "That  one  part- 
"ner  cannot  confess  a  judgment  against  another  partner,  even  for  a 
"  partncship  debt,  is  a  conceded  legal  principle,  but  it  by  no  means 
"  follows  that  an  execution  upon  a  judgment  so  given,  levied  upon 

418 


Pt.  2,  Ch.  8.  Powers.  §122. 

"the  personal  property  of  the  firm,  would  be  postponed  at  the  in- 
"  stance  of  a  subsequent  execution-creditor  of  the  same  firm.  *  *  So 
"far  as  the  judgment  affedts  only  the  property  of  the  firm  it  is  good, 
"if  obtained  in  the  firm  name,  against  any  representative  of  the  firm, 
"and  there  is  no  reason  why  it  should  not  be,  for  the  individual 
I  "partner  has  full  power  and  authority  to  apply  the  property  direcSlly 
F  "to  the  payment  of  the  debt.  He  may  even  assign  the  whole  of  the 
[  "partnership  effecfts  for  a  dona  fide  partnership  purpose  (6  W.  &  S. 
"301),  and  what  he  can  do  by  his  own  acft,  he  may  cause  to  be  done 
"by  operation  of  law. "  The  rule  was  not  intended  to  prevent  the 
"use,  by  an  individual  member,  of  the  firm  property,  for  partnership 
"purposes,  but  to  prohibit  partnership  effe6ls  from  being  misapplied, 
"  and  also  to  protedl  the  persons  and  separate  estates  of  the  partners 
"from  being  bound  by  adts  not  contemplated  by  the  articles  of  co- 
" partnership."     Grier  v.  Hood,  i  Casey  430,  Pa.  (1855). 

4.  Execution  against  firm  stock  corresponds  to  judgment  confessed  by 
partner  for  firm  claim.  A,  the  co-partner  of  B,  gave  C  a  judgment 
note  for  a  debt  of  A  &  B,  and  C  entered  up  judgment  and  levied  on 
firm  property.  B  claimed  that  execution  should  correspond  to  the 
judgment  which  A  had  confessed. — B  could  not  prevent  C  from 
taking  the  firm  stock  in  execution  on  his  judgment  against  A.  Ro€S 
V.  Howell,  3  Norris  129,  Pa.  (1877). 

5.  If  not  a  lessee,  partner  not  liable,  after  dissolution,  for  rent  on  a  lease 
exceeding  a  year.  Rescission  of  sale  fornon-payment  of  price,  revests 
title  in  seller,  subject  to  intervening  judgment  against  buyer.  Part- 
ner in  commercial  business  has  implied  power  to  confess  judgment. 
A  sold  steamer  to  B  &  C,  for  |i4,ooo,  payable  |i,5oo  down,  and  bal- 
ance in  instalments.  B  was  captain,  and  C  business  manager.  B,  as 
captain,  and  for  owners,  confessed  judgment,  |i5,7oo,  for  supplies  fur- 
nished by  D,  who  seized  the  boat  in  execution.  C  ratified  the  judgment. 
The  next  day  A  and  B  &  C  rescinded  the  sale,  B  &  C  returning  the 
steamer,  without  reclaiming  the  advance,  and  A  taking  possession 
without  a  demand  for  the  use  of  the  boat.  A  claimed  to  set  aside  the 
execution,  because  title  reverted  to  him  clear  of  incumbrance.  B's 
confession  of  judgment  exceeded  his  power. — Execution  enforced. 
A  regained  title,  subjedl  to  the  intervening  judgment,  by  the  confes- 
sion which  B,  as  partner  in  a  commercial  business,  bound  the  firm 
without  C's  ratification  of  the  judgment.  Wilmout  v.  Ouachita  Belle, 
23  La.  An.  607  (18S0). 

6.  Confession  of  judgment  cannot  revive  a  firm  debt  which  is  barred 
by  the  statute  of  limitations.  It  can  only  ajfell  an  existing  claim.  B, 
a  liquidating  partner,  confessed  judgment  in  name  of  the  firm  in 
favor  of  A,  the  plaintiff  in  an  amicable  acftion. — The  judgment  did 
not  operate  as  a  release  and  discharge  of  C,  B's  co-partner,  who  re- 
fused to  confess  judgment,  but  he  may  be  sued  under  the  A(fl  of  6th 
April,  1830  {supra  i  82).  But  the  confession  of  judgment  cannot 
revive  against  the  co-partner  a  debt  which  the  statute  of  limitations 
has  barred.  B  could  only  continue  existing  liability,  he  could  not 
create  a  new  obligation.    Kauffman  v.  Fisher,  3  Grant  302,  Pa.  (1S60). 

7.  Creditors  may  impeach  judgment  confessed  against  the  firm  to  de- 
fraud them.  B,  C  &  D,  partners.  Firm  made  a  note  to  B.  He 
endorsed  it  to  A,  his  brother,  and  induced  C  to  join  in  confessing 
judgment  against  the  firm  for  it  to  A.  The  parties  knew  that  the  firm 
was  insolvent.  A  issued  execution,  and  bought  in  the  firm  goods, 
li  bought  in  and  took  possession  of  the  same  goods,  under  a  subse- 
quent execution  against  the  firm.      A  brought  trover  against  E.     De- 

419 


§123- 


Powers.  Pt.  2,  Ch.  8. 


fence :  Offer  of  evidence  that  note  had  been  paid,  and  of  testimony 
bv  C,  of  conversations  with  B,  admitting  that  the  note  was  assigned 
aiul  jiulgincut  confessed  to  defraud  firm  creditors.  Evidence  com- 
petent, and  sufficient  to  put  A  to  proof  of  a  bonajide  purchase.  Davis 
V.  Newkirk,  5  Deuio92,  N.  Y.  (1847). 


§123. 


(ill)c  limit  of  a  partner's  autljoritti  to  borroru  10  ^xtii  b^  i\)t 
amount  ii)l)icl)  is  usual  in  business  of  X\\t  class. 

The  lender  must  find  out  the  business,  and  the 
normal  extent  of  it,  at  his  peril.  If  the  jury  should 
find  that  the  loan  exceeds  that  standard,  the  firm 
would  not  be  liable  fi^r  its  repayment.  If  the  sum  is 
within  the  range  of  amount  ordinarily  raised  by  trades 
or  business  of  the  same  kind,  the  fa(5l  that  the  part- 
ner appropriated  the  money  to  his  own  use  does  not 
relieve  the  firm  from  liability  for  it. 

The  power  to  borrow  arises  from  trade,  which  con- 
sists of  buying  and  selling.  The  firm  capital  may 
have  been  absorbed  in  the  purchase  of  property  which 
cannot  be  immediately  resold.  A  partner  must  have 
authority  to  borrow  the  money  required  to  preserve 
tbe  firm  property,  and  make  it  available  for  the  firm 
business. 

The  power  to  pledge  results  from  the  power  to  bor- 
row, when  joined  with  the  power  to  sell.  The  pledge 
is  a  composite  transa6lion.  It  involves  a  dealing 
with  the  title  to  the  property,  and  to  that  extent  is 
derived  from  the  power  of  sale.  The  title  is  not 
aliened  for  a  price,  but  for  a  loan  which  must  be  re- 
paid, and  to  that  extent  the  validity  of  the  trausadion 
results  from  the  power  to  borrow.  ^ 

420  .IT 


I 


Pt.  2,  Ch.  8.  Powers.  §124. 

Chattel  mortgage  by  partner  of  all  the  firm  stock  in  payment  of  a 
firm  debt  valid.  B  &  C  took  D  into  partnership.  B  &  C  mortgaged 
all  firm  property  to  E  for  delit.  A  obtained  judgment  against  firm, 
garnisheed  E,  and  denied  that  E  was  a  creditor  of  new  firm.  D's 
evidence,  that  firm  had  dissolved  before  mortgage  executed,  rejected. 
— Judgment  for  E.  Partner's  mortgage  of  all  firm  property  for  some 
firm  debts  not  an  assignment  for  creditors  in  Iowa,  and  within  part- 
ner's implied  authority.  So.  White  Lead  Co.  v.  Haas,  33  N.  W^  657, 
Iowa(iS87).     Re-hearing  refused.  25  N.  W.  493,  Iowa  (1887). 


§124. 
^  partner  mag  make,  ^rato,  accept  or  en^or0e  commercial  paper 

He  may  accept  a  draft  on  the  firm  in  his  individual 
name,  and  his  acceptance  will  be  for  the  firm  upon 
which  the  draft  is  drawn. ^  A  partner  cannot  be  pre- 
vented from  binding  the  firm  by  commercial  paper. 
Any  restri6lion  would  be  unavailing,  as  commercial 
paper  is  an  incident  to  the  business."  A  partner 
could  bind  his  firm  in  advance  by  a  promise  to  give 
commercial  paper.  A  reliance  upon  the  promise 
would  charge  the  firm,  especially  if  such  a  promise 
had  been  made  before,  and  had  been  fulfilled.^  Part- 
ners in  different  firms  can  exchange  accommodation 
paper.  They  can  in  this  way  raise  money  apparently 
upon  a  transaction  between  two  firms,  although,  in 
fadl,  the  transaAion  is  a  fi6lion.^ 

If  a  partner  induced  the  plaintiff  to  indorse  his 
note  by  the  assurance  that  it  was  for  the  firm,  and 
his  co-partner  endorsed  it,  the  plaintiff  could  recover 
from  the  firm.  Although  in  form  an  individual  trans- 
adlion  of  the  separate  partners,  the  loan  was  made  to 
the  firm,  and  the  a(?tion  was  not  on  the  note,  but  for 
money  paid  to  the  firm's  use.^  A  partner's  note  may 
be  shown  at  the  trial  to  be  for  a  loan  to  the  firm.     The 


421 


§124- 


Powers.  Pt.  2,  Ch.  8. 


presumption  that  the  note  embodied  an  individual 
transaction  may  be  rebutted,  and  the  firm  charged. 
If  the  loan  was  made  to  the  firm,  the  individual  note 
would  not  be  satisfa6lion,  unless  accepted  as  such.'' 

1.  Partner's  individual  acceptance  of  a  draft  on  the  firm  binds  it.  A 
tS:  B,  who  sold  goods  to  C  &  D,  drew  on  them  for  the  price.  D,  in  his 
individual  name,  accepted  the  draft,  which  the  bank  discounted.  A 
^c  B,  who  were  compelled  to  take  up  the  draft,  sued  C  &  D  on  it. — 
Recovered.  Tolman  v.  Hanrahan,  44  V/is.  133  (1878). 

2.  Partner  may  bind  firm  by  making  notes  in  its  name.  B  &  Co.,  in 
the  shoe  trade,  at  Boston,  for.-aed  a  partnership  with  C  &  D,  at  Bing- 
hampton,  to  conduct  a  tannery  there,  and  sell  the  leather  in  Boston, 
and  agreed  not  to  contract  debts,  except  by  mutual  consent.  B  &  Co. 
made  notes  in  the  name  of  the  aggregate  firm,  payable  to  B  &  Co., 
and  endorsed  them  to  A,  who  brought  suit  upon  them. — Recovered. 
Nothing  on  the  paper  to  put  A  upon  enquiry.  Blodgett  v.  Weed,  119 
Mass.  215  (1875). 

3.  Managing  partner  may  bind  his  co-partner  by  promising  his  signa- 
ture to  renewal  of  firm  note.  B,  managing  partner,  to  effedl  a  loan, 
induced  A  to  endorse  a  note  signed  by  B,  b}-  representing  that  it  was 
on  firm  account,  and  would  be  signed  by  his  partner,  C.  C  did  sign 
the  note,  but  not  the  renewals,  which  were  endorsed  on  the  same 
representation.  A  sued  B  &  C.  C's  defence :  Renewal  payment  in 
law,  of  original  note,  and  A  surety  for  B,  and  not  for  B  &  C, — Re- 
covered. A,  who  was  entitled  to  rely  on  B's  representation,  did  not 
relinquish  firm  liability.   McKee  v.  Hamilton,  33  Ohio  St.  7  (1877). 

4.  'Kiting'  by  partner  valid  if  for  firm  benefit,  B,  for  B,  C  &  D,  ex- 
changed commercial  paper  with  E,  in  order  to  raise  money  for  firm. 
B  drew  on  B,  C  &  D  in  favor  of  E,  who  endorsed  draft  to  A.  The}'^ 
accepted  it  in  return  for  E's  acceptance.  A  sued  B,  C  &  D.  A's 
claim:  Bo7iafide\io\di^r  for  value;  exchange  for  mutual  accommoda- 
tion, and  within  partner's  implied  authority.  Denied,  and  the  paper 
a  fraud  on  C  and  I),  unless  they  assented  to  it.  They  did  not  use  E's 
acceptance. — Recovered.  Exchange,  if  for  firm  benefit,  binding. 
Gano  v.  Samuel.  14  Ohio  593  (1846). 

5.  Accommodation  endorser  may  recover  from  the  firm  on  a  note  made 
by  partner  and  endorsed  by  co-partner  after  the  plaintiff's  endorse- 
ment, by  showing  that  plaintiff  endorsed  for  the  firm.  B  &  C,  part- 
ners. C  made  a  note  to  A,  and  induced  him  to  endorse  it,  by  telling 
him  that  it  was  for  the  firm  and  would  be  endorsed  by  B.  It  was 
endorsed  by  B,  and  discounted  by  bank,  which  recovered  from  A. 
He  sued  B  &  C.  B  defaulted,  and  C  objedled  to  any  evidence  to 
charge  the  firm. — Admitted.  AcT;ion  not  on  the  note,  but  for  money 
paid  to  firm's  use.  .\  endorsed  for  defendants'  accommodation,  and 
at  their  request.  Thev  received  the  proceeds,  which  were  used  in 
the  finn  business.  Thayer  v.  Smith,  116  Mass.  363  (1874). 

6.  Taking  pawner's  individual  note  does  not  exclude  evidence  that 
the  loan  was  made  to  the  firm.  A  sued  B,  sur\-iving  partner  of  C, 
and  averred  that  C  borrowed  |i,500  for  the  firm,  and  gave  his  indi- 
vidual note  for  the  loan.  B  demurred.— Recovered.  The  note, 
♦hough  evidence  of  a  loan  to  C,  as  an  individual,  is  not  conclusive. 

422 


Pt.  2,  Ch.  8.  Powers.  §125. 

and  might  be  rebutted  at  the  trial.  The  note  would  not  be  substituted 
for  the  firm  debt,  unless  accepted  in  satisfadlion  of  it.  Hoeflinger  v. 
Wells,  47  Wis.  62S  (1879). 


§125. 


^  partner  cannot  make  acconiniobation  paper  in  tlie  firm  name, 
eitl)cr  for  l)is  own  use  or  for  tl)e  use  of  a  tl)irii  persoi. 

That  is,  any  one  taking  such  paper  with  a  knowl- 
edge of  its  charadler,  would  he  precluded  from  recov- 
ering.^ The  endorser  of  an  individual  note  for  the 
accommodation  of  the  firm,  could  not  retain  the  pledge 
subsequently  received  for  his  endorsement.  The  note 
disclosed  an  individual  transaction,  and  the  endorser 
has  no  claim  on  the  firm."^  The  offer  of  an  individual 
note  with  the  assertion  that  the  paper  was  for  a  firm 
transa(5lion  and  the  change  to  a  firm  note  at  the  par- 
ty's request,  might  be  notice  of  an  individual  matter. 
If  the  partner  had  represented  in  the  first  application 
that  he  wanted  to  negotiate  the  note  for  his  individual 
account,  and  then  had  changed  the  paper  to  a  firm 
note,  with  a  corresponding  change  in  the  representa- 
tion, the  party  who  was  asked  to  endorse  would  be 
sufficiently  notified.^  If  a  partner  offers  a  third  per- 
son's note  with  the  firm's  endorsement,  in  consequence 
•of  a  demand  for  security  for  a  personal  loan,  the  taker 
could  not  hold  the  firm.  The  transadlion  would  dis- 
close an  accommodation  by  the  firm,  and  that  would 
exceed  the  partner's  authority.* 

Aside  from  the  form  of  commercial  paper,  anything 
that  discloses  a  transa6lion  for  the  individual  account 
of  the  partner  would  be  sufficient  to  put  a  taker  on 

4^3 


§125-  Powers.  Pt.  2,  Ch.  8. 

inquiry,  because  the  partner  lias  authority  to  ne- 
gotiate commercial  paper  only  for  the  firm  account. 
Either  formal  notice  or  fa6ls  from  which  a  court  and 
jury  would  infer  an  individual  transadlion  would  be 
sufficient." 

If  firm  notes  are  fraudulently  negotiated,  a  party 
to  the  fraud  cannot  be  compelled  to  pay  and  recall 
them.  The  holder  has  a  legal  right  to  recover  on  the 
notes,  and  the  firm's  remedy  against  the  fraudulent 
negotiator  at  law  is  adequate.^ 

1.  Partner  cannot  give  accommodation  endorsement.  No  separate 
judgment  in  joint  aflion.  B  gave  A  &  Co.  his  note,  with  B  &  Co.'s 
endorsement.  A  &  Co.  knew  that  the  endorsement  had  been  made 
by  B,  as  an  accommodation.  A  &  Co.  sued  B  &  Co. — Non-suited. 
Without  proof  o:'  B's  authority,  no  joint  contra<5t.  Separate  judgment 
against  B  impossible  at  Common  law  in  a  joint  adlion.  Fielden  v. 
Lahens,  9  Bosw.  436,  N.  Y.  (1862). 

2.  Form  of  commercial  paper  is  notice  to  accommodation  endorser. 
B  applied  to  D  for  accommodation  endorsement  for  his  firm  of  B  & 
C.  I),  without  examining  the  paper,  endorsed  B's  individual  note. 
B  delivered  to  D  a  canal  boat  belonging  to  firm,  as  security.  B  had 
note  discounted,  and  D  was  compelled  to  take  it  up.  A  obtaiutd 
judgment  agaiust  the  firm,  and  took  canal  boat  in  execution.  A 
bought  boat  at  constable  's  sale,  and  brought  replevin  against  D's 
vendee. — Recovered.  D  was  not  a  firm  creditor,  but  took  the  fim 
boat  for  an  individual  partner's  debt.  D  could  not  assert  that  his 
endorsement  was  for  the  firm,  inasmuch  as  he  was  bound  to  read  the 
note  before  he  endorsed  it.  Uhler  v.  Browning.  4  Dutch  79,  N.  J. 
(1859)- 

3.  Substitution  of  jirm,  for  individual,  note  at  endorser's  request  not 
notice  of  individual  transaction  if  partner  represented  that /le  nego- 
tiated for  the  jirm.  D,  of  the  firm  C  &  D,  informed  A  of  a  contem- 
plated change  in  the  firm,  "and  that  he  might  want  a  favor"  of  him. 
C,  subsequently,  retired,  and  E  became  D's  partner.  D  afterwards 
called  on  A,  and  asked  him  to  endorse  two  notes  drawn  by  himself 
individually.  On  inquiry,  A  was  told  that  the  notes  were  for  C,  for 
the  balance  of  the  stock;  that  the  new  firm,  D  &  E,  had  bought  the 
goods;  and  that  the  only  reason  the  notes  were  in  D's  name  was,  that  _ 
he  did  not  know  it  would  make  anv  difference  in  the  security  of  the  ■ 
endorser.  A  was  satisfied  that  the  firm  D  &  E  was  solvent,  and  there-  11 
upon,  at  his  suggestion,  new  notes  were  drawn  by  D,  in  the  name  of 
the  firm  D  &  E,  and  endorsed  to  A.  D  used  the  notes  for  his  own 
purposes,  and  not  for  the  benefit  of  the  firm,  which  became  bankrupt, 
and  assigned  to  B.  A,  who  had  been  obliged  to  take  up  the  notes, 
proved  his  claims  before  the  Register,  but  the  Court  belov/  rejedled 
themon  the  ground  that  A  was  not  a  bona  fide  holder  without  notice 

of  facts  affecfliug  their  validity.— Reversed,  and  claims  allowed.     A's 
only  knowledge  of  the  transaclion  came  from  the  representations  of 

424. 


Pt.  2,  Ch.  8.  Powers.  §126, 

D,  that  the  transacHrion  was  stricflly  pertinent  to  the  partnership  busi- 
ness, and,  therefore,  within  the  scope  of  either  partner's  power. 
"There  must  be  knowledge  of  facfts  impeaching  the  validity  of  the 
notes."  There  was  no  such  knowledge  on  the  part  of  A.  "The 
"  notes  having  been  drawn  by  one  partner,  in  the  firm  name,  appar- 
"ently  in  the  course  of  partnership  dealing,  and  without  notice  of 
"faAs  from  which  the  appellant  was  bound  to  infer  that  they  were 
"  made  without  authority,  or  that  a  misapplication  of  them  was  con- 
"templated,  he  is  a  bona  fide  holder  of  them,  and  is  entitled  to  their 
"allowance  as  debts  against  the  bankrupt  partnership."  Bush  v. 
Crawford,  29  Leg.  Int.  363  (1872). 

4.  Firm  endorsement  given  by  a  partner  for  a  loan  on  his  individual 
account  is  notice  to  the  taker.  B  applied  to  A  for  an  advance  on  cot- 
ton to  be  shipped  by  D.  A  asked  for  security,  and  B  brought  D's 
note  to  B  &  C's  order,  and  endorsed  their  name. — No  recovery  against 
C.  Notice  to  lender  that  partner  pledged  the  firm  credit  for  a  trans- 
adlion  foreign  to  the  firm  business.  Newman  v.  Richardson,  9  Fed. 
Reporter  865  (1881). 

5.  Partner'' s  denial  that  a  renewal  note  was  made  for  a  firm  debt,  or  by 
his  authority,  puts  plaintiff  to  proof  of  both  fa£ls.  A  sued  B,  D  &  E 
for  note  of  114,673.  E  pleaded  7ion  est  factum,  and  alleged :  That  A 
sold  cotton  to  B,  C  &  Co.,  succeeded  by  B  &  D,  who  gave  a  note  for 
the  price  to  A.  D  renewed  the  note,  in  the  name  of  B,  D  &  E,  in 
anticipation  of  its  formation.  D  renewed  the  note  again,  in  the 
name  of  the  partnership,  B,  D  &  E,  after  it  was  formed.  A  knew, 
when  the  notes  were  renewed  that  B  &  D  were  insolvent,  and  that  E 
was  solvent. — Judgment  for  E.  E's  averment  put  A  to  the  proof  of 
D's  authority  to  bind  E  by  the  note.  Bryan  v.  Tooke,  60  Ga.  437 
(1878). 

6.  Equity  will  compel  collusive  holder  of  firm  note  made  by  partner, 
to  cancel  it,  but  not  to  pay  it  in  the  hands  of  bona  fide  purchaser, 
though  liable  to  indemnify  firm.  B  fraudulently  made  and  delivered 
three  firm  notes  to  C,  who  knew  of  the  fraud.  C  endorsed  one  of 
the  notes  to  D,  a  bona  fide  purchaser.  Firm  dissolved,  and  a  receiver 
appointed.  D  brought  suit  against  the  firm  on  his  note.  A,  B's  part- 
ner, brought  bills  against  B  &  C,  to  compel  C  to  cancel  the  note  held 
by  D. — C  compelled  to  cancel  his  note,  but  not  to  pay  the  note  of  D, 
who  had  an  absolute  right  at  law,  against  A  &  B.  A's  remedy  at  law 
was  adequate  to  recover  from  B  &  C  after  he  had  paid  D's  note.  Ful- 
ler V.  Percival,  126  Mass.  381  (1879). 


§126. 

(iTIlc  autliontn  of  a  partner  to  bin^  \\\t  firm  bri  rommcrcial 
paper  is  tietmeii  not  bn  tl)e  principles  of  partnersljtp,  but  bg  tl)e 
principles  peculiar  to  commercial  paper. 

425 


§126.  Powers.  Pt.  2,  Ch.  8. 

A  partner's  authority  to  make  commercial  paper 
in  the  firm  name  is  limited  to  transa6lions  between 
the  firm  and  third  persons.  He  never  represents  the 
firm  except  in  dealing  with  third  persons.  A  partner 
ina\'  advance  money  to  his  firm  in  excess  of  his  con- 
tribution, and  take  the  firm  note  in  acknowledgment,  or 
the  firm  may  permit  the  partner  to  use  their  credit  as 
accommodation  endorsers  in  an  individual  transadlion.' 
But,  properly  speaking,  neither  of  these  transa6lions 
form  part  of  the  firm  business.  They  are  stridlly 
between  the  partners  dealing  wdth  each  other  as  sep- 
arate individuals.  In  neither  case,  therefore,  can  the 
j^artner  have  any  implied  authority  to  sign  the  firm 
name.  On  partnership  principles,  therefore,  when- 
ever a  note  in  the  firm  name  is  made  payable  to  a 
partner,  the  taker  would  be  charged  with  notice  of 
the  partner's  want  of  authority  to  sign  the  firm  name. 
On  the  other  hand,  if  the  note  of  an  individual  part- 
ner is  made  payable  to  the  firm  and  endorsed  in  the 
firm  name,  the  taker  from  the  individual  partner  is 
notified  that  the  endorsement  is  for  the  accommoda- 
tion of  the  individual  maker.  The  endorsement  can 
have  no  other  effedl,  because  a  partner  has  no  reserve 
credit  to  pledge  for  the  firm.^  Such  a  note  might  cover 
a  withdrawal  by  the  maker  of  a  part  of  his  contribu- 
tion, but  then  the  co-partners  would  be  the  proper 
custodians  of  the  paper,  and  the  maker  would  have 
no  right  to  endorse  it  for  the  firm.  The  result  is  that 
upon  partnership  principles  in  all  such  cases  the  form 
of  commercial  paper  should  put  the  taker  and  any 
subsequent  holder  upon  enquiry  as  to  the  authority 
of  the  partner  to  attach  the  firm  signature.'  But  in 
this  respedl  the  do6lrines  of  partnership  have  been 

42.6 


Ft.  2,  Ch.  8.  Powers.  §126. 

modified  by  the  rules  which  govern  commercial  paper. 
Commercial  paper  is  habitually  drawn  in  so  many 
different  forms  and  so  seldom  corresponds  in  form  to 
the  real  nature  of  the  transa(5lion  that  the  courts  dis- 
regard the  form  altogether,^  A  partner  by  means  of 
commercial  paper  may,  therefore,  do  all  that  the  firm 
itself  could  do,  and  there  is  no  limit  to  his  authority.^ 
In  absence  of  a6lual  notice  that  the  transa6lion  is  for 
his  individual  benefit,  his  putting  the  firm  signature 
to  comercial  paper  creates  in  all  cases  a  firm  lia- 
bility.^ The  interjedlon  of  this  docftrine  into  the  law 
of  partnership  operates  as  a  practical  extension  of  the 
partner's  implied  authority. 

The  partner,  as  such,  has  no  authority  to  make  use 
of  the  common  name,  except  for  a  common  purpose. 
This  rule  gives  him  the  firm  name  for  his  private 
use,  and  in  effe6l,  makes  each  partner  an  agent  for 
his  co-partners,  not  only  in  the  partnership,  but  in 
all  trans a^lions.  There  is  no  limit  to  a  partner's  au- 
thority to  bind  his  co-partners,  by  making,  or  endors- 
ing, commercial  paper.  Though  the  firm  name  has 
been  misused  by  a  partner,  he,  nevertheless,  had  the 
right  to  use  it;  and  while  the  misuse  of  the  name 
prevents  a  recovery  from  the  firm  by  a  holder,  who 
took  the  paper  with  notice  and  without  the  concurrence 
of  all  the  partners,  its  negotiation  afterwards,  if  for 
value  and  without  notice,  is  not  afiecfted  by  the  orig- 
inal want  of  authority.  The  a(5l  was  within  the  power 
of  all  the  partners,  and  though  the  exertion  of  this 
joint  power  by  a  single  partner  was  sufficient  to  in- 
validate the  paper  in  the  hands  of  one,  who  knew  the 
circumstances  and  dealt  with  any  number  of  partners 
less  than  the  whole,  the  validity  of  the  paper  is  not 

427 


§126.  Powers.  Pt.  2,  Ch.  8. 

aflfedled  in  the  hands  of  a  hoiia  fide  purchaser,  who 
relied  upon  the  paper  as  a  due  exercise  of  its  power 
by  the  firm." 

1.  The  use  of  firm  credit,   without  authority,  has  the 

same  eifedl. 

Parlnfr's  endorsement  in  firm  name  for  his  separate  debt  makes 
him  liable  to  reimburse  co-partner  who  pays  his  quota  to  get  a  settle- 
ment, and  thereby  release  his  separate  estate  from  firm  executions.  A 
&:  B  were  partners.  B  endorsed  C's  note,  but  afterwards  substituted  A 
&  B's  endorsement  without  A's  knowledge  or  consent.  A's  property 
being  under  execution  for  a  firm  debt,  B  refused  to  settle  with  cred- 
itors unless  A  paid  his  one-half  of  the  note,  and  released  B  from  all 
liability  on  account  of  it.  A  paid  one-half  and  brought  bill  to  re- 
cover it  from  B. — Recovered.  B's  endorsement  for  firm  exceeded 
his  riglit  as  a  partner,  and  bound  B  to  indemnify  A  for  the  payment 
of  B's  debt.  B's  refusal  to  get  A's  separate  estate  released  Irom  the 
joint  execution  by  means  of  a  settlement  with  the  creditors,  unless 
he  would  assume  B's  debt,  was  putting  pressure  upon  A,  and  made 
his  payment  a  matter  of  compulsion.  Smith  v.  Loring,  2  Ohio  440 
(1825). 

2.  Acceptance  by  partner  in  individual  name  for  firm,  does  not  create 
a  separate  debt.  B  &  C,  partners.  D  drew  on  firm  for  price  of  mer- 
chandise, and  B  accepted  thus:  B  &  Co,  B.  After  B's  death,  bill  was 
endorsed  to  A,  who  claimed  administration  upon  B's  estate  as  a  cred- 
itor. B  died  insolvent. — Dismissed.  A  not  a  separate,  but  a  firm  cred- 
itor.    In  re  Barnard,  32  Ch.  D.  44  (i? 


3.  But  the  form  of  an  individual  transadlion  would  be 
overcome,  at  any  rate,  so  that  the  bona  fide  holder  could 
charge  the  firm  upon  the  paper  in  spite  of  its  form.  If 
the  form  was  notice,  it  would  affect  everybody  who  took 
the  paper,  not  only  the  taker,  but  the  holder  for  value. 
The  form  would  not  be  exhausted  by  a  single  operation, 
but  would  continue  to  act  upon  all  who  took  the  paper. 
Common  partner  drawing  firmnote  to  his  order,  and  endorsing  it  with 
his  name  and  luith  name  of  second  firm,  indicates  a  firm  IransaHion, 
B,  of  the  firms  B  &  C  and  B,  C  &  Co.,  drew  a  promissory  note  pay- 
able to  his  own  order,  signed  the  firm  name  B  &  C,  and  endorsed  it 
with  his  own  name,  andwith  the  name  of  the  firm  B,  C  &  Co.  A 
l>ecanie  the  holder  of  the  note,  which  was  at  its  maturity  protested 
for  non-payment,  and  sued  B,  C  &  Co.  as  endorsers. — Recovered. 
Ihmsen  v.  Negley,  r  Casey  297,  Pa.  (1855). 

4-  yo  form  of  commercial  paper  by  partner  notice  of  individual  trans- 
aclion.  Actual  notice  must  be  given  of  dissolution  to  customers  of 
the  firm.  B  made  note  to  his  own  order,  and  after  endorsing  it,  ob- 
tanied  C's  endorsement.  When  B  took  the  note  to  bank,  A,  for  dis- 
count, he  said  it  was  made  on  account  of  firm  B  &  D,  and  A  required 
the  firm  endorsement,  which  B  made.  The  firm  had  dissolved,  and 
published  notice,  but  A  had  not  adlual  knowledge.  A,  who  had  pre- 
viously discounted  notes  for  the  firm,  sued  D.  Defence :  Form  of  | 
paper/iyiwa/aaV  an  individual  transadlion,  and  consent  of  all  part- 

428 


Pt.  2,  Ch.  8,  Powers.  §127. 

ners  must  be  proved. — Recovered.  Adlual  notice  of  dissolution  to 
A  necessary  Form  of  paper  no  notice.  Bank  of  Commonwealth  v. 
Mudgett,  44  N.  Y.  514  (1871). 

5.  Par  titer's  accommodation  endorsement  charges  firm.  B  &  C,  part- 
ners. A  held  two  firm  notes,  each  of  Is, 000.  C  gave  firm  notes  in 
exchange  for  D's  notes,  which  C  endorsed  to  A,  in  order  to  take  up 
the  original  notes.  A  sued  B  &  C  on  endorsement. — Judgment  for 
A.  Mutual  accommodation  might  be  for  firm  benefit.  Steuben  Co. 
Bank  V.  Alberger,  loi  N.  Y.  202  (18S6). 

6.  Firm  note  in  hands  of  a  partner,  even  though  endorsed  by  a 
stranger,  is  prima  facie  a  firm  asset.  B  made  a  note  in  name  of  B  & 
C,  payable  to  D,  and  induced  him  to  give  an  accommodation  endorse- 
ment. B  gave  the  note  to  A,  in  payment  of  an  individual  debt.  A 
sued  firm,  and  obtained  judgment  by  default.  C  got  judgment 
opened,  to  let  him  into  a  defence. — Judgment  entered  for  C.  Form 
of  paper,  and  B  having  possession  of  it,  raised  presumption  that 
note  was  a  firm  asset,  and  should  put  A  on  enquiry.  He  could  recover 
only  by  proof  that  note  had  been  negotiated  by  endorser  in  the  mar- 
ket. Then  the  presumption  that  B  held  it  as  a  firm  asset  would  be 
rebutted.     Mecutchen  v.  Kennady,  3  Dutch.  230,  N.  J.  (1858). 


§127. 


^\\t  form  of  commerrial  paper,  unconiuctcb  mitt)  otI)cr  cir- 
cumstaiucs,  conce^s  no  notice  to  tl)e  first  or  subsequent  takers 
of  tl)e  nature  of  tl)e  transaction,  or  of  tl)e  purpose  for  u)l)icl)  tl)e 
partner  l)as  e^ecuteb  it. 

The  note  of  a  partner  to  tlie  firm  indicates,  appar- 
ently, his  debt  to  the  firm,  and  when  he  places  upon 
it  the  firm  endorsement,  there  may  be  ground  for  sup- 
posing that  his  objedl  is  his  own  accommodation.  On 
the  other  hand,  a  note  of  the  firm  to  the  partner,  when 
endorsed  by  him,  apparently  indicates  an  attempt  on 
his  part  to  use  their  credit  for  his  private  advantage. 
But  these  indications  are  not  conclusive.  In  both 
cases,  he  may  be  using  his  name  for  their  benefit. 
Commercial  paper  may  be  drawn  in  various  ways  for 
the  accomplishment  of  the  same  purpose.     A  partner 

429 


^J2-.  Powers.  Pt.  2,  Ch.  8. 

has  a  right  to  raise  money  for  the  firm  by  giving  its 
name  as  maker  or  as  endorser,  and  no  one  can  say 
that  his  objed  is  illegitimate  when  he  adopts  any  one 
of  the  various  forms  sandlioned  by  the  custom  of 
business.'  The  form  of  commercial  paper  frequently 
does  not  express  the  actual  transa6lion  between  the 
parties  to  it.'  The  only  things  that  are  fixed  and  cer- 
tain are  the  obligations  of  the  makers  and  endorsers 
to  the  holder  for  value. 

A  partner's  individual  note,  with  the  firm  endorse- 
ment, made  by  a  co-partner,  and  the  blanks  filled  out 
by  the  partner  when  he  negotiated  it  to  the  plaintiff, 
was  no  notice  that  the  partner  was  the  principal 
debtor.  If  the  note  was  merely  a  blank  form  with 
the  firm  signature  by  a  partner,  the  taker  would  re- 
cover, although  he  had  knowledge  that  it  was  filled 
out  by  a  partner  in  a  different  firm  and  negotiated  by 
him.  No  notice  would  avail  to  relieve  the  firm  if  a 
partner  used  its  name  on  commercial  paper.^ 

In  the  hands  of  a  subsequent  holder  without  no- 
tice, the  paper  of  a  partnership,  whatever  its  form,  is 
good,  but  there  may  be  circumstances  in  the  case 
which  sufficiently  inform  the  first  taker  that  the 
paper  is  not  given  for  a  partnership  purpose,  as  if,  for 
example,  the  partner  should  give  a  firm  note,  or  his 
own  note  with  the  firm  endorsement,  to  pay  his  indi- 
vidual debt.  It  has  been  held  in  Pennsylvania  that  if 
the  partner  makes  a  note  payable  to  a  stranger,  who 
endorses  it,  and  then  the  partner's  firm  endorses  it, 
the  taker  from  the  partner  sees  that  the  endorsement 
by  the  stranger  is  an  accommodation,  and  he  should 
infer  that  the  firm  endorsement  was  given  for  the  bene- 
fit of  the  individual  partner.^ 

430 


Pt.  2,  Ch.  8.  Powers.  §127. 

But  it  is  questionable  whether  this  circumstance 
should  be  given  the  e£fe6l  indicated.  The  stranger 
may  as  reasonably  be  supposed  to  be  an  accommoda- 
tion endorser  for  the  firm  as  for  the  partner.  Where 
a  man  brings  to  bank  for  discount  his  own  note,  regu- 
larly endorsed  by  the  payee,  it  is  clear  the  irregular 
endorsement  was  for  the  maker's  accommodation, 
but  when  a  partner  is  the  maker  and  his  firm  the 
endorser,  the  partner  represents  both  himself  and  his 
firm,  and  who  shall  say  in  what  capacity  he  has  the 
note  discounted.  A  partner  may  make  a  firm  note 
payable  to  himself  and  endorse  to  and  for  a  second 
firm,  of  which  he  is  also  a  member,  without  raising 
any  suspicion  that  he  is  using  the  second  firm's 
endorsement  for  his  individual  advantage.  He  can 
both  make  and  endorse  firm  paper,  and  the  interme- 
diate link  of  making  the  note  payable  to  himself  and 
endorsing  it  over  to  the  second  firm,  is  simply  express- 
ing his  agency,  and  is  no  more  than  making  the  note 
payable  to  the  second  firm  in  the  first  instance.* 

Where  neither  the  firm  nor  the  partner  is  the  pri- 
mary debtor,  but  a  stranger  is,  and  the  firm's  liabil- 
ity on  the  paper  is  prior  to  the  partner's,  the  form  in- 
dicates a  partnership  transa6lion.  The  firm  drew  on 
a  stranger,  who  accepted  the  draft,  which  was  payable 
to  the  partner  and  endorsed  by  him.  The  taker  held 
the  firm.''  A  partner's  individual  note  to  his  firm, 
endorsed  by  it  and  also  by  second  firm,  was  sold  by  a 
broker  for  the  first  firm.  The  buyer  recovered  from 
the  second  firm.^ 

I.  Firm  bound  by  custom  of  keepm^  bank  account  and  givino;  checks 
in  one  partner's  name.  No  fraud  for  this  partner  to  give  co-partner 
a  blank  firm  check.  B,  C  &  D,  partners,  kept  bank  account  and  drew 
checks  in  B's  name,  but  did  other  business  in  name  of  B  &  C.     B 

431 


|i2^.  Powers.  Ft.  2,  Ch.  8. 

signed  a  blank  check  in  favor  of  D,  who  filled  in  the  amount  and 
endorsed  to  A,  as  a  firm  check,  and  for  a  firm  debt.  After  dissolu- 
tion, A  sued  the  three.  C's  defence :  Blank  check  a  fraud  on  the 
firm'.  Check  in  15's  name  presumably  on  his  credit. — Credit  upon 
which  check  received  a  question  of  fadl,  and  delivering  blank  check 
to  partner  no  fraud  on  the  firm.  Crocker  v.  Colwell,  46  N.  Y.  212 
(1.S71). 

Partner's  individual  note,  endorsed  by  firui  and  negotiated  by  him, 
not  notice  to  taker  of  an  individual  transaflion.  B  made  his  individ- 
ual note  payable  to  his  firm,  C,  D  &  Co.,  and  C  endorsed  for  the  firm. 
The  date  and  rate  of  interest  were  left  blank,  and  filled  up  in  A's 
presence  by  B,  when  he  negotiated  the  note  to  A.  In  a  suit  by  A,  B 
made  default,  and  D,  the  surviving  partner,  requested  the  court  to 
charge  that  the  form  of  the  note  and  the  circumstances  of  its  nego- 
tiation by  B  were  notice  to  /  of  an  accommodation  endorsement. — 
Refusal  sustained.  Partner's  authority  to  make  firm  paper,  includes 
the  right  to  insert  the  date  and  rate  of  interest.  Making  the  note  in 
his  individual  name  might  be  for  the  firm,  and  not  for  his  individual 
benefit.     Wait  v.  Thayer,  118  Mass.  473  (1875). 

2.  The  forms  which  would  give  notice,  if  not  prevented 
by  more  important  considerations,  of  an  individual 
transadlion  for  the  partner's  benefit,  are  three.  First: 
If  a  note  is  made  by  a  partner  in  favor  of  the  firm,  and 
endorsed  by  the  firm,  the  taker  should  know  that  the 
endorsement  is  for  the  maker's  accommodation,  and  be- 
yond any  partner's  authority.  Second  :  If  the  partner 
makes  a  note  payable  to  a  stranger,  who  endorses  it,  and 
then  the  partner's  firm  endorses  it,  the  taker  might  see 
an  accommodation  endorsement  by  the  firm  of  a  part- 
ner's individual  debt."*  Third :  An  irregular  endorse- 
ment, which  is  construed  as  an  accommodation,  because 
not  made  in  the  regular  course  of  negotiation.  The  finn 
endorsement  made  by  a  partner  before  the  payee  had 
endorsed,  should  not  charge  the  firm,  if  the  principles 
of  partnership  governed  the  matter,  because  the  paper 
did  not  come  regularly  to  the  firm  by  the  payee's  en- 
dorsement; but  as  the  firm's  endorsement  means  some- 
thing, it  would  be  an  accommodation.*" 

a.  Infra  Tanner  v.  Hall. 

b.  Partner  drawing  bill  to  his  own  order,  endorsed  by  firm  and  then 
by  drawer,  would  be  notice  of  an  accommodation.  B  drew  on  E  &  F 
for  I400.  C  endorsed  the  bill  in  the  name  of  his  firm,  B,  C  &  Co.  D 
added  his  own  endorsement,  took  the  bill  to  the  agents  of  the  bank, 
A,  who  discounted  it,  and  paid  D  the  proceeds.  At  maturity,  the  bill 
was  presented  to  E  &  F,  and  as  they  had  no  funds,  was  protested; 
and  notice  given  to  the  endorsers.  A  then  sued  B,  C  &  Co.— B,  C  & 
Co.  not  liable.  Lowrie,  C.  J.,:  "The  very  form  of  this  bill  is 
''prima  facie  evidence  that  [B,  C  &  Co.]  are  accommodation  en- 
^  dorsers  for  [D].  *  *  The  law  does  not  presume  that  one  partner 
"  IS  agent  for  his  co-partners  to  endorse  as  surety  for  others,  or  out- 

432 


Pt.  2,  Ch.  8.  Powers.  §127. 

"  side  the  sphere  of  ordinary  mercantile  partnerships."     Bowman  v. 
The  Cecil  Bank,  3  Grant  :i^,  Pa.  (1859). 

3.  The  firm  signature  to  blayik  form  0/  draft,  no  notice  of  accommo- 
dation. B  signed  a  blank  form  of  draft  in  the  name  of  B  &  C,  and 
delivered  it  to  D,  who,  in  the  presence  of  A,  filled  in  the  amount, 
payable  to  his  own  order,  the  name  of  his  firm  as  drawee,  and  ac- 
cepted for  his  firm.  B  &  C  had  dissolved,  but  A,  who  did  not  know 
it,  discounted  the  draft,  and  sued  C.  Defence  :  Draft  in  hands  of  D, 
one  of  acceptors,  notice  of  accommodation  by  B  &  C.  The  blank 
form  was  notice  of  no  consideration  to  the  firm  of  B  &  C. — Judgment 
for  A.  Possession  of  the  form  by  D  was  sufficient  evidence  of  his 
authority  to  fill  it  up,  as  agent  appointed  by  B  for  the  firm  of  B  &  C. 

4.  The  form  of  commercial  paper  would,  but  for  the 
superceding  of  partnership  principles  by  the  law  of 
commercial  paper,  show  who  were  principals  and  who 
were  accommodation  parties,  and  give  notice  to  the 
holder  of  its  chara6ler.  As  a  partner  has  no  right  to 
use  the  firm  credit  for  his  separate  advantage,  if  he 
does  appropriate  the  asset,  he  exceeds  his  authority, 
and  would  not  on  partnership  principles  charge  his  co- 
partners. When  the  commercial  paper  shows  that  the 
partner  is  the  primary  debtor,  and  the  firm  only  his 
surety,  the  taker  would  be  apprized  by  the  form,  if 
given  its  legitimate  eflfe6l,  that  he  was  conniving  with 
the  partner  who  is  using  the  firm  name  for  his  individ- 
ual benefit,  in  order  to  defraud  his  co-partners.^ 

a.  Partner's  note  to  stranger,  and  after  stranger'' s  endorsement,  firm 
endorsement  by  partner,  who  got  it  discounted,  sufficient  notice  to  put 
taker  on  inquiry.  B,  of  the  firm  of  B  &  C,  drew  his  separate  promis- 
sory note  in  favor  of  D,  E  &  Co.,  procured  their  endorsement  of  it, 
added  the  endorsement  of  his  own  firm,  and  had  it  discoimted  by  a 
bank,  F,  which  sent  it  to  another  bank,  G,  for  colle<5lion,  having 
placed  the  proceeds  to  his  separate  account.  The  note  being  returned, 
was  endorsed  to  A  by  the  President  of  the  bank  F,  and  A  sued  B  &  C 
on  the  note. — Judgment  for  B  &  C.  A  partner  has  authority  to  bind 
his  firm  by  adls  within  the  scope  of  its  business,  but  by  no  other  a(5ls 
without  the  express  or  implied  sanction  of  his  co-partners.  Where 
such  authority  is  express,  there  can  be  no  difficulty;  to  deduce  it 
from  circumstances  is  less  easy.  A  partner  cannot  pay  his  separate 
debt  with  joint  funds,  though  the  creditors  may  not  suspedl  a  misap- 
plication. "The  case  may  be  different  where  partnership  paper  is 
"paid  or  pledged  for  a  debt  incurred,  on  the  faith  of  it,  by  a  partner 
"or  a  stranger.  If  it  pass  into  the  hands  of  a  bona  fide  holder  for 
"value,  or  be  paid  to  the  vendor  of  an  article  dealt  in  by  the  firm, 
"the  debt  will  be  treated  as  if  it  had  been  incurred  by  the  partner- 
"  ship.  The  difficulty  is,  to  determine  *  *  between  bona  fides  and 
"'mala  fides.  The  latter  may  certainly  be  imputed  to  a  holder  who 
"  omits  to  inquire  into  the  true  nature  of  a  transadlion  which  does 
"not  fall  in  with  the  current  of  trade.  *  *  The  endorsement  of  ac- 
"  commodation  paper,  is  not  the  ordinary  business  of  a  partnership ; 
"nor  is  it  a  necessary  or  legitimate  incident  of  it;"    although,  if 

433 


Cj28.  Powers.  Pt.  2,  Ch.  8. 

such  has  been  the  custom  of  the  firm,  the  custom  may  give  authority 
to  the  partners  to  continue  it.  It  was  not  this  firm's  custom.  The 
fact  that  B  "had  drawn  ostensibly  for  his  separate  accommodation, 
ifliciently  indicated  that  his  firm's  endorsement  was  also  for  his 


Ikith  the  bank  and  A  were  affedled  with  notice  that  the  transadlion 
was  a  separate  one.  Tanner  v.  Hall,  i  Barr  417,  Pa.  (1845). 
c  Common  partner's  drawing  note  in  name  and  to  order  of  one  firm, 
and  endorsins^  it  in  name  of  both,  indicate  a  firm  transaBion.  C,  a 
partner  in  the  firms  of  B  &  C  and  C  &  D,  drew  a  promissory  note  in 
the  name  and  to  the  order  of  B  &  C,  and  endorsed  it  with  the  names 
of  both  firms.  A  discounted  the  note  for  C  &  D,  and  placed  the  pro- 
ceeds to  their  credit.  C  dre-v  out  the  money  and  used  it.  A  sued  B 
&  C  on  the  note. — Recovered.  Miller  v.  Consolidation  Bank,  12 
Wright  514,  Pa.  (1865). 

6.  I^raft  bv  firm  to  partner's  order,  and  endorsed  by  him,  indicates,  by 
its  form,  a  partnership  transaflion.  B,  of  the  firm  of  B  &  C,  made 
a  draft  to  his  own  order  in  the  name  of  the  firm,  and  endorsed  it 
with  his  own  name.  The  draft  was  accepted  by  the  parties  on  whom 
it  was  drawn,  was  discounted  by  A,  and  the  proceeds  paid  to  B.  It 
was  protested  at  maturity  for  non-payment,  and  A  sued  B  &  C. — Re- 
covered.    Haldeman  v.  Bank  of  Middletown,  4  Casey  440,  Pa.  (1857). 

7.  Individual  note  drawn  by  common  partner  to  one  firm,  and  endorsed 
bv  it  and  by  second  firm,  not  interpreted  by  its  form.  D,  a  partner  in 
the  firms  of  B  &  Co.  and  C  &  Co. ,  made,  in  his  own  name,  a  note  to  the 
order  of  C  &  Co.,  endorsed  it  with  the  names  of  both  firms,  and 
placed  it  in  the  hands  of  E,  a  note-broker,  to  negotiate  for  C  &  Co. 
E  sold  it  to  A,  who  made  no  inquiries  concerning  it,  and  at  its  ma- 
turitv  sued  B  &  Co. — Recovered.  Moorehead  v.  Gilmore,  27  Smith  118, 
Pa.  {'1874). 


§128. 


<l\)t  fact  tl]at  tl)c  firm  rcceircti  tl]c  coiisiberation  mill  not  cl)ang 
tl]c  cl)aracter  of  an  intiitiibual  transaction.  -'• 

If  a  note  made  by  an  individual  partner  was  not  al- 
leged to  be  for  the  firm,  but  the  loan  was  applied  to 
the  firm  business,  the  endorser  could  not  recover  from 
the  firm.  He  had  notice  of  an  individual  transadlion, 
and  no  cause  of  adion  exists  against  the  firm.'  A 
^member  of  two  firms  who  made  to  his  co-partner  a 

434 


J 


Pt.  2,  Ch.  8.  Powers.  §128. 

note  of  the  other  firm  for  an  individual  debt,  did  not 
charge  them,  although  by  not  paying  the  debt,  the 
money  belonging  to  the  creditor  was  used  in  the  sec- 
ond firm's  business,  because  the  co-partner  knew  his 
partner  was  the  debtor,  and  if  the  second  firm  used 
the  money  which  should  have  been  paid,  it  was  an 
advance  made  by  the  debtor  and  not  by  the  creditor,^ 
If  one  partner  makes  and  another  endorses  a  note, 
the  application  of  the  proceeds  will  not  charge  the 
firm  on  the  note.  The  original  contrail  was  not 
made  by  the  firm,  and  the  subsequent  alteration  can- 
not alter  the  contra(5l.^ 

If  the  partner  does  not  represent  that  he  is  borrow- 
ing money  for  the  firm,  and  gives  the  lender  his  indi- 
vidual note  for  the  loan,  the  note  embodies  the  trans- 
action, and  the  lender  has  no  recourse  except  against 
the  maker,  unless  it  clearly  appears  that  the  loan  was 
made  to  the  firm,  and  that  the  note  was  collateral. 

1.  Surety  on  note  made  by  partner  in  individual  name  no  claim 
against  firm.  A  endorsed  notes  made  in  B,  managing  partner's 
name,  on  his  representation  that  they  were  for  B  &  C.  B  applied 
the  proceeds  to  firm  business.  A  proved  B's  insolvenc}',  and  claimed 
judgment  against  C. — No  cause  of  action.  Form  of  note  showed  an 
individual  transadlion.      Peterson  v.  Roach,  32  Ohio  St.  374  (1877). 

This  decision  applies  the  principles  of  partnership, 
instead  of  commercial  paper,  and  makes  the  form  notice 
of  an  individual  transa(5lion,  in  spite  of  the  representa- 
tion made  at  the  time  that  the  note  was  negotiated  on 
behalf  of  the  firm.  The  representation  supercedes  no- 
tice implied  by  the  form. 

Partner'' s  note  binds  firm  if  made  for  its  business.  B  procured  D's 
endorsement  of  B  &  C's  paper  for  firm,  but  bank  preferred  to  dis- 
count B's  paper  with  D's  endorsement.  Upon  insolvency,  B  assigned 
certain  firm  claims  to  secure  D,  but  C  assigned  all  the  firm  claims  to 
A. — D  entitled.  Endorsement  for  firm  though  note  individual,  and  B 
could  pay  it  with  firm  assets.  Hopkins  v.  Thomas,  28  N.  W.  Rep'r 
147,  Mich.  (1881). 

2.  Partner  taking  note  of  different  firm  from  common  member  for  his 
separate  debt,  cannot  charge  the  firm.  A  &  B,  contradtors  and  part- 
ners. A  &  C,  manufacSturers  and  partners.  A  gave  B  a  note  of  A  & 
C,  for  a  loan  to  A  individually. — Though  he  used  it  in  the  firm  of  A 

435 


§J29.  Powers.  Pt.  2,  Ch.  8. 

&  C  they  would  not  be  liable  without  consent.  Would  become  debt 
of  finn  to  A,  not  to  B.  Clay  v.  Cottrell,  6  Harris  408,  Pa.  (1852). 
3  Partner's  note  a  separate  contrail,  unchanged  by  application  ofpro- 
ceeds  to  the  firm.  B,  C,  D  &  E  were  partners  in  conducing  a  flour 
mill.  B  made,  and  C  endorsed  a  note  to  F,  who  endorsed  it  for  value 
to  A.  B  applied  the  proceeds  to  payment  of  firm  debts.  B  &  C  were 
both' indebted  to  the  firm  for  arrears  of  contribution.  A  sued.  D  & 
E  defended.— Judgment  for  I)  &  E.  Money  bona  fide  lent  on  credit 
of  maker  and  endorser.  vSubsequent  application  does  not  alter  orig- 
inal contradl.  The  indebtedness  of  B  &  C  to  the  firm  only  explain 
their  giving  the  note.  National  Bank  of  Salem  v.  Thomas,  47  N.  Y.  15 
(1871). 


§129. 


^  partner  cannot  guarantee  tl]e  bebt  of  a  tl)iri5  person,  xtnless 
sml)  a  guarantu  is  an  indkut  to  tl)e  busineea  of  tl)e  firm. 

A  partner  cannot  guarantee,  on  behalf  of  his  firm, 
the  liability  of  a  third  person.^  A  single  partner  could 
assign  a  firm  mortgage.  The  assignment,  as  an  exe- 
cuted contrail,  discharged  a  firm  debt,  and  the  seal  was 
surplusage."  He  can  assign  a  firm  j  udgment.  It  is  an 
asset  which  any  partner  might  sell.  But  he  could  not 
guarantee  payment  of  the  judgment,  not  even  if  the 
guaranty  was  necessar}^  for  its  negotiation.  The  ne- 
cessity is  a  reason  for  securing  the  concurrence  of  all 
the  partners,  not  for  dispensing  with  it.  A  judgment, 
though  assigned  and  guaranteed  by  a  partner  for  value, 
does  not  entitle  the  buyer  to  sue  the  firm  upon  the 
guaranty.  The  partner  who  gave  the  guaranty  is  in- 
dividually bound,  without  proof  that  it  was  made  on  his 
separate  account,  because  beyond  his  power  as  a  part- 
ner. The  guarantee  is  void,  though  the  assignment 
would  be  valid. ^ 

If  a  note  were  given,  not  by  the  immediate  debtoi 
but  by  the  debtor's  debtor,  might  the  creditor  take 

436 


Pt.  2,  Ch.  8.  Powers.  §129. 

without  inquiry  and  assume  that  the  firm  received 
the  consideration  ?    Or  may  a  partner  give  firm  paper 
for  a  co-partner's  debt?    It  would  be  easy  for  the  part- 
ners to  exchange  the  firm  paper  for  their  individual 
debts,  and  thus  charge  each  other's  debts  upon  the 
firm  without  directly  giving  the  firm  obligation  for 
their  own  debts.     The  debts  of  its  members  might 
compel  it  to  assume  them  in  order  to  save  itself;  or 
the  firm  might  be  broken  up  before  it  started,  as  the 
creditor  would  have  it  in  his  power  to  put  the  assets 
in  the  hands  of  a  receiver.     The  exigency  would  be 
overwhelming;  still  the  necessity  does  not  establish 
a  partner's  right  to  undertake  the  payment  of  a  debt 
foreign  to  the  firm.     Unless  the  debt  can  be  brought 
within  the  range  of  partnership  business,  the  indi- 
vidual partner  has  no  implied  authority  to  assume  it. 
The  guaranty  of  a  judgment,  though  necessary  to 
enable  the  firm  to  sell  it,  did  not  authorize  a  partner 
to  guarantee  the  payment.'*     If  the  authority  arises 
out  of  the  business  undertaken  by  the  firm,  there  is 
no  limit  to  the  extent  to  which  a  partner  may  charge 
the  firm.     The  assumption  of  a  debt  might  be  out  of 
all  proportion  to  the  profits  expelled  from  the  firm 
business,  and  the  co-partner  should  at  least  have  the 
option  to  say  whether  he  preferred  to  renounce  the 
business,  or  to  run  it  subject  to  additional  liabilities 
imposed  upon  it  from  without,  and  not  the  result  of 
the  business  transadlions  themselves.      The  extent 
of  the  business  may  be  elastic,  according  to  the  part- 
ner's discretion,  and  the  liabilities  will  correspond  to 
the  grant  of  power,  and  also  be  vague  and  indefinite; 
yet  they  will  grow  diredlly  out  of  the  nature  of  the 
business,  and  not  be  a  burden  cast  or  shifted  upon  it 

437 


§129.  Powers.  Pt.  2,  Ch.  8. 

from  a  different  business.  Such  a  load  should  be  left 
to  the  firm's  election.  If  they  prefer  to  shoulder  the 
debt  and  stagger  under  it,  rather  than  relinquish  the 
obje(5ls  of  the  firm,  they  must  concur  in  assuming 
the  indebtedness.  The  alternative  of  abandoning  the 
business,  rather  than  be  charged  with  antecedent  or 
foreign  liabilities  is  at  least  always  open  to  the  part- 
ners.'^ 

1.  Partner's  guaranty,  thous^^h  in  firm  name,  binds  him,  but  not  the 
firm.  A  &  B  hesitated  to  sell  merchandise  to  C,  when  D,  in  the  name 
of  D  &  E,  guaranteed  payment.  Exception  to  charge  :  ThatD  could 
pledge  the  firm  credit  without  E's  knowledge. — Judgment  for  plaint- 
iffs reversed.  Partner's  adls  beyond  the  scope  of  firm  business,  are 
presumed  to  be  on  his  individual  account,  though  done  in  the  firm 
name.     vSutton  v.  Irwine,  12  S.  &  R.  13,  Pa.  (1824). 

Partner's  endorsement  to  pay  creditors  of  old  firm  not  binding.  B, 
of  the  firm  B,  C  &  D,  endorsed  in  the  name  of  the  firm,  a  note  to  pay 
A  a  debt  of  the  former  firm  B,  E  &  Co.,  of  which  C  was  not  a  mem- 
ber. A  brought  suit. — C  not  liable.  The  court  below  affirmed  one 
of  the  defendant's  points,  to  the  effe<fl  that  in  the  absence  of  evidence 
that  the  endorsement  was  made  with  the  authority  and  assent  of  C, 
A  could  not  recover  against  him.  The  court  above  approved  the 
answer,  and  added:  "The  plaintiffs  took  the  note  in  payment  of  the 
"old  debt  of  the  fonner  firm,  and  therefore  knew  that  [B]  was  adling 
"without  implied  authority  of  C  as  a  partner  in  the  new  firm,  and 
"there  is  no  evidence  of  his  assent  to  [B's]  adt."  Riegle  v.  Irwin, 
34  Leg.  Int.  447,  Pa.  (1877). 

Partner  may  create,  but  not  assume,  a  liability.  Inconsistent  de- 
fences are  good  as  alternatives,  though  one  is  inconsistettt  with 
plaintiff's  claim.  A  &  B  sued  F,  to  recover  payment  of  a  note  made 
by  C  for  firm  A,  B  &  C  to  his  own  order,  and  endorsed  to  F,  which 
F  endorsed  to  a  bona  fide  holder,  and  plaintiffs  paid.  Claim  :  C  gave 
note  to  F,  for  debt  of  a  different  firm,  without  plaintiff's  consent. 
Defences :  i,  Horse  bought  for  C's  prior  firm,  whose  assets  A,  B  &  C 
purchased  as  successors;  also,  C's  representation  that  debt  was  as- 
sumed by  his  second  firm,  which  took  the  horse  and  used  it  in  the 
business.  2,  Also,  horse  bought  by  C  for  A,  B  &  C,  and  their  note 
given  for  the  price.  Defences  excluded. — Reversed.  Defendant  en- 
titled to  prove  the  2d  defence.  Kaiser  v.  Fendrick,  2  Outerbridge  528, 
Pa.  (18S1).  so, 

Nor  doe.s  a  guaranty  to  a  partner  enure  to  the  firm. 

Guaranty  to  partner  does  not  enure  to  firm.  B,  under  contradl,  in 
his  own  name,  furnished  firm  goods  to  C,  and  D  guaranteed  payment 
toB.  Firm  .\&B  sued  Don  his  guaranty.— Judgment  for  D.  Though 
C  might  be  liable  for  the  price  to  A  &  B,  D  bound  only  by  his  con- 
traa.  Not  liable  to  A,  because  contra6l  with  B ;  not  liable  to  B,  be- 
cause goods  furnished  by  A  &  B.  Barnes  v.  Barrow,  61  N.  Y.  -^q 
(1874). 

2.  Supra  ?  117,  n.  i. 

438 


Pt.  2,  Ch.  8.  Powers.  §130. 

3.  Partner  cannot  guarantee  payment  of  judgment  which  he  assigns. 
B  &  C,  partners,  recovered  judgment  against  D.  B,  for  value,  and 
in  the  name  of  the  firm,  assigned  the  judgment  to  A,  and  guaranteed 
its  payment.  A  tried  to  recover  the  money  on  the  judgment,  but  D 
was  unable  to  pay.  A  then  sued  B  &  C.  Defence:  No  authority 
shown  by  C  to  B  to  execute  the  guaranty,  which  was  not  in  the  course 
of  partnership  business.  In  the  court  below,  judgment  for  defend- 
ants.— On  writ  of  error,  affirmed.  Smith,  J. :  "The  true  criterion, 
"whether  the  adl  of  one  partner  makes  the  other  responsible,  seems 
"to  be,  whether  the  a6l  was  or  was  not  done  according'to  the  usual 
"course  of  business."    Hamill  v.  Purvis,  2  P.  &W.  177,  Pa.  (1830). 

4.  Liquidating  partner  may  assign  firm  judgment,  but  cabinet  guar- 
antee its  payment.  B  &  C,  partners,  recovered  judgment  against  D 
et  at.  They  released  D,  and  dissolved.  C,  liquidating  partner,  as- 
signed judgment  to  A,  and  covenanted  for  firm  that  all  defendants 
continued  liable.  D  alone  was  solvent.  A  sued  B  for  amount  of 
judgment. — Not  liable  upon  the  covenant,  though  the  assignment 
was  valid.     Bennett  v.  Buchan,  61  N.  Y.  225  (1874). 

5.  Firm  not  liable  on  its  acceptance  given  by  partner  for  his  individ- 
ual debt.  B  &  C  were  partners.  On  the  maturity  of  an  acceptance 
in  his  own  name  in  favor  of  A,  B,  in  part  satisfadlion,  gave  A  another 
bill,  and  accepted  it  in  the  name  of  the  firm,  but  without  any  author- 
ity from  C.  A  sued  the  firm  on  the  bill. — No  recovery.  If  one  part- 
ner gives  the  firm's  acceptance  in  discharge  of  his  own  separate  debt, 
the  presumption  is,  that  he  does  so  without  the  authority  of  his  co- 
partner. If  that  fa6l  had  not  been  part  of  the  plaintiff's  case,  he 
might  have  relied  on  a  partner's  implied  authority  to  bind  the  firm. 
Leverson  v.  Lane,  13  C.  B.  N.  S.  (106  E.  C.  L.),  278  (1862). 


§130. 


Set-off  is  a  mcbinm  of  equitji.  ^quitg  Msrcgarbs  proccbuu, 
anil  ]3ermit3  a  set-off  toljerroer  tl)e  befenlrant  l)as  a  claim  against 
tl)£  plaintiff.  ' 

In  Pennsylvania,  any  liquidated  claim  may  be  set 
off,  though  arising  out  of  a  different  transa6lion  from 
that  in  controversy.  Partners  might  set  off  their 
moiety  of  a  promissory  note  made  by  the  plaintiff  and 
owned  by  them  in  common  with  a  stranger  in  an 
ac^lion  for  the  price  of  merchandise.^ 

The  firm  is  nothing  but  the  partners,  and  as  the 
partner  is  liable  for  the  whole  debt,  which  he  may  be 

439 


§1^0.  Powers.  Pt.  2,  Ch.  8. 

compelled  b}^  execution  to  pay  out  of  his  separate 
estate,  he  can  set  off  his  claim  against  it.  If  not  per- 
mitted to  do  so,  he  might  be  forced  to  pay  the  debt  to 
an  insolvent  creditor,  from  whom  he  could  not  subse- 
quently colledl  his  claim.  A  partner  may  avail  him- 
self of  this  right  of  set-off  when  sued  alone,  or  in 
conjnnclion  with  his  co-partners. 

An  assignment  by  the  partner  of  his  claim  to  the 
firm  is  not  requisite.^  The  separate  estate  is  exposed 
by  the  suit  to  the  creditor's  claim,  and  may  be  used 
to  satisfy  it.  The  firm  cannot  require  the  partner  to 
allow  them  to  set-off  his  private  claim  against  the 
demand  of  a  firm  creditor,  for  that  w^ould  compel  an 
increase  of  his  contribution.  On  the  other  hand,  the 
partner  may  consent  to  the  firm's  use  of  his  private 
claim  as  a  set-off,  in  which  case  he  advances  his  claim 
to  the  firm,  and  identifies  the  claim  with  the  firm  prop- 
erty.^ A  partner  represents  in  his  own  person  the 
whole  title  to  firm  propert}',  and  also  the  entire  lia- 
bilit}'  for  a  firm  debt.  Consequently,  when  sued  alone, 
or  in  conjundlion  with  his  co-partners,  he  may  always 
use  his  private  claim  to  pay  the  firm's  debt,  for  the  debt 
and  the  claim  are  substantially  in  the  same  right. 

The  partner's  right  to  make  the  advance  to  the  firm 
by  setting  off  his  claim  against  the  firm  debt,  does  not 
depend  upon  his  right  to  contribution  against  his  co- 
partners for  the  advance,  but  the  right  of  contribution 
is  a  consequence  of  the  right  to  make  the  advance. 

1.  Set-off  of  half  plaintiff's  debt,  due  to  defendants  and  a  stranger. 
AS:  Co.,  for  the  use  of  D,  brought  acflions  on  the  case,  for  goods 
sold  and  delivered,  against  B  &  C,  who  pleaded  set-off  and  payment 
with  leave,  and  offered  in  e\'idence,  a  promissory  note  of  A  &  Co., 
payable  to  the  order  of  E  &  Brother,  and  endorsed  by  E  &  Brother 
wnthout  recourse."  B  &  C  proved  themselves  co-owners  with  F  of 
the  not^  V  had,  in  a  previous  suit,  set-off  his  share  against  A  &  Co. 
— Set-off  allowed.     Woodward,  J., :    "It  is  true  the  note  could  not 

440 


Pt.  2,  Ch.  8.  Powers.  §130. 

"be  divided  for  the  purpose  of  adlion,  but  it  may  be  a  defence  under 
"the  equitable  plea  of  set-off."  Smith  v.  Myler,  lo  Harris  36,  Pa. 
(1853)- 

By  Common  law,  the  joint  right  of  adlion  inhered  in 
the  partners.  All  must  join  in  the  suit,  and  one  could 
not  sue  for  all.  A  partner's  express  assignment  would 
not  invest  his  co-partner  with  the  joint  right  of  adlion.* 

a.  Partners  cannot  empower  co-partners  to  sue.  A,  B  &  C,  partners  in 
stage  line,  and  D  kept  stage-office.  On  settlement,  partners  directed, 
D  to  pay  receipts  to  A.  He  brought  assumpsit  for  money  had  and 
received.  Claim:  Promise  resulted  from  ownership  as  to  one  owner 
after  payment  to  co-owners  of  their  quotas. — Judgment  for  D.  No 
property  in  specific  money,  as  it  could  not  be  followed;  but  a  chose 
m  adtion,  which  could  not  be  assigned  without  debtor's  consent;  nor 
had  debtor  consented  to  change  his  creditors,  as  he  did  by  severing 
the  debt,  when  he  paid  quotas  of  co-owners.  Horbach  v.  Huey,  4 
Watts  455,  Pa.  (1835). 

As  the  reason  for  a  joinder  no  longer  exists,  a  partner 
may  represent  the  firm  with  or  without  an  assignment 
from  his  co-partner.^ 

b.  Assignment  by  firm  to  partner  enables  him  to  sue  in  joint  name, 
B  assigned  his  interest  in  firm  claim  to  A,  and  died.  A  sued  in  joint 
name.  Defence:  Plea  in  abatement ;  non-joinder  of  B's  executors. — 
Judgment  for  A.  Matherson  v.  Wilkinson,  8  Atlantic  Rep'r  84,  Me. 
(1887). 

2.  The  Civil  law  seems  to  require  an  assignment. 

,,SCirb  bie  ©efellfcfiatt  unter  ifircr  Jytrma  berftagt,  fo  fann  fie  mit  einer 
„i^r  gegen  ben  J^Iager  5uftef)enben  (yegenfDrberun(\  con^jenfiren.  Db  fie 
,,bagegen  bie  ^ribatforberimg  eineS  ifirer  ©efellfd^after  in  Stufrerfinung 
,,  bringen  fann,  ift  beftritten.— (S§  ii:)trb  bie§  urn  bc5.»ptl(en  bcjabt,  tneil 
,,burd)  bie  Slugftagung  bergtnna  bie  fdmmtltcf)en  ©efellfcfiafter  mit»erflagt 
,,feien.  9(lletn  eg  iDurbc  berett§  gejeigt  (^  57),  ba^  bie  gegen  bie  (yeiel(= 
„  fcf)aft  ahS  formelle  (Sinf)eit  gerid}tete  j^tage  unter  ben  50m  ein  iiiitiscon: 
„  fortium  ganj  anberer  %xi  icic  bagjenige  begri'tnbet,  it>eW}e§  baburd)  ent; 
„fte^t,  ba^  ein  ©Idubiger  bie  einjetnen  (55 efellfcb after  jufammen  nerflagt. 
,,3luc^  ift  bie  G5efe(Ifd;aft  al§  folate  nid;t  bered^ttgt,  fiber  bas  '^srinatner: 
„mbgen  if)rer  53iitg(ieber,  felbft  jur  5:ilgung  'oi^w  ©ocietdt^fdiulben  ju  ber; 
„  fiigen,  ntdl;renb  ber  01dubiger  tnetdjer  feine  SBefriebigung  aiu3  bem  @efell= 
,,fd)aft'gfonb'3  fud)t,  fid)  auf  jene^  SBermogen  nid)t  fcrtrcifcn  ju  (affen 
„brauc^t.  !Demnad>  fann  bie  unter  ibrer  %\xxna  ferflagte  CicfcIIfdiaft  mit 
,,^riBatforberungen  ber  cinjelnen  socii  nid}t  compcnfi'ren.  'l^i^^i)  berr^dlt 
„e§  fic§  anber§,  n)enn  bie  '^vrinatforbcrung  be§  (^efcUfd;after§'  auf  bie 
,,  0efeUfd)aft  itbertragen  n^orben  ift — eine  Ueberunnsung,  bie  93tl^uf§  ber 
,,3Bettfd)(agung  nod)  md^renb  be§  3ied>tsftreit§  burd)  ben  bie  Societdt  ber= 
,,tretenben  Socius  f)infidit[id}  eine§  ibm  ge^origen  3(nf^.n-ud)§  gefdie^en 
,,  fann.^^    3i  e  n  a u  b,   ,, Sa§  3ied)t  ber  Gommabitgefellfd^aft,"  s.  437, 

3.  Plaintiff  cannot  credit  a  partner's  claim  on  account  of  the  firm's 
debt,  without  partner's  consent.  A  claimed  feoo  of  B  &  C,  and  de- 
dudled  ^128  which  he  owed  B  &  C,  and  |;ioo  which  he  owed  B.  De- 
fendants asked  non-suit,  because  claim  beyond  justice's  jurisdicftion. 
— Entitled  to  non-suit.  Defendants  could  not  set-off  B's  claim,  and 
plaintiff  can't  without  their  consent.  Williams  v.  Hamilton,  i  South. 
220,  N.  J.  (1818). 

441 


§13^- 


Powers.  Pt.  2,  Ch. 


I)ic  r^JcfcUfcf'aft  luirb  untcr  i^rer  ^irma  Dertlagt.  ®ie 
fann  mit  ciiicr  WcfcUidiaft^SforbcnnuT  compenftrcn,  abet  md)t  mit  ber 
"  iri»atforbcvuiui  cinci  cinsclncn  C'icKilfdutftcr'o,  bcnn  Uiennglcid;  burd)  bie 
"  ^lac\i  ticijcii  bic  WoKlIfAaft  fammtlidic  ('■icfcUidrnftcr  belaiuit  finb,  \o  finb  fie 
"  bod)  niir  mit  iU",iclniiiii  auf  ibre  iicfcUi'duiftlidie  ivcrbinbuiu^  bclangt.  Sie 
"fonnoii  |id)  babcr  nudMUir  tmter  ber  Aivina  ber  WcicUfdiaft  einlaffcn  unb 
"  fbiiucn  luir  bicjcniiicii  3icd)te  auc-iUH'ii,  uu'ld^c  ilincii  ale  6cfeU[diaftern 
"^uftcbcu.  ^Jll>3  iold)e  abcr  babcix  fie  uidit  bie  Sie-'pofition§befuc(niB  iiber 
'[cin.uiin 'iU-iiKituermiJfl.'it  eiiies  (^5e|ell|d)after'g  geborenbes  i^ermogenftiicf, 
],  fie  ionncii  alfo  cine  \!;ri»atforbevung  bes  eiusclnen  (ycfeUi'diattevs  tiH'ber 
'leinflageii  noc^  compcnsando  geltetiD  madden.  (Sbenfoiuenig  ti)nnen  fie 
^!abor  biC'3  rHoc^it  aii$  bcu  naif  bent  cyefeUfd^aftsiHTtrag  "ttw  cinselnen 
','  (>)c)cUid)aftern'  obliegenbeii  iierpttiditungeu  ableitcn.  '^\v<xx  Unirbe, 
'jiH'im  ber  einjelne  (^kfellfitafter  ber  (ye[cUfd)aft  Derpflic^tct  tocire,  %vx 
,,  ,'^aMimg  ber  fteiclli*aft<-utulb  leinen  2(ntf)ei(  in  ber  2lrt  beijutragen, 
",,\><\i  er  ilin  au5  jeineiu  '^(rbatyermogen  jaf)lte,  bi^3  jum  Setrag  biefes 
^^Jlntbcil^'mit  ber  "^riinitforberuug  be^  einjelnen  05efellfd)aftcr5  gegen 
Libert  Mldgcr  compenfirt  inerben  fbnnen.  23ei  ber  Sanbelsgefellfc^aft  ift 
„  nber  eine  fotd^e  i?erpf(id;tung  ber  einjelnen  ©efcllfdjaftcr  ber  ©efell: 
,,  fcbaft  gcgeniiber  nid^t  uprbanben.  ^ie  ©efellfc^after  braud^en  iiber 
,,ibre  I'ertragcMndftigc  tSintage  au§  iftrem  ^sriuatwermbgen  5u  gefellfd^aft: 
,,  lidu'ix  ,^i»edcu  nid)t  '^^i  ©eringfte  su  eericenben  be,v  norsufdiiefjen. 
,,(3.  'i3emerf.  ju  9(rt.  92,  li  3.)  Sie  f)aben  baber  (x\\^  inebefonbere  leine 
,,  (i-injablungcu  jiir  ,-]a(iIung  lu>n  GefcUid)afts.idniIben  ju  mad;en,  noc^ 
,,nH'nn  cine  CJefeUidiaftsfdiuIb  au§  ber  (3efel(fd;aft§caffe  bejafilt  ift,  'x>zv. 
,,58etrag  berfelben  biefer  Gaffe  ju  erfe^en,  e§  fel;lt  batter  ber  ©efellt'diaft  an 
,,jebem  rlicdjtCnirunb,  ber  gegen  fie  geric^teten  illage  bie  ^sri»atforberung 
,,cinc^ibrcr  lifitgtieber  entgegen  ju  fe^en. — 2^ie  Jyrage  iinrb  iibrigens  Don 
,,praftiid)er  SJU'beuting  nur  fiir  ben  ^yall,  bafe  ber  0efeUfd)after  bie  33enu§= 
,,ung  feincr  APrberung  jur  Gompenfation  Deriveigert;  bcnn  in  ber  Ueber= 
,,Iaf5ung  ber  ^yorberung  ;;ur  Gcmpenfation  ift  eineGeffion  entttatten  (f.  o. 
,,  ^]Jote  4),  unb  bie  0efeUfd;aft  ift  %\\x  (Som^enfation  ber  cebirten  gorberung 
,,bered)tigt"  (f.  o.  I  4).  33 on  Sal^n,  „6ommentar  jum  2tll.  Seutfd^en 
„§anbcl59efe^buc^,^'  2(rt.  121,  \1 . 

A    PARTNER   SUED    FOR    A    FIRM    DEBT   MAY    SET-OFF   A    FIRM   CLAIM 
WITHOUT  HIS  CO-PARTNER'S  PERMISSION. 

He  might  have  taken  money  out  of  the  firm  ex- 
chequer, and  paid  the  firm  debt.  He  accomplished 
the  same  result  by  applying  the  claim,  which  is  an 
asset  of  the  firm,  to  the  discharge  of  its  obligation. 
Moreover,  if  compelled  to  pay  the  debt,  he  could  re- 
cover from  his  co-partners  contribution,  which  he 
merely  anticipates  by  the  set-off.^ 

As  set-off  is  a  medium  of  equity,  the  law  searches 
out  the  party  interested,  and  gives  the  benefit,  or  detri- 
ment, of  set-off  to  him.^ 

4.      ,Gr  !ann  cine  (^efeUfdiaftgforbcrung  gegen   Sen  .ftlager  jur   6ompcn= 
station  brmgen.    3)ernburg  crflart  bieg  fiir  jweifeUog  nur,  luenn  ber 


442 


Ft.  2,  Ch.  8.  Powers.  .       §130, 

„be!lagte  ©efellfc^after  Don  ber  i^crtrctung  ber  ©efcUfd;aft  nid;t  au^i-- 
„jd)IoBcn  ift,  ift  jebod}  gencigt,  aud;  bent  Hon  ber  asertretung  2luJ.ge-- 
„icf)loffenen  biefe  ik'fugnife  becMuegen  jii3uge[tef)en,  mii  berfelbe  bered^tigt 
„ieintnuffe,  ju  feinem  e*ul5  alle  ber  WeieUfdniftj-fd^ulb  inl;drtrenben  (irj 
„ce))ttonen  bor3uid;u^eii,  ju  lueldjeu  and;  bic  (ionpenfationscinrebe  gel^ore. 
„  gjlciner  2(nfid)t  nad)  ift  and)  t;ier  siinfdien  bem  toon  ber  ajiertrctung  augge-- 
„fc^loffen  unh  bem  nid}t  au§gefd;loffen  (^Jefellfdjafter  nid}t  ju  itnterfd;eiben. 
„  ®cr  3{ed)t^grunb,  auf  toeld^ein  bie  ^ulcifeigt'eit  ber  Gompenfation  beruf)t, 
„  ift  ber  bent  ©efelifc^after,  UHid;er  eine  @efeU|d;aft§fd;uIb  jat)!!,  gegen  bie 
„  ©efellfd^aft  jufte^enbe  Siegrefe  unb  biejer  ift  ber  gleid^e  fiir  alle  ©efells 
„f^after.  2)ie  (Sigen[d;aft  al<i  ifertreter  ber  ©eiellfd^aft  tann  fiir  ben  in 
„eigenem  Diamen  betangten  0efelIfd;after  nid)t  in  S8etrad;t  fommen." 
Von  Hahn,  Art.  121,  ^  8  (b). 

5.  At  law,  the  firm  could  not  set  off  a  partner's  claim 
against  the  joint  creditor,  because  the  claims  were  not 
by  and  against  the  same  plaintiff  and  defendant,^  The 
form,  however,  might  be  controlled  by  the  fadl.  Part- 
ners could  set-off  their  deposit  against  a  note  made  by 
one  and  endorsed  by  the  other,  if  and  because  discounted 
for  the  firm.*^ 

a.  Partner  cannot  set-off  his  individual  claim  against  plaintiff ''  s  claim 
against  firm.  A,  as  B's  trustee,  sued  C  &  D  for  price  of  fruit  sold 
them.  They  pleaded  set-off  of  A's  note  to  D  for  f/.ooo.  C  died  after 
plea  filed. — Disallowed.  Set-off  determined  by  right  at  the  time  of 
bringing  suit,  not  at  the  trial,  when  D  was  surviving  partner.  John- 
son V.  Kaiser,  11  Vr.  286,  N.  J.  (1878). 

b.  Firm  deposit  set-off  against  vote,  separate  itt  fortn  but  discounted 
for  the  firm.     B  made  his  note  to  C,  his  co-partner,  and  he  endorsed 

it.  D,  a  banker,  discounted  the  note  for  the  firm.  B  &  C  notified  D, 
upon  his  failure  to  set  off  their  deposit  against  the  note,  and  he  pro- 
mised to  make  the  off-set.  D  assigned  for  creditors,  to  A,  who  sued 
B  &  C.  Defence:  Set-off. — Allowed.  The  note,  though  in  form,  a 
separate,  was  in  substance,  a  firm  obligation,  and  the  set-off  was  mu- 
tual. Joint  suit  admitted  mutuality.  Smith  v.  Felton,  43  N.  Y.  418 
(1870). 

A  PARTNER  CAN  SET-OFF  HIS  INDIVIDUAI.  CI.AIM  AGAINST  A  FIRM 
LIABILITY,  WHEN  SUED  ALONE,  OR  IN  CONJUNCTION  WITH  HIS  CO-PART- 
NERS. 

He  owes  the  firm  debt  individually,  and  if  he  choses 
jto  appropriate  his  separate  property  to  paying  what 
is  also  the  firm's  debt,  the  co-partners  could  not  obje6l, 
if  they  would,*^  The  partner  owes  the  firm  debt  to  the 
plaintiff,  and  the  plaintiff  owes  the  partner  a  debt. 
One  extinguishes  the  other.  A  supercargo  sued  the 
co-owners  of  a  ship,  to  the  use  of  his  assignees,  for 
his  services  on  the  voyage.     One  defendant  set  off  a 

443 


§130.  Powers.  Pt.  2,  Ch.  8. 

judgment  against  the  supercargo  recovered  before  the 
assignment." 

6.  Co-obligors  were  sued  by  the  assignee  of  the  obligee. 
The  debt  of  the  real  owner  of  the  bond,  for  whom  the 
assignee  held  it  to  one  of  the  obligors,  was  set-off  against 
the  plaintiff.  Wrenshall  v.  Cook,  7  Watts  464,  Pa. 
(1838). 

7.  Stewart  v.  Coulter,  12  S.  &  R.  252,  Pa.  (1825). 
Contra,  if  proceedings  at  law  where  the  obstacles  are 

in  the  forms  of  procedure ;''  but  the  technical  objedlions 
do  not  defeat  the  set-off  in  equity.  ** 

a.  A  pa  litter  can't  set-off  /its  separate  claim  in  a  suit  against  the  firm. 
Executors  of  A  sued  B  &  C  for  services,  as  manager  of  iron  works. 
Evidence  offered,  by  way  of  set-off,  of  A's  agreement  with  B,  to  pay 
any  debt  coutradled  by  C,  and  of  C's  contratfting  a  debt  for  £11. — 
Rejected.  Separate  claim  of  partner  not  allowed  as  a  set-off  in  a 
suit  against  them  for  a  firm  debt.  Brown  v.  Thompson,  Coxe  2  N.J. 
(1790J. 

b.  Obstacles  to  set-off  at  law  do  not  prevail  in  equity.  B  attached  C,  and 
D  intervened.  C  settled  with  B,  and  enjoined  D  from  proceeding, 
claiming  that  D  was  indebted  to  him  for  advancing  D's  share  in  dif- 
ferent enterprise  undertaken  by  them.  D  admits  advances,  but 
claims  adjustment  by  partnership  accounts. — Maintained.  Set-ofF 
available  m  equity,  without  technical  objecflions.  Dungan  v.  Miller, 
4  C.  E.  Gr.  219,  N.J.   (1868). 

If  A  FIRM  SUES  ITS  DEBTOR,  HE   CANNOT  SET-OFF  A  CLAIM  WHICH  HE 
HAS  AGArNST  ONE  OF  THE  PARTNERS. 

The  plaintiff's  claim  belongs  to  both  partners,  and 
is  indivisible ;  the  defendant's  claim  is  separate  against 
a  single  partner.  As  the  firm  does  not  owe  the  debts 
of  its  members,  the  defendant  cannot  make  it  pay 
them  by  means  of  a  set-off.^ 

The  partners  are  liable  severally,  because  they  in- 
cur diredl  obligations  to  third  persons,  who  enforce 
the  contradls.  They  do  not  acquire  severally,  because 
nobody  but  themselves  is  involved  in  the  transaction, 
and  they  have  excluded  each  other,  except  for  the  firm 
balance.  Hence  the  debt  is  not  one  to  each  partner. 
It  is  an  asset  of  the  firm,  and  if  the  assets  were  divisi- 

444 


Pt.  2,  Ch.  8.  Powers.  §130. 

ble,  and  owned  in  quotas  b}^  the  partners,  it  would  be 
set  ofif  against  each,  according  to  his  aliquot  share." 

8.  Separate  debt  of  partner  cannot  be  set-off  against  a  firm  claim.  A 
bought  out  B  &  C,  and  sued  firm  debtor,  D,  for  balance  of  account. 
D  included  in  account  separate  charges  against  B. — Items  stricken 
out.    Billings  V.  Meigs,  53  Barb.  272,  N.  Y.  (1869). 

The  German  Code  prevents  the  set-off  by  a  firm  debtor 
of  his  claim  against  a  partner  during  the  partnership.* 
This  results  as  Renaud  points  out,  *"  from  the  recognition 
of  partnership  property,  which  would,  if  the  set-off 
were  allowed,  be  misappropriated  to  the  payment  of  a 
partner's  individual  debt. 

After  a  dissolution  of  the  partnership,  the  German 
Code  admits  the  set-off,  if  there  has  been  a  division  of 
the  assets,  against  the  share  of  the  debtor  partner.*^ 

.  a.  .,  giue  (Som^jenfation  jicifc^en  g^orberungen  ber  ©efeHf^aft  unb  ^ribatj 
,,  forberungen  be§  Q5ei'eUf(|)aft§[rf)uIbncr§  gegen  einen  einjelnm  ©eiellfdfiafter 
,,finbet  iDd^renb  ber  3)auer  bcr  (McfcUic^aft  tpeber  ganj  nod)  tf)eil>»eiffe 
„  ftatt;  nad)  3Uifl5§ung  ber  ©eiellid^aft  t[t  fie  juld^ig,  t»mn  unb  injotoeit 
„bie  (yefoUfd^aftgforbcnmg  bem  GcfcUfdjaftcr  bei  ber  3tusetnanberfe^ung 
„uber>Dieien  ift."    ,,2111.  Seutfc^.  ^anbelggefe^bud},"  2lrt.  121. 

b.  „S)ie  ©onberung  be§  @efea[c^aft§t)ermogen§  bon  ^ribatbermogen  ber 
,,ein5elnen  0efelIf(^after  au^ert  fid)  abet  l»etter  barin,  baf,  eine  Gonn^enfa-- 
,,  tion  5ir»ifdjen  Jorberungeu  ber  0efellfd)aft  unb  1>riimtforberungen  be§ 
,,  6efeUfd)aft5i"d)uIbner  gegen  einen  einselnen  (5)eje[l|d;)after  iudi^renb  ber 
,,Sauer  ber  ©efetlfd^aft  treber  ganj  noc^  t^eitireife  Statt  finbet."  3le= 
uaub, .?.  436. 

c.  ,,3'ia^  Sluflofjung  ber  ©efellfd^aft,  etc.  %a.  nad^  i4  eine 
,,  an  einen  OJefellfdiafter  cebirte  ©efelffc^aft^forbcrung  aud)  n^dl^renb  ber 
„2)ciuer  ber  ©efeltfc^aft  toon  bem  ©ejcllfdnifter  gegen  bie  ^J-orberung 
„  feineg  ^^rt»atg(dubiger§  aufgeredniet  liierben  tann,  fo  iriirbe  bie  33emer!= 
„ung  Sernburg'g  bO'*  ber  Sdilu^fah  nidit  gliidUd)  gefafet  fei,  julreffenb 
,,  fein,  \w\\\\  nid)t  bie  eigentlidie  iiebeutung  biefe^i  ®atie§  barin  %\\  fud)en 
,,tt)dre,  ba^  bie  6om^)enfation  aud)  nad;  9(uf(b§ung  ber  @e|eU= 
,,fd)aft  unjuldfeig  bteibt,  fo  lange  bie  betreffenbe  Jyc^r^'fi^""^  "prf)  W^^ 
,,ungetbeitten  ©efellfcbaftSbennbgen  gef;5rt.  (5^  Gntfpridit  bie§  bollig  bem 
„in  21rt.  119  au«geft)rod)enen  '^rinci^."   Von  Hahn,  Art.  121,  \.  5.' 

9.     Smith  V.  Myler,  supra  n.  i. 

The  partner  may  set-off  a  firm  claim  against  his  individual 
debt,  if  his  co-partners  consent  to  the  appropriation. 

They  can  do  with  their  own  what  they  please,  and 
may  devote  it  to  paying  off  a  partner's  debt.  If  the 
firm  consents  to  the  partner's  use  of  its  claim,  he 
may  apply  it  by  way  of  set-off  against  his  separate 

445 


§i-jo.  Powers.  Pt.  2,  Ch.  8. 

debt.     He  owns  the  claim  by  a  joint  title,  and  no  one 
but  his  co-partner  can  objecfl  to  the  application. "* 

The  defendant  partner  could  not  make  the  set-ofF 
without  the  consent  of  his  co-partners.  The  plaintiff 
in  such  a  case  would  not  be  entitled  to  rely,  as  Re- 
NAUD  states,"  upon  the  implied  authority  of  the  part- 
ner, who  does  not  a(fl  on  behalf  of  the  firm,  and  the 
use  of  the  firm  asset  to  pay  his  private  debt  is  notice 
to  the  plaintiff,  who,  as  an  individual  creditor,  partici- 
pates in  the  fraudulent  misappropriation  of  the  firm 
asset. 

10.  Co-makers  of  a  promissory  note,  who  were  sued  by 
the  payee,  set-off  a  debt  due  by  the  plaintiff  to  a  differ- 
ent firm,  of  which  the  defendants  were  partners,  their 
co-partners  having  consented.  Tustin  v.  Cameron,  5 
Wharton  379,  Pa.  (1840). 

Firrn  clerk's  recognition  of  a  partner's  agreement  to  set-off  firm 
debt  against  his  individual  debt  binds  firm.  C  hauled  wood  for  A, 
who  agreed  to  pay  hiui  in  goods  from  store  of  A  &  B.  A  received 
first  load,  and  firm  clerk  received  the  three  other  loads.  A  &  B  sued 
C  for  balance,  less  three  loads  received  by  their  clerk. — Bound  to 
credit  the  four  loads,  as  firm  clerk  adled  on  basis  of  A's  contra<ft. 
Hood  v.  Riley,  3  Gr.  127,  N.  J.  (1835). 

II.  ,,  fflirb  ein  C^efeUfc^after  au§  ctner  ^srtt)atfcf»ulb  Belangt,  fo  !ann  er  mit 
,,  finer  ^vorbontnfl,  treldie  ber  ©efeUi'd)att  (^cc^en  ben  ^(ciger  juftcl^t,  bann 
„mdU  cpmyenfiren  ipenn  er  bon  ber  5lscrtretiing  ber  Societcit  atiSgeidjIoffen 
,,ift,  ba  ilim  iibcr  einen  \i>\A)ixi  5ai5ifi»ni*,  ungead}tet  er  Vcjtxi  an'bemfelben 
„I'at,  feinerlei  Tic-pofttion  sutbmmt.  ^*,ft  er  bagegcn  tion  ber  9ie)3rdfenta« 
„tion  ber  Wefe(I(ri>aft  nidit  au'Sgcfditoffen,  fo  iff  er  jur  Gotn^.tenjation  mit 
„ber  gan^en  (^iekllidmftoforberung' obne  ^iidfid}t  baraitf,  ob  bie  2Bett- 
„  )di(agimg  im  "sntereffc  ber  Spcictiit  liegt,  urn  be^anllcn  berec^tigt,  ixKiler 
„3^rttteu  gegeniiber  ein  unbe[d}ranfte§  a.serfiigungs-red}t  iiber  ben  ©efell^ 
„  idjaftefonbs  fiat.  3ii>ar  tnirb  tiiergegen  geltenb  gemad}t,  ee  fijnne  ber 
„rejjrdKntntion5berecbtigtc  WefelUdiafter  nn'r  im  Sfamen  ber  Societdt  iiber 
„bereu  A-orbcrung  berfiigen;  eine  joldie  Serfiigung  liege  aber  nid^t  ttorunb 
„fei  nidit  mi3g(id),  iwcnn  ber  in  eigenem  9famen\icrfiagte  socius  auf  bie 
,,AUnge  fid)  einlaffe.  SlKein  i^  !ann  baraue  einer  ^sri'batfd}iilb  belangte 
„  f^efeUfdiafter  fo  fern  er  Hon  ber  Jkrtretung  ber  ©ocietat  nidit  anegc- 
„fdi(offen  lit,  fid;  Tfamens  (e^erer  eine  ©efelifd^afteforberung  iibertiHifen, 
„  iim  fie  alebann  ,uir  (Som^jenfation  ju  benuhen,  ja  cbne  fortnIid}e  Ueber= 
„etn?ei5ung  im  ^famen  ber  ©efeUfd}a|t  juftimmen,  'i:(xS^  beren  gorberung 
„vxx  aBettfd)Iagung  bemil^t  tuerbe.     3Unaub,  .?.  489. 

In  an  action  by  a  partner,  the  defendant  may  set-off  a  ci^aim 

AGAINST  THE  FIRM. 


446 


\ 


Pt.  2,  Ch.  8.  Powers.  *  §130; 

The  partner  owes  the  debt  (defendant's  claim) ,  as 
an  individual,  and  he  cannot  objecft  to  pay  it  when 
made  a  set-off  to  his  separate  claim.'" 

12.  ,,^IagtenbUcf)  etn  (MeicUfcf^after  cine  ^ribatforberung  gegen  Written  ein, 
„fo  t'ann  biefer  eine  il;m  gegcn  bie  ©efellfdiaft  juftefjenbe  gorberung  mit 
,,-bem  ganjm  23etragc  ui  3lufrec^nung  bringen,  tneil  ber  berflagte  feinen 
,,  DoUen  'Jlnf^ruc^  ftagettteifc  gegen  ben  socius  geltenb  madden  fbnnte.  2lu§ 
,,bem  namlicfien  ©runbc  ftnbet  eine  Gom^enfation  gegen  cinen  (Somman-- 
„bitiften  Jt)iernur  infonieit  ©tatt,  atg  bieferfiir  bieSeteUjrf^aftsfd^utb  birect 
„bem  Gldubiger  f^aftet."     :;}ienaub,  5^.  439-40. 

A  SURVIVING  PARTNER    CANNOT   SET-OFF  A    FIRM  CI.A1M   AGAINST   HIS 
INDIVIDUAL  DEBT. 

Originally,  he  could  do  it,  because  the  firm's  rights 
of  adlion  survived  to  him  alone, '^  although  the  a6l 
would  be  a  breach  of  the  relation."  Now,  however, 
since  the  deceased  partner's  estate  is  charged  with 
the  firm  debts,  the  surviving  partner  should  not  be 
permitted  to  use  the  firm  claims  by  way  of  set  off,*'^ 
At  the  death  of  the  partners  the  rights  of  their  cred- 
itors become  fixed,  and  a  claim  not  previously  estab- 
lished is  unavailable  for  set-off.^" 

13.  A  surviving  partner  could  set-off  his  individual  debt 
against  a  firm  debt,  or  a  firm  against  an  individual  debt, 
because  the  rights  of  allien  survived  to  him.  Hender- 
son V.  Lewis,  9  S.  &  R.  379,  Pa.  (1823). 

14.  But  this  is  a  breach  of  the  relation,  i  Lindley,  Law 
of  Partnership,  529. 

15.  The  claims  remain  distin6l. 

Separate  claim  of  partner  will  not  keep  open  and  running  an  account 
between  firm  and  stranger.  A,  as  surviving  partner,  sued  C  for  items 
barred  by  statute  of  limitations.  C  had  set  up  a  counter  claim  against 
A  individually,  not  yet  outlawed. — ^Judgment  for  C.  The  accounts 
were  not  mutual,  so  as  to  give  A  benefit  of  the  date  of  C's  last  item. 
Eldridge  v.  Smith,  144  Mass.  35  (1887). 

16.  Equality  of  distribution  prevents  a  set-off  after  the  death  of  the 
parttier.  On  the  death  of  a  surviving  partner,  his  execators  at- 
tached the  property  of  a  iirm  debtor  in  the  hands  of  a  bank,  and  ob- 
tained judgment  against  the  garnishee.  The  garnishee  attempted  to 
set-off  a  claim  against  the  firm  on  an  endorsement  which  fell  due 
after  the  surviving  partner's  death. — Disallowed.  An  unlawful  pre- 
ference. Distribution  must  be  eqiial  among  the  creditors  of  dece- 
dents.    Cramond  v.  Bank  of  U.  S.,  i  Binn.  64,  Pa.  (1803). 

447 


§i^o.  Powers.  Pt.  2,  Ch.  8. 

A  I'ARTNER  WHO  IS  SUED  FOR  A  FIRM  DEBT  CAN  SET-OFF  HIS  CO- 
PARTNER'S CLAIM  AGAINST  THE  PLAINTIFF,  IF  THE  CO-PARTNER  CON- 
SENTS. 

The  authority  to  make  the  set-off  must  be  ex- 
press. No  such  power  will  be  implied,  for  that 
would  enable  a  partner  to  increase  arbitrarily  his  co- 
partner's contribution.  A  creditor  may  enforce  the 
several  liability  of  the  co-partner  in  the  first  instance, 
but  the  partner  has  no  right  to  compel  the  payment 
of  a  firm  debt  out  of  the  separate  estate  of  his  co- 
partner, except  by  way  of  contribution  to  a  payment 
previously  made  by  himself. 

The  partner,  if  compelled  in  the  separate  action  to 
pay  more  than  his  share  of  the  firm  debt,  is  entitled 
to  contribution,  and,  therefore,  he  in  fa(5l  represents 
his  co-partner  for  the  excess.  By  allowing  the  set- 
off, the  co-partner  who  was  not  joined  simply  pays  a 
debt  for  which  he  would  ultimately  be  liable.  If  a 
partner  should  refuse  to  avail  himself  of  such  a  set- 
off when  offered  by  his  co-partner,  he  would  deprive 
himself  of  his  right  to  contribution  for  the  payment 
which  he  had  needlessly  made.  Where  the  partner 
who  is  sued  has  already  paid  more  than  his  propor- 
tion of  the  firm  debts,  it  would  be  important  for  him 
to  compel  the  application  of  his  co-partner's  claim  to 
the  satisfadlion  of  the  firm  obligation.  He  could  not 
accomplish  this  end  by  the  machinery  of  the  Common 
law.  A  plea  in  abatement  for  the  non-joinder  of  his 
co-partner  would  not  serv^e  his  purpose.  That  would 
enable  him  to  fix  the  liability,  but  not  to  control  the 
separate  property  of  his  co-partner.  Yet  he  would 
have  a  clear  equity  available  in  a  Court  of  Chancery. 
But  there  must  be  some  proceeding  in  which  the  part- 

448 


Pt.  2,  Ch.  8.  Powers.  §131. 

nership  account   and  all  the  parties  are  before  the 
court. 


§131. 


^n  assignimnt  for  creditors  is  not  tuttl^in  a  partner* 9  torn- 

No  such  assignment  by  a  single  partner  is  allowed, 
except  when  his  co-partner  is  out  of  the  jurisdiction, 
and  cannot  be  consulted,  and  then  only  if  an  adverse 
sale  is  impending/  Under  such  circumstances,  the 
authority  is  implied  to  a  partner  who  may  exert  the 
power,  as  he  represents  his  co-partners,  rather  than 
let  a  stranger  exert  the  power  and  e£fe6l  a  forced  sale, 
which  might  sacrifice  the  stock." 

The  partner,  it  is  said,  by  such  an  assignment, 
delegates  his  capacity  to  the  assignee,  and  this  dele- 
gation is,  by  the  general  principles  of  partnership, 
beyond  his  authority.^  The  corre6lness  of  this  rea- 
soning may  be  questioned.  The  assignment  does 
not  involve  the  delegation  of  a  partner's  capacity,  for 
the  assignee  becomes  a  trustee  for  creditors,  and  not 
merely  a  substitute  for  the  partner.  The  assignee,  it  is 
true,  does,  in  part,  discharge  the  function  of  a  partner, 
inasmuch  as  he  applies  the  assets  of  the  firm  to  the 
payment  of  its  debts.  But  the  sheriff  would  perform 
the  same  fundlion.  True,  he  only  executes  an  adverse 
process,  but  the  difference  between  the  effeCl  of  an  exe- 
cution and  of  an  assignment  in  this  respe6l  is  only 
apparent,  for  it  is  not  maintained  that  a  partner  can 
appoint  an  assignee,  except  to  forestall  an  execution. 

449 


§1^1.  Powers.  Pt.  2,  Ch.  8. 

A  partner  can  not  prejudge  the  expediency  of  an  a(ft 
which  may  involve  the  existence  of  the  firm,  and  the 
financial  career  of  its  members,  unless  it  is  obvious 
that  there  was  no  alternative.  In  such  a  dilemma,  it 
is  proper  that  the  discretion  should  be  exercised  by 
one  identified  with  the  business  rather  than  by  a  hos- 
tile creditor.^ 

In  considering  this  question,  it  must  be  borne  in 
mind  that  a  partner  is  clothed  with  a  power  similar  in 
kind  and  greater  in  extent  in  those  jurisdidlions  where 
he  is  permitted  to  confess  a  judgment  under  which  the 
firm  assets  may  be  sold,  because  this  power  has  never 
been  made  dependent  upon  the  absence  of  his  co- 
partner or  the  inability  to  consult  him.^  An  assign- 
ment for  creditors  by  a  partner  is  permitted  only  as  a 
means  of  forestalling  adverse  proceedings,  and  thus 
becomes  a  protedlion  to  the  firm ;  but  a  confession  of 
judgment  is  a  surrender  of  the  firm  to  a  hostile  cred- 
itor. 

I.     Sloan  V.  Moore,  Supra  ?  115,  n.  i. 

Power  to  assif;7i  for  creditors  not  implied  in  any  number  of  part- 
ners less  than  all.  A  beiug^  iu  Europe  on  firm  business,  B  &  C  notified 
him  of  embarrassment,  and  asked  him  to  return.  He  dispatched  a 
letter,  which  was  received,  saying  he  w  as  en  route.  He  was  delayed 
by  stress  of  weather,  and  nine  days  before  his  arrival  B  &  C  assigned 
for  creditors  to  D.  A  brought  bill  for  dissolution  account,  injun^ion 
and  receiver. — Decree.  No  authority  to  assign  in  anticipation  of  A's 
return.     Wetter  v.  Schlieper,  4  E.  D.  Smith  707  N.  Y.  (1858). 

All  partners  must  join  in  assignment  for  creditors.  In  absence 
of  co-partners,  D  and  E,  on  business,  one  in  Cuba,  the  other  iu  Cali- 
fornia, B  and  C  assigned  to  A,  for  creditors,  with  preferences.  F  levied 
on  goods  in  hands  of  A,  ^who  sued  to  recover.— -Judgment  for  F.  No 
emergency  to  justify  assignment  by  less  than  all  co-partners.  Pettee 
V.  Orser,  6  Bosw.  123,  N.  Y.  (i860). 

A  partner  may,  of  course,  assign  his  separate  estate 
for  the  satisfadion  of  the  firm  creditors. 

Partner  m  insolvent  firm  viav  convcv  his  separate  property  in  satis- 
failwn  of  a  firm  debt.  B,  member  of  insolvent  firm,  conveyed  his 
separate  property,  to  certain  firm  creditors,  in  satisfacTiion  ;  then  firm 
made  assignment.  Assignee  sought  to  include  convevance  as  part  of 
assignment.— Dismissed.     Partner  may  apply  his  separate  property 

450 


Pt.  2,  Ch.  8.  Powers.  §131. 

to  pay  any  firm  creditor  in  full.     Elgin  Watch  Co.  v.  Meyer,  30  Fed. 
Rep'r  659,  Mo.  (1887). 

.  If  partner  absconds,  co-partner  may  assign  for  creditors.  B  &  C, 
partners,  mortgaged  firm  stock  to  D,  creditor  of  B.  Then  B  ab- 
sconded, and  C  assigned,  for  creditors,  to  A,  with  preference  to  mort- 
gagee. After  A  took  possession,  sheriff  levied  on  goods,  and  A  sued 
him  to  recover  possession. — Recovered.  Assignment  good,  though 
preference  void.   Kemp  v.  Carnley,  3  Duer  1,  N.  Y.  (1853). 

Assignment  by  partner  for  creditors  allowed  to  savefrm  stock  from 
adverse  and  forced  sale  by  execution  creditor.  C  &  D  were  partners 
in  coach-building,  and  contradled  debts.  A  levy  was  made  on  their 
stock  in  trade,  consisting,  inter  alia  oi  unfinished  carriages.  D  there- 
upon ran  away,  and  left  the  country.  To  save  loss,  C  execiited  a  bill 
of  sale  of  the  entire  stock  to  A  and  the  other  creditors.  The  sheriff,  B, 
then  gave  up  the  stock  to  A  and  others,  who  took  it,  employed  v^ork- 
men,  among  them  C  himself,  and  carried  on  the  business.  Then  an 
execution  issued,  at  the  suit  of  E,  against  C  &  D,  which  was  put  into 
the  hands  of  B,  who,  being  indemnified  by  E,  levied  on  the  property 
in  the  possession  of  A  and  others,  as  the  property  of  C  &  D,  and  sold 
it.  A  et  al.  brought  trespass  against  B.  Defence  :  That  the  bill  of 
sale  was  illegal,  because  of  the  entire  stock,  and  by  C  alone,  especially 
as  it  was  under  seal,  and,  further,  that  the  employment  of  C  by  the 
plaintiffs  was  part  of  the  consideration  of  the  transfer,  and  in-validated 
it.  First  point  ruled  against  the  defendant.  Second  point  ruled  for 
the  defendant,  if  the  jury  should  believe  the  fadt.  But  verdi<fl  fcr 
plaintiff,  and  judgment  accordingly. — Affirmed.  ROGERS,  J.:  "It  is 
"a  general  principle  of  the  law  of  partnership,  that  the  partners  are 
"bound  by  what  is  done  by  each  other  in  the  course  of  the  partner- 
"  ship  business.  *  *  *  Among  the  powers  most  ordinarily  exercised 
"by  partners,  is  \!a.&  jus  disponendi.  *  *  *  it  is  admitted  he  can 
"  sell  part  without  the  acflual  consent  of  his  associates,  and  the  policy 
"of  limiting  that  right  is  not  very  apparent,  when  the  transa6tion  is 
"  conducfled  in  good  faith ;  still  less  in  a  case  like  the  present  when 
"  the  arrangement  is  most  clearly  for  the  benefit  of  the  firm.  *  '^  * 
"When  the  assignment  is  bona  fide,  I  cannot  doubt  the  power  of  one 
"partner  to  transfer  the  whole  as  well  as  a  part  of  the  partnership 
"effedls.  *  *  *  The  fa<ft  of  fraud  was  left  by  the  Court  to  the  jury, 
"and  they  have  found  that  the  contrail  was  bona  fide.  Deckard  v. 
Case,  5  Watts  22,  Pa,  (1836.). 

,  Partner  can't  assign  for  creditors  without  co-partner''  s  consent,  and 
intervening  attachment  takes  precedence.  B  &  C  were  insolvent,  and 
B  published  dissolution.  He  assigned  for  creditors,  to  D,  and  filed  the 
assignment.  Later  in  the  daj',  A  attached  firm  property.  D  had 
previously  consented  to  be  trustee,  but  the  assignment  was  not  de- 
livered to  him,  nor  did  he  know  of  it,  until  after  the  attachment,  when 
he  at  once  accepted  the  appointment.  C,  though  in  town,  was  not 
consulted  by  D  when  he  made  the  assignment.  When  informed  of 
it,  C  at  first  hesitated,  but  subsequently  consented  to  it.  Parties 
agreed  to  let  D  sell  the  property  attached  and  hold  the  proceeds  in 
its  place.  A  disputed  them  with  D. — A  recovered.  Assignment  not 
an  ordinary  firm  transaction.  B  not  a6ling  as,  but  appointing,  an 
agent.  He  could  not  assign  for  creditors  without  C's  concurrence, 
and  intervening  attachment  cut  out  the  assignment.  Holland  v. 
Drake,  29  Ohio  St.  441  (1876). 

One  partner  cannot  assign  for  creditors.  B  assigned  firm  stock  to 
C,  for  creditors,  without  knowledge  of  co-partner,  A,  who  enjoined 

451 


^2.  Powers.  Pt.  2,  Ch.  8. 

p  ^  C.— Decree.     Partner  cannot  delegate  his  discretion.    Hayes  v. 
Heycr!  3Samlf.  293,  N.  Y.  (1849).  -^      ^     ,  //      ^      a 

Partner  no  power  to  assign  Jar  creditors  if  co-partners  at  hand.  A 
maiority  of  partners  assigned  for  creditors.  It  would  appear  that  the 
minoritv  were  consulted.— Assignment  invalid.  Partner  may  assign 
all  finn'stock  to  firm  creditors,  but  not  appomt  a  trustee,  i.  c,  a  third 
utrson  who  will  control  co-partners  in  liquidation.  He  cannot  dele- 
cate  his  own  authority,  nor  deprive  his  co-partners  of  power.  Fisher 
V.  Murray,  i  H.  D.  vSmith  341,  N.  Y.  (1850). 

The  partner  can  neither  delegate  his  own  or  limit  his 
co-par tner'-s  capacity.  An  agent  could  not  exert  the 
co-i)artner's  rights.  Thus  a  clerk  can  not  create  an  in- 
dci)cndent  liability  against  the  firm,^  but  he  may  carry 
out  a  contracl  made  by  them.*" 

a.  Agent  cannot  use  partner's  naine  for  firm.  B  was  managing  clerk, 
with  authority  to  give  notes  for  firm.  He  signed  a  partner's  name 
and  subscribed  his  own  initials  to  a  note  given  to  A  on  firm  account. 
B  so  signed  notes  before,  and  paid  them  with  firm  money,  but  with- 
out the  knowledge  or  authority  of  the  partner,  or  of  the  firm.  A  sued 
on  the  note.  Defence:  A  firm  transaction. — Liable,  becau.se  note  not 
given  in  firm  name,  and  no  implied  authority  to  a6t  for  firm  in  a  part- 
ner's name.    Palmer  v.  Stephens,  i  Deuio  471,  N.  Y.  (1845). 

b.  Hood  v.  Riley,  supra  n.  10. 

4.  Assignment  or  mortgage  of  entire  firm  stock  void,  unless  with 
consent  of  all  the  partners.  B  &  C,  partners,  insolvent.  C  made,  8 
November,  1886,  firm  note  to  A,  for  12,529.31,  for  merchandise,  due 
9  November,  1886,  secured  by  chattel  mortgage  of  all  the  firm  prop- 
erty. A  foreclosed.  Defence :  Partners  agreed,  6  November,  1886, 
to  assign  for  creditors,  to  D.  Assignment  prepared  by  attorney,  and, 
9  November,  B  executed  it  for  the  firm.  D  accepted. — Judgment  for 
D.  Assignment  made  with  C's  concurrence  valid.  Mortgage  without 
B's  assent  void.  Osborne  v.  Barge,  29  Fed.  Rep'r  725  (1887). 

5.  Supra  \  122. 


§132. 


(Tlic  assignment  for  crebitors  bn  a  partner  \z  prima  facie  a 

liiisolutiou  of  tl)c  tu'm. 

An  assignment  for  tlie  benefit  of  creditors  is  not 
necessarily  a  dissolution  of  the  firm.  The  stock  goes 
to  the  assignee.'  The  good-will  belongs  to  the  cred- 
itors, if  it  is  an  asset.  The  partnership  might  go  on 
if  not  only  the  business  itself,  but  also  the  name  which 

452 


Pt.  2,  Ch.  8.  Powers.  §132. 

individualized  the  firm  passed  to  its  creditors.  If 
the}',  like  the  creditors  in  Cox  v.  Hickman,  or  a  Scotch 
bankruptcy,  took  possession  of  the  firm  and  ran  it  for 
their  own  benefit,  the  partnership  would  be  suspended 
during  the  interval.  They  would  not  be  restrained 
from  the  use  of  the  firm  name,  or  from  any  solicita- 
tion of  the  firm  customers.  Without  either  or  both 
of  these  constituents,  the  firm  would  be  in  suspense. 
But  the  assignment  is  not  equal,  in  its  e£Fe6l,  to  a 
bankruptcy,  and  need  not  dissolve  the  firm.^  If  the 
debts  are  paid  off  by  the  assignee  a  right  may  result  to 
the  firm  or  to  the  partners,  who  can  then  proceed  to 
trade  again. 

It  is  a  question  of  intention  for  the  jur^^  If  to  re- 
sume after  a  settlement,  a  subsequent  bankruptcy 
would  stand;  if  a  dissolution  intended,  no  firm  exists 
to  be  put  into  bankruptcy.^'  The  result  is  that,  upon  a 
re-assignment  of  any  surplus  to  the  partners,  a  former 
creditor  would  compete  with  new  creditors  of  the  re- 
suscitated firm. 

1.  Unless  restric5led  to  the  firm  stock,  the  assignment 
also  carries  the  separate  estate  of  the  partners. 

Partners'  assignment  for  creditors  not  confined  to  firm  property  by 
construction.  A  &  B  assigned  all  their  property  for  creditors,  describ- 
ing themselves  as  a  firm,  and  stipulating  for  a  release. — Sustained, 
because  not  in  terms  confined  to  firm  property.  Orr  v.  Ferrell,  5  S. 
W.  Rep.  490,  Texas  (18S7). 

2.  But  \\\^  prima  fades  is  often  taken  for  the  invariable 
efifecT:.^ 

a.  Assignment  for  creditors  dissolves  firm.  A  &  B  assigned  for  cred- 
itors, who  accepted  their  dividend  as  payment.  Certain  articles  men- 
tioned in  the  assignment  as  by  law  exempt,  were  returned  to  the  part- 
ners who  had  contributed  them,  respectively,  A  brought  bill  for 
account  against  B. — Dismissed.  Firm  dissolved  by  assignment,  and 
I        nothing  to  account  for.     Wells  v.  Ellis,  63  Cal.  243  (1885). 

A  partner  may  make  an  assignment  for  creditors.  Whether  assign- 
ment zi'orks  a  dissolution,  or  not,  for  jury.  B,  C,  D  &  E,  partners. 
B  made  an  assignment  of  all  firm  property,  to  F,  for  creditors.  Sub- 
sequently, B,  b  and  E  assigned  to  G,  for  creditors.  D  continued 
business,  under  old  firm  name  of  D  &  Co.     H,  of  firm  H  S:  I,  signing 

453 


§133-  Powers.  Ft.  2,  Ch.  8. 

petition  for  himself  and  co-partuer,  obtained  a  commission  in  bank- 
ruptcy against  the  four  partners.  A  sued  the  firm  for  an  old  debt. 
Defence:  Bankruptcy.  A  attached  petition  and  denied  firm  exist- 
ence.— Validity  of  bankruptcy  proceedings  depends  on  the  effedl  of 
assignments.  If  firm  dissolved,  no  joint  commis.sion  could  issue;  if 
firm  continued,  the  proceedings  regular.  Question  for  jury,  whether 
the  assignments  meant  to  close  firm  transadlions  for  the  future,  as 
well  as  for  the  past.  Pleasants  v.  Meng,  i  Dall.  380,  Pa.  (1788). 


§133. 


^\]t  aiitl)oritB  of  a  partner  cannot  be  restricted  bg  l)is  co- 
partners. 

Each  partner  has  authority  to  a^l  for  the  firm,  and 
the  co-partners'  forbidding  him  does  not  devest  him 
of  his  authority,  although  notice  of  the  prohibition 
is  given  to  the  person  who  is  dealing  with  the  part- 
ner.' 

The  insolvency  of  a  partner  does  not  deprive  him 
of  the  right  to  manage  the  business.  The  solvent 
partner  cannot  claim  that  insolvency  is  equivalent  to 
death,  and  invests  him  with  the  rights  of  a  surviving 
partner.  The  insolvent  partner  cannot  be  ousted 
from  his  control,  except  for  cause  shown.^  A  partner 
cannot  by  notice  revoke  his  co-partner's  authority  to 
coUedl  a  firm  claim.  The  authority  is  not  subject  to 
the  partner's  control,  even  upon  insolvency  and  dis- 
solution,' There  is  no  supremacy  among  partners, 
but  they  are  all  equals. 

The  partner's  right  is  incident  to  the  business.  He 
may  lease  premises  for  the  firm.^  Each  attorney  ex- 
erts the  powers  of  all  in  legal  transadions.^  A  part- 
ner may  re-deliver  goods  upon  a  return  of  the  firm 
notes  given  for  the  price.     The  merchandise  returned 

454 


Pt.  2,  Ch.  8.  Powers.  §133. 

satisfies  the  debt,  although  the  insolvency  of  the  firm 
prevents  it  from  satisfying  its  other  creditors.*^ 

1.  Partner's  authority  in  firm  business  cannot  be  restriSled  by  a  co- 
partner. B,  C  &  D,  partners.  B  drew  on  A  for  the  firm  use,  and 
gave  a  written  indemnity  in  the  firm  name.  C,  in  A's  presence,  dis- 
sented from  the  indemnity,  but  subsequently  applied  the  proceeds  of 
the  acceptance  to  the  payment  of  rent  on  a  lease,  taken  in  his  own 
name,  of  the  store  occupied  by  the  firm.  A  sued  B,  C  &  D. — Recov- 
ered. B  had  implied  authority  to  bind  the  firm  by  the  indemnity,  in 
spite  of  C's  dissent.   Wilkins  v.  Pearce,  5  Denio  541,  N.  Y.  (1848). 

2.  Insolvency  does  not  deprive  partner  oj  joint  control.  A  etal.,  being 
insolvent,  dissolved  partnership  with  B,  and  sued  him  for  account  and 
receiver.  B's  defence:  Solvent,  and  entitled  to  liquidation,  like  a 
surviving  partner. — Decree.  Analogy  too  remote,  but  B  might  be 
appointed  receiver  if  unimpeachable.  Hubbard  v.  Guild,  i  Duer  662, 
N.  Y.  (1853). 

3.  Partner  cannot  revoke,  by  notice,  co-partner's  authority  to  colle£l 
firm  claim.  A  &  B  were  co-owners  of  a  ship,  and  partners  in  the 
cargo.  B,  as  ship's  husband,  insured  ship  and  cargo  in  his  own  name, 
with  C,  for  whom  it  might  concern;  policy  payable  to  himself. 
There  was  a  total  loss.  C  paid  B  a  portion,  and  was  then  notified, 
by  A,  to  pay  no  more  to  B,  because  he  was  insolvent,  and  A  was  in- 
terested in  the  payment.  C  did,  however,  pay  the  balance  to  B,  and 
A  sued  for  it. — Judgment  for  C.  Neither  dissolution  nor  insolvency 
incapacitates  a  partner  from  receiving  firm  money.  Notice  by  co- 
partner inefieclual,  because  stranger  did  not  know  the  state  of  part- 
nership account.    Gillilan  v.  Ins.  Co.,  41  N.  Y.  376  (1869). 

4.  Partner  may  bind  the  firm  for  rent  of  premises  necessary  for  the 
business.  B  took  a  lease  of  brewery  for  10  years.  He  became  bank- 
rupt during  the  third  year,  and  C  obtained  from  the  assignee  an  as- 
signment of  the  term  to  C  &  D,  though  without  D's  knowledge,  and 
C  contrafted  for  the  firm_  to  pay  the  rent.  C  &  D  occupied  the 
premises,  and,  upon  dissolution,  both  executed  an  assignment  of  the 
lease.  A,  as  lessor,  brought  assumpsit  against  C  &  D  for  the  rent. — 
Recovered.  Renting  brewery  without  B's  authority  is  an  incident 
of  the  business,  and  ratified  by  D's  subsequent  recognition  of  it. 
Stillman  v.  Harvey,  47  Conn.  26  (1879). 

5.  Attorneys  in  partnership  delegate  authority  of  all  to  each  member. 
Counsel  signed  bill  as  A  &  B.  Defendants  objected  to  joint  signa- 
ture.— Sufficient.  Rule  to  restrain  attorneys,  but  control  of  firm 
reached  the  members,  and  each  has  authority  of  all.  Hampton  v, 
Coddington,  i  Stew.  557,  N.  J.  (1887). 

6.  A  partner  may  re-deliver  goods  in  return  for  the  price,  although 
his  firm  is  embarrassed.  A  sold  coal  to  firm,  which  was  embarrassed, 
and  gave  notes  for  the  price.  B,  a  partner,  gave  A  a  bill  of  sale  for 
the  coal  which  was  lying  on  the  wharf.  The  next  day  sheriff  levied 
on  the  coal,  and  A  replevied,  and  obtained  verdicfl  for  152,866.43. 
Judge  charged  that  A  had  authority  to  re-deliver  coal  in  satisfadlion 
of  the  debt. — Sustained.   Boswell  v.  Green,  i  Dutch.  391,  N.J.  (1856). 


455 


§U4- 


Powers.  Pt.  2,  Ch.  8. 

§134. 


13ii  acirecnicnt,  tl)c  partners  mag  restrict  tlje  autl]oritg  of  a 
partner  bctiuccn  tl)ejnscbcs.' 

Outsiders  are  not  affeded  by  the  arrangement,"  un- 
less notice  of  it  is  brought  home  to  them,^  and  then 
slight  evidence  will  be  deemed  sufficient  to  make  out 
a  waiver  of  the  restriction.''  A  partner  who  was  for- 
bidden to  buy  except  fcr  cash,  bought  on  credit.  The 
seller  knew  of  the  restriAion,  but  as  the  co-partner 
knew  of  the  sale,  his  failure  to  dissent  was  deemed  a 
waiver.     His  assent  was  not  necessary.'^ 

1.  Limitation  of  liability  by  agreement  inter  se.  Uniucorporated 
society  provided  by  its  constitution  that  fund  alone  should  be  liable, 
without  recourse  to  members,  and  that  its  officers  should  not  contradl, 
except  upon  this  basis.  They  did,  nevertheless,  contracft  with  A, 
without  reservation.  A  sued  the  members  as  partners.  He  could 
not  aver  execution  of  authority  in  conformity  to  articles,  but  he 
mij^lit  recover  on  a  quajittun  meruit.  Sullivan  v.  Campbell,  2  Hall 
271,  N.  Y.  (1829). 

2.  ContraFl  between  partners  does  not  affefl  creditors.  B  &  C  gave  A  firm 
note,  and  dissolved  partnership.  B  undertook,  as  liquidating  part- 
ner, to  assume  outstanding  debts,  and  gave  C  note  for  his  share.  A 
sued  firm.  C  set  iip  B's  assumption  of  A's  debt. — No  defence.  Gul- 
ick  V.  (Vulick,  i  Harr.  186,  N.  J.  (1837). 

Cu<:toin  controls  secret  agreements.  By  articles  A  could  not  con- 
tracfl  without  consent  of  B,  his  co-partner.  A  did  so  contraA,  and,  in 
a  suit  against  firm,  B  set  up  want  of  authority. — Liable.  Frost  v.  Han- 
ford,  I  E.  D.  Smith  540,  N.  Y.  (1852). 

Agreement  to  rcstrifl  liability  to  amount  contributed  ineffe5lual: 
A  &  B,  with  20  others,  agreed  to  equip  a  steamboat,  and  run  her  be- 
tween two  ports  oil  joint  account,  to  contribute  to  expenses  in  instal- 
ments, and  share  the  profit  and  loss  in  proportion  to  their  subscrip- 
tions, though  they  restricted  the  loss  of  each  party  to  the  amount  of 
his  subscription.  B,  on  A's  demand,  promised  'to  pay  his  second 
instalment.  A  who  had  advanced  money  for  expenses,  sued  B  for 
his  quota.  B  asked  for  non-suit. — Refused,  because  B's  promise 
made  him  liable  on  account  stated,  though  he  was  a  partner,  and  A 
could  not  sue  him  on  partnership  account.  Brown  v.  Tapscot,  6  M. 
&W.  119(1840). 

3.  ContraH  of  partners  inter  se  binds  stranger  with  notice  of  it.  Agree- 
ment between  B,  C  &  D,  that  D  should  neither  participate  in  the 
profit  or  loss,  nor  be  liable  as  a  partner.  A,  who  had  notice  of  the 
agreement,  sued  D,  as  a  partner.— Not  liable  to  A,  because  he  knew 
of  the  arrangement.    Alderson  v.  Pope,  i  Camp.  404,  note  (1811). 

4.  Johnston  v.  Bernheim,  stcpra  \  115,  n.  3. 

456 


Pt.  2,  Ch.  8.  Powers.  ^0135. 

5.  Partner's  afl  in  excess  of  authority  validated  by  co-partner's  knowl- 
edge. B  contributed  ^2,000,  and  limited  his  liability  to  that  amount. 
C  managed  the  business,  and  could  buy  only  for  cash.  He  bought  on 
credit,  of  A,  who  knew  of  the  arrangement,  but  with  B's  knowledge, 
A  sued  B. — Liable,  because  he  knew  of  the  purchase.  Mason  v.  Part- 
ridge, 66  N.  Y.  633  (1876). 


§135. 


^\)t  partners  maw  ratifp  tl)e  act  of  a  co-partner  in  txttss  of 
l]is  autl)orit2,  if  i)one  in  tl)e  name  of  tl)e  firm. 

A  ratification  implies  that  the  a(5l  ratified  was  done  in 
the  name  of  the  principal.  If  so  done,  the  subsequent 
ratification  binds  the  principal,  whether  he  received 
any  benefit  from  the  transaction  or  not.  If  the  con- 
trail was  not  made  in  the  name  of  the  principal,  his 
subsequent  adoption  of  it  would  not  make  him  liable 
on  the  promise  without  a  new  consideration. 

It  is  often  said  that  the  a6l  ratified  must  have  been 
done  on  behalf  of  the  principal.  The  meaning  of  this 
phrase  must  be  that  the  a6l  was  done  in  the  name  of 
the  principal.^  In  so  far  as  any  different  signification 
is  given  to  it,  the  phrase  is  incorre6l.  The  promissor 
in  entering  into  a  contrail  in  his  own  name,  may  in- 
tend that  a  third  person  shall  have  the  benefit  of  the 
engagement.  If  the  third  person  has  previously  au- 
thorized the  contrail,  he  is  liable  to  the  promissee  as 
an  undisclosed  principal.  But  if  there  was  no  prece- 
dent authority,  there  is  no  way  to  make  the  third  per- 
son liable  to  the  promisee  on  the  contra(5l.  There  is 
no  opportunity  for  ratification,  because  the  want  of 
authority  can  never  be  supplied  by  ratification,  unless 
the  promisee  contemplated  the  third  person  as  the 
principal  at  the  time  the  contrac^t  was  made.     The 

457 


§1^^.  Powers.  Pt.  2,  Ch.  8. 

reason  is  that  ratification  is  not  merely  an  expedient 
for  charging  a  principal  with  liability,  but  is  a  means 
of  confirming  a  man  as  party  to  a  contra6l  made  in 
his  name,  but  without  his  authority.  By  ratification 
the  principal  becomes  in  fa6l,  as  well  as  in  name,  a 
party  to  the  contracT;,  and  he  not  only  incurs  its  bur- 
dens, but  may  compel  performance  by  the  other  party. 
Tlie  proposition  is  not  that  a  man  is  liable  because  he 
has  ratified,  but  that  where  the  adl  is  done  in  his  name, 
he  has  the  right  to  ratify  and  take  the  benefit  with 
the  burden.  But  a  man  can  have  no  right  to  in- 
trude himself  as  a  party  into  a  contrail  made  with-  j 
out  reference  to  him.  For  this  a(5tion  the  testimony  I 
of  the  nominal  promissor  is  inadmissible  to  prove  his 
secret  intention  that  a  third  person  should  have  the 
benefit  of  the  contract.  Conversely,  therefore,  the 
other  party  to  the  contra(5l  can  have  no  right  against 
a  third  person  upon  proof  of  such  secret  intention, 
and  its  subsequent  adoption  by  him  as  the  intended 
beneficiary.  Such  a  transa6lion  can  take  effed  only 
as  a  new  contrail.  The  promissee  may  sue  an  un- 
disclosed principal  upon  the  equitable  ground  that 
he  was  the  real  party  in  interest,  but  must  prove  that 
the  defendant,  though  undisclosed,  was,  in  fa6l,  the 
principal  at  the  time  the  contract  was  made.  The  de- 
fendant might  plead  any  set-off  he  had  against  the 
promissee,  as  the  agent  might  have  done  had  suit 
been  brought  against  him.  The  undisclosed  princi- 
pal has  no  right  against  the  other  party  to  the  con- 
trail, except  through  the  agent.  The  liability  of  the 
undisclosed  principal  is  equitable,  not  contradlual, 
and  the  rule  does  not  apply  unless  he  was  the  party 
in  interest  at  the  time  the  contrad  was  made.     If  the 


458 


^ 


Pt.  2,  Ch.  8.  Powers.  §135. 

evidence  shows  that  the  defendant  did  not  become  in- 
terested in  the  contrail  until  after  it  was  made,  he 
could  not  be  held  upon  the  equitable  ground  that  he, 
in  fa(5l,  caused  the  plaintiff  to  part  with  the  considera- 
tion, nor  upon  the  contrail  to  which  he  was  not  a 
party. 

The  a(5l  of  a  partner,  in  excess  of  his  implied  au- 
thority as  agent  of  the  firm,  binds  him,  because  he 
warrants  his  authority  to  do  the  ad:.  But  his  co-part- 
ners are  not  bound,  unless  they  adopt  the  a6l  in  ex- 
cess of  authority  as  their  own  a6l.'  As  the  a6l  is  on 
behalf  of  all  the  partners,  the  adoption  by  each  is 
based  on  the  adoption  of  all.  Unless  they  all  make 
the  adl:  their  own,  by  adopting  it,  the  adoption  by  a 
single  partner  will  not  bind  him,  because  he  does  not 
intend  to  assume  the  individual  liability  for  the  ultra 
vires  a6l,  but  only  to  share  it  with  his  fellow-prin- 
cipals, on  whose  behalf  the  a6l  was  done.  Unless 
they  also  adopt  the  a(?t,  the  condition  upon  which  he 
adopted  it  is  not  fulfilled,  and  he  is  not  bound."^  He 
consented,  as  one  of  the  firm,  to  embrace  the  a6l 
within  its  province,  but  to  enlarge  the  scope  of  the 
partnership  requires  the  consent  of  all  the  partners."* 
It  is  not  to  be  presumed  that  the  partner  who  adopted 
the  a(5t  meant  to  assume  the  entire  responsibility 
himself,  alone.  He  was  willing  to  extend  the  part- 
nership, so  as  to  cover  this  a6l,  if  his  co-partners 
agreed  to  it.  They  could  not  do  it,  unless  all  con- 
curred. The  a6l  would  not  be  duly  authorized  unless 
every  partner  adopted  the  a(5l,  and  thus  brought  it 
within  the  limits  of  the  partnership  business.  The 
adl  was  done  on  behalf,  not  of  a  single  partner,  but 
on  behalf  of  all.     The  ratification  could  be  only  by 

459 


§135-  Powers.  Pt.  2,  Ch.  8. 

all.  Ratification  b}-  one  partner  would  not  corre- 
spond to  the  autliorit}'  assumed  and  meant  to  be  rati- 
fied. 

The  partner  who  does  not  join  in  a  specialty  executed 
for  the  firm  may,  nevertheless,  be  bound  in  any  one  of 
four  ways?  i.  He  may  authorize  his  co-partner  to 
execute  the  specialty  for  him,  and  in  his  name.  2, 
He  may  be  present  at  the  execution  of  the  specialty, 
know  of  the  transa(?tion ,  and  not  dissent.  3,  He 
may  subsequently  ratify  the  transaction.  In  these 
three  cases  he  is  bound  by  the  covenants.  In  the  first 
case  the  precedent  authority,  and  in  the  third  case  the 
subsequent  ratification,  may  be  given  by  parol.^  In 
the  second  case  the  failure  to  dissent  is  equivalent  to 
aclual  execution.^  4,  He  may  authorize  the  adl  in 
question,  but  not  its  embodiment  in  a  specialty.  In 
this  case  he  will  be  bound,  not  by  the  covenant,  but 
by  the  contra6l,  and  the  seal  will  be  disregarded,  as 
surplusage.^ 

The  argument  is  frequently  nrged,  that  a  partner 
should  have  the  power  to  bind  the  firm  by  a  seal,  be- 
cause the  authority  does  not  exceed  the  power  which 
he  exercises  by  means  of  commercial  paper.^  This 
reasoning  betrays  an  ignorance  of  the  exceptional 
privilege  conferred  upon  the  partner  by  commercial 
law.  As  has  been  pointed  out,  the  power  to  bind  the 
firm  by  commercial  paper  does  not  spring  from  the 
relation,  but  is  superinduced  by  rules  which  are  in- 
consistent with  partnership,  and  which  supercede  its 
principles. 

I.     A  finn  may  ratify  the  a(5l  of  a  partner  which  is  ultra 
vires.     The  ratification  operates  not  simply  as  evidence 


460 


Pt.  2,  Ch.  8.  Powers.  §135. 

of  original  authority,    but  as  a  substitute  for  the  want 
of  authority.'^ 

a.  Partner  may  ratify  co-partner's  unauthorized  use  of  firm  credit. 
B  &  C,  attorneys,  iti  partuership.  B  made  his  individual  note  to  B 
&  C,  and  endorsed  it,  in  their  name,  for  his  separate  debt.  A  dis- 
counted the  note,  with  knowledge.  When  informed  of  the  note,  C 
promised  to  pay  it.  A  sued  B  &  C. — Recovered.  A  ratification, 
which  is  not  evidence  of  original  authority,  but  a  substitute  for  want  of 
authority.  Commercial  Bank  of  Buffalo  v.  Warren,  15  N.Y.  577  (1837). 
Execution  of  specialty  by  partner  prevents  a  bill  to  nform  it  in 
Chancery.  B  &  Co.  settled  with  A  &  Co.,  giving  judgment-note  for 
balance  due,  signed  B  &  Co.  [i^.s.]  by  B  [i..s.].  A  &  Co.  issued  exe- 
cution against  B,  who  was  insolvent  and  out  of  jurisdi(5tion.  Then 
brought  bill  to  reform  the  note  according  to  both  parties'  intention, 
which  charged  firm  of  B  &  Co. — Dismissed,  because  A  &  Co.  ratified 
the  legal  constru6lion  of  the  note,  which,  otherwise.  Chancery  would 
have  reformed.    McNaughten  v.  Partridge,  11  Ohio  223  (1842). 

2.  Partners  executing  specialty  in  firm  nam,e  was  bound  by  the  deed. 
B,  C  &  D  were  partners.  B  wrote  a  note  payable  to  A,  and  D  sealed 
it.  C  was  not  present,  but  the  note  was  in  the  name  of  the  firm.  A 
sued  B  and  D. — Recovered.  Woodward,  J.,  said:  "The  jury  found 
"that  the  two  parties  sued,  sealed  or  assented  to  the  sealing  of  this 
"  note,  and  it  is  in  nowise  material  that  they  used  the  name  of  a  firm 
"in  which  [C],  who  was  not  present  or  assenting,  was  a  partner.  By 
"whatever  name  they  call  themselves,  the  defendants  are  liable  ac- 
"  cording  to  the  tenor  of  the  instrument  they  signed."  Potter  v. 
McCoy,  2  Casey,  458  Pa.  (1856). 

3.  If  the  scope  of  the  business  is  enlarged,  the  partners 
must  add  the  constituent  power,  and  all  must  ratify  the 
a6l  in  excess  of  authority.  If  not,  none  of  the  partners 
are  bound,  not  even  the  ratifying  partners.* 

a.     Roberts'  Appeal,  supra  \  24,  n.  8. 

4.  If  the  firm  exceeds  the  scope  of  the  business  for  which 
the  partnership  was  formed,  the  consent  of  every  mem- 
ber must  be  obtained,  in  order  to  justify  the  firm  in 
undertaking  the  new  business.* 

a.  Partners  can  do  no  aB  beyond  the  scope  oj  the  business  unless 
all  consent.  The  stockholders  of  an  unincorporated  society  passed 
resolutions  by  unanimous  vote,  changing  their  previous  articles  of 
agreement.  vSubsequently,  a  portion  of  the  stockholders  signed  new 
articles,  under  which  the  original  articles  were  again  put  in  force. 
Some  of  those  who  did  not  sign  these  articles  asked  an  injun<5lion 
from  the  court  to  prevent  this. — Injuncflion  granted.  All  must  con- 
sent to  any  change  in  the  articles  of  the  association.  And  until  that 
is  done,  any  change  is  beyond  the  scope  of  the  business,  which  any 
of  the  stockholders,  being  tenants  in  common,  can  stop  by  an  injunc- 
tion.    Ivivingston  v.  Lynch,  4  Johns.  Ch.  573,  N.  Y.  (1820). 

5.  The  partners  may  ratify  by  parol  a  specialty  executed 
by  a  co-partner.*     But  subsequent  assent  is  also  an  ac- 

461 


^ij-.  Powers.  Pt.  2,  Ch.  8. 

knowledgment  of  the  deed  which  is  executed  in  the  firm 

name  and  on  its  behalf. 

a.  Co-parlncrs  not  present  when  the  contracl  is  sealed  by  the  partner 
in  the  name  of  the  Jinn,  may  afterwards  ratify  it  by  parol.  A  sued 
H  iS:  C  on  an  agreement  under  seal  executed  by  B  in  the  name  of  the 
firm.  C  was  absent  when  the  agreement  was  executed,  but  the  firm 
enjoyed  the  benefits  of  the  contradl,  and  C  paid  A's  agent  money  due 
under  it.  A  brought  covenant. — Recovered.  Strong,  J. :  "  Con- 
"cede  now,  that  knowledge  of  the  thing  alleged  to  have  been  rati- 
"  fied,  is  essential  to  ratification.  Existence  ot  that  knowledge,  like 
"that  of  any  other  facl,  may  be  inferred  from  circumstances.  *  *  * 
"Surely  there  was  some  e^^dence  of  knowledge  of  an  existing  con- 
"tracl;,'and  of  a  contrail  with  [A],  and  of  assent  to  it.  *  *  *  And  if 
"  [C]  knew  of  the  coutradl,  tL'eu  his  subsequent  use  of  the  machine, 
"and  payment  for  that  use,  were  a<5ls  of  ratification."  Jones  v.  Bat- 
tin,  6  Casey  84,  Pa.  (1857). 

k'atijicaiion  of  partner's  ultra  vires  contraB  by  aEls.  B  employed 
.\  in  matters  beneficial  to  firm  of  B  &  C,  but  not  striAly  in  the  line 
of  its  business.  C  paid  A  money  for  expenses,  and  had  consultations 
\%-ith  him  in  reference  to  the  business.  A  sued  firm  for  services. 
Defence  by  C  :  B  had  no  authority  to  employ  A  on  firm  account.^ 
Judgment  for  A.  C's  conduct  a  ratification.  Holmes  v.  Kortlander, 
31  N.  W.  Rep'r  532,  Mich.  (1S87J. 

6.  The  assent  of  a  partner  who  is  present  at  the  execution 
of  a  specialty  makes  it  his  a6l.^  He,  in  effecSl,  directs 
the  performance. 

Presence  of  partner  at  execution  of  deed  by  co-partjier  for  the  firm 
makes  the  deed  his  aH.  B  6c  C  were  partners,  and  B,  in  the  presence 
of  C,  who  assented  to,  and  authorized  the  transaction,  assigned  cer- 
tain bonds  to  D,  by  an  instrument  under  seal  and  in  the  name  of  the 
firm.  There  was  a  covenant  in  the  instrument  that  in  case  the 
amount  of  the  bonds  could  not  be  recovered  :  "We  do  promise  and 
agree  and  pay  the  amount  thereof,"  etc.  A,  the  executor  of  D, 
brought  covenant  against  B  &  C.  C  appeared  and  pleaded  nott  est 
factum. — A  recovered.     Fichthorn  v.  Boyer,  5  Watts  159  (1836). 

7.  The  requirement  that  the  authority  to  attach  a  seal 
should  be  delegated  by  deed  is  relaxed.  But  unless 
subsequently  ratified,  the  a(5l  would  bind  the  firm,  not 
as  a  deed,  but  as  a  simple  contradl.'' 

a.  Though  the  deed  of  a  partner  may  be  ratified  by  parol  after  execu- 
tion, it  is  still  necessary  that  the  precedent  authority,  if  relied  on,  should 
be  under  seal.  A  brought  covenant  against  B,  C  &  D,  partners,  trad- 
mg  as  B  &  Co.,  upon  an  agreement  under  seal,  executed  by  B  in  the 
name  of  the  firm,  but  not  in  the  presence  of  C  &  D. — No  recovery. 
GiBsox,  C.  J. :  "A  thing  done  in  the  presence  of  another,  and  at  his 
||request,  is  his  inmiediate  a(5l.  *  *  *  Que  may  adopt  as  his  own,  a 
"seal  affi::ed  by  another  without  his  authority,  or  even  against  his 
•|will,  and  the  deUvery  being  his  immediate  acl,  makes  the  instru- 
'|ment  his  immediate  deed.  The  law  is  fixed  and  certain,  that  the 
"authority  of  any  agent  to  bind  by  deed,  can  in  no  case  or  under 
"any  circumstances,  be  by  parol."  Hart  v.  Withers,  i  P.  &  W.  285, 
Pa.  (1 830). 

Contra,  Gram  v.  Seton,  Infra,  next  note. 

462 


Pt.  2,  Ch.  8.  Powers.  §136. 

8.  Authority  to  execute  deed  ratified  by  parol.  B  signed  and  sealed  a 
charter  party,  in  firm  name  of  B  &  C,  without  any  special  authority 
from  C.  B  &  C  atfled  under  the  instrument,  but  when  A  sued  them, 
to  compel  payment  of  balance  due,  C's  defence:  N^oit  est  faHuin.^ 
Judgment  for  A.  Necessities  of  business  demand  recognition  of  part- 
ner's authority  to  attach  seal  without  warrant  of  attorney.  Previous 
permission  or  subsequent  assent  makes  deed  bind  co-partner.  To 
establish  previous  permission,  presence  at  time  of  execution  not 
essential.  Analogy  of  commercial  paper.  Remed}',  covenant.  lyike 
co-lessees,  who,  if  one  lessee  signs  lease,  and  both  occupy  under  it, 
are  liable  in  covenant.     Gram  v.  Seton,  i  Hall  262,  N.  Y.  (1828). 


§136, 


^n  infant  partner  must  disaffirm  at  ntaioritn,  in  or^cr  to 
escape  past  ani)  future  liabilitu  tor  l)is  acts  as  aw  infant. 

The  peculiarity  of  ratification  by  an  infant  is,  that 
his  continuance  of  the  business  after  attaining  ma- 
jority is  treated  as  an  afS.rmance  of  all  the  transact 
tions  of  the  firm  during  his  infancy.^  This  conclusion 
is  suggested  by  the  analogous  and  admitted  principle 
that  where  an  infant  retains,  after  majority,  the  prop- 
erty, which  he  might  return,  he  becomes  liable  for  the 
price. ^  The  analogy  is  not  perfe(?t,  because  by  con- 
tinuing in  the  firm  he  retains  no  physical  property 
which  might  be  handed  over  to  a  firm  creditor.  But 
he  retains  the  benefit  of  his  position  as  a  partner  and 
co-proprietor  of  the  business.  The  firm  business  is  the 
produ6l,  among  other  things,  of  the  contrails  made 
during  minority.  If  then  the  infant  does  not  dissolve 
at  majority,  and  notify  the  firm  creditors  of  his  retire- 
ment from  the  firm,  besides  rendering  himself  liable 
on  the  firm  contrails  made  during  his  membership, 
he  becomes  liable  on  the  subsequent  contrails  of  the 
firm.^  The  firm  customers,  have  dealt  with  him  as  a 
partner  and  have  known  that  he  was  a  co-proprietor 

463 


§136.  Powers.  Pt.  2,  Ch.  8. 

in  the  firm,  possessed  of  the  benefits  of  the  firm  busi- 
ness. The  obligation  upon  him  to  notify  the  firm 
customers  of  his  retirement  from  the  firm  at  major- 
ity, is  analogous  to  his  obligation  to  return  property 
bought  during  infancy,  if  still  in  his  possession. 
A\'ithout  such  notice  he  must  be  considered  as  retain- 
ing the  proprietorship  of  the  firm  business,  and  there- 
fore, as  continuing  to  be  a  partner.  If  he  adopts  the 
firm  contradls,  his  partnership  embraces  the  period  of 
his  infancy  when  they  were  made.  The  ratification 
carries  with  it  the  precedent  authority,  and  thus  es- 
tablishes his  position  as  a  partner  from  the  beginning. 
The  partnership  must  be  dissolved  by  the  usual  notice 
brought  home  to  the  customers. 

Suppose  the  infant  partner  upon  majority  repudi- 
ated the  partnership,  and  reclaimed  his  contribution 
of  $10,000,  and  the  only  assets  of  the  firm  were  goods 
of  that  value,  sold  in  one  lot  by  a  vendor,  who  claimed 
payment  of  the  price.     Is  the  infant  preferred  to  the 
unpaid  seller  and  allowed  to  take  the  assets  away 
from  him  without  payment?     The  infant  would  take 
the  merchandise  from  his  co-partner,  who  could  not 
resist  his  demand.     The  creditor  could  not  prevent  it. 
He  sold  to  the  infant  and  adult  partners,  but  could 
recover  only  from  the  adult.     The  infant's  taking  the 
goods  would  not  be  a  retention  which  would  charge 
him  for  the  price,  because  he  would  not    take  them 
under  his  contrail  with  the  seller,  but  under  his  con- 
tracl  with  his  co-partner,  which  he  might  avoid  at  age. 
The  goods  became  the  property  of  the  partners  by 
virtue  of  the  sale,  and,  thus  converted  into  firm  assets, 
lost  their  identity.     The  infant  reclaims  them  as  rep- 
resenting his  contribution." 

464 


Pt.  2,  Ch.  8.  Powers.  §136. 

1.  Co7iti)iui7tg  partnership  after  Diajority  charges  infant  parttier  on 
previous  firm  contraRs.  B,  in  partnership  with  C,  a  minor,  gave  a 
note  to  A,  for  a  firm  debt,  without  C's  knowledge.  After  coming 
of  age,  C  continued  the  business,  paying  debts  of  the  firm,  colleAing 
money  on  its  account,  giving  receipts  in  the  firm  name,  and  joining 
in  suits  upon  firm  claims.  Subsequently,  learning  of  the  note,  he 
repudiated  and  refused  to  pay  it.  A  sued  on  the  note. — Judgment  for 
A.    Miller  V.  Sims,  2  Hill  479,  So.  Car.  (1S34). 

2.  Retention,  after  majority,  of  property  which  might  be  returned, 
affirmance  of  infant's  contrail.  Two  infants,  B  and  C,  bought  ahorse 
and  plough  of  A.  After  B's  majority,  and  while  C  was  still  a  minor, 
they  sold  the  horse,  and  bought  another  with  the  purchase-money. 
They  retained  the  plough  three  years  after  both  obtained  majority. 
A  sued  them  for  the  price  of  the  horse  and  plough.  Defence:  In- 
fancy.— Recovered.  Retaining  the  plough  after  majority  an  affirm- 
ance of  the  entire  contrail.  Boyden  v.  Boyden,  9  Met.  519,  Mass. 
(1845). 

3.  Infant' s  failure  to  announce  dissolution  at  majority  charges  him 
for  subsequent  contrails  of  the  firm.     B,  a  minor,  in  partnership  with 

C.  At  majority,  B  dissolved,  but  gave  no  notice  to  firm  customers. 
A  sold  the  firm  goods  on  C's  order,  supposing  B  to  be  still  a  partner, 
and  sued  B  &  C  for  the  price.  B's  defence  :  Infancy. — Judgment  for 
A,  because  no  notice  of  dissolution.  Goode  v.  Harrison,  5  B.  &  Aid. 
147  (1821). 

4.  The  infant  is  entitled  to  reclaim  his  contribution 
either  before  or  at  majority.''  There  is  no  foundation 
for  denying  to  an  infant  the  right  to  disaffirm  before 
majority.  *"  If  the  contribution  is  lost  in  the  business, 
the  infant  has  no  right  against  his  co-partners  for  in- 
demnity.*' He  cannot  recover  indemnity,  because  by 
contributing  to  the  partnership  he  has  not  devested 
himself  of  his  property  right.  He  merely  admitted  his 
co-partners  to  co-ownership  with  himself.  The  loss  of 
his  contribution  is  the  result  of  his  own  a(ft.  When 
he  reclaims  his  contribution  from  the  partnership  fund, 
he  devests  his  co-partners  of  their  co-ownership  with 
him  in  his  contribution. 

a.  Lifatit partner  may  recover  his  contribution.  B  induced  A,  an  in- 
fant, to  contribute  |i,ooo  to  partnership  b>  representing  business  as 
profitable.  It  tvirned  out  unsuccessful.  A  sued  B  to  recover  contri- 
bution, less  |ii2  received  from  the  business,  averring  minority  and 
fraudulent  representations.  Defence  :  Gist  of  adlion,  fraud,  and  suit 
should  be  ex  fl'i'/z^7c).— Judgment  for  A.  Minority  sufficient  to  re- 
scind. Misrepresentation  matter  of  aggravation,  and  adlion  prop- 
erly ex  contractu.     Sparman  v.  Keim,  83  N.  Y.  245  (1880). 

b.  An  infant's  rights  under  a  partnership  contraB  are  in  suspense. 
The  contraB  becomes  valid,  or  void,  by  relation,  upon  infant's  adop- 
tion or  rejeHion.  A,  an  infant,  formed  a  partnership  with  B,  con- 
tributing |ioo.  After  three  months,  A  left,  because  B  would  not 
give  him  a  salary  in  lieu  of  a  share  in  the  business.  A  subsequently 
returned,  and  continued  in  the  business  for  nine  months,  when  he 

465 


§137.  Powers.  Pt.  2,  Ch.  8. 

withdrew  and  sued  for  his  contribution,  with  interest  and  for  his  ser- 
vices, judgment  for  B.  A  cannot  anticipate  his  election  to  affirm 
or  disallirm  the  partnership  contradl,  but  must  await  his  majority. 
Dutton  V.  Brown,  31  Mich.  182  (1875J. 

c.  Infant  partner  cannot  recover  contribution  or  compensation.  A, 
infant,  contributed  |ioo  to  partnership  with  B,  adult,  and  gave  his 
services  to  business  for  a  year  and  seven  months,  when  he  dissolved, 
and  sued  B  for  his  contribution  and  for  compensation  for  services. — 
Judgment  for  B.  Contribution  was  not  a  payment  to  B,  but  remained 
in  joint  possession,  like  other  partnership  property,  of  A  &  B.  The 
services  were  rendered  in  the  joint  interest.  B  not  liable  without  ex- 
press promise.     Page  v.  Morse,  128  Mass.  99  (1880). 


§137. 


^n  infant  mati  tnitv  a  firm,  but  as  I)e  is  not  bating  b«  \)\3 
contract  of  partncrsl)ip,  eitl)cr  to  l)is  partners  or  to  tljirb  per- 
sons, l)is  position  as  a  partner  is  lieteriuineLi  entireb  bg  l)is 
propcrtn  ric[l)ts. 

The  contradls  of  a  firm  are  not  binding  upon  an  in- 
fant partner.^  The  firm  does  not  acquire  by  virtue  of 
the  contra6l  of  partnership  a  joint  title,  so  as  to  subje(5l 
the  infant's  contribution  or  interest  in  the  firm  fund  to 
the  claims  of  firm  creditors.  The  interest  of  the  infant 
is  always  that  of  a  tenant  in  common,  because  he  is  not 
liable  to  an  account.  He  may  reclaim  his  share  of  the 
firm  property  at  any  time  on  his  title  as  co-tenant,  irre- 
speclive  of  the  state  of  account  between  himself  and 
his  co-partners. 

There  are,  however,  anomalous  cases  which  enforce 
an  infant  partner's  contra(fl:  to  the  extent  of  maintain- 
ing the  co-partner's  control  over  the  infant's  contri- 
bution, and  subjeding  his  interest  in  the  funds  of  the 
firm  to  its  debts."  These  cases  proceed  upon  the  no- 
tion that  the  partners  hold  the  firm  property  by  a 

466 


1 


Pt.  2,  Ch.  8.  Powers.  §137. 

joint  title  as  in  ordinary  cases,  and  that  the  infant 
having  invested  his  co-partners  with  this  joint  title 
cannot  afterwards  dispute  his  own  a6l.  But  an  in- 
fant's deed  is  no  less  voidable  than  his  promise.  His 
adl  creating  a  joint  title  can  have  no  greater  validity 
than  his  assent  to  a  joint  contracfl.  For  this  reason 
he  may  rescind  the  partnership  contract  and  reclaim 
his  portion  of  the  partnership  property  at  any  time, 
without  waiting  until  he  has  attained  his  majority.^ 
If  the  firm  could  retain  his  contribution  until  he 
reached  majority,  his  a(?t  during  the  interval  would 
be  binding,  not  voidable.  If  at  majority  an  infant 
does  dissolve  the  partnership,  and  reclaim  his  con- 
tribution, this  cannot  be  distorted  into  an  affirmance 
of  the  relation,  even  though  he  receives  from  his  co- 
partners a  payment  as  profit  for  the  use  of  his  con- 
tribution.'* 

His  claim  to  recover  the  premium  paid  for  admis- 
sion into  a  partnership  stands  upon  a  different  footing. 
In  such  a  case  his  position  is  that  of  a  buyer.  He 
pays  the  price  of  a  valuable  privilege  and  enters  upon 
its  enjoyment.  Having  thus  received  the  considera- 
tion he  cannot  reclaim  the  price.'^  In  the  contra6l 
between  the  parties  it  is  not  contemplated  that  a 
premium  for  admission  to  the  partnership  shall  be 
paid  backf  but  a  partner  always  retains  a  qualified 
ownership  of  his  contribution,  and  has  the  right  to 
re-take  it  upon  a  distribution.  The  rights  of  an  infant 
with  respedl  to  his  ct)ntribution  resemble  his  right  to 
a  sum  of  money  paid  as  a  deposit  to  secure  his  per- 
formance of  a  contrail.  He  may  disaffirm  the  contraA 
and  recover  the  sum  deposited.  He  has  never  in  re- 
ality parted  with  title  to  the  deposit. 

467 


gf^;.  Powers.  Pt.  2,  Ch.  8. 

1.  Infant  partner  not  bound  by  firm  contrail.  A,  aged  19,  -went  iino 
partliershi])  with  B  &  C.  Within  a  year,  he  sold  out  his  share  to  B. 
1),  the  holder  of  notes  given  by  the  firm  while  A  was  a  partner,  re- 
covered judgment,  and  levied  on  A's  property.  A  obtained  injunc- 
tion.—Maintained.  Vansyckle  v.  Rorbach,  2  Hal.  Ch.  234  N.  J. 
(1847). 

2.  Infant  partner  bound  by  assigntnent  of  firm  property.  B  was  in- 
fant partner  in  a  firm  which  assigned  for  creditors.  He  affirmed  the 
deed  at  majority.  A  claimed,  as  firm  creditor,  to  set  aside  assign- 
ment, because  infant's  privilege  to  disaffirm  equivalent  to  a  reserva- 
tion, and  avoided  the  deed. — Disallowed,  i.  No  reservation  in  the  ' 
assignment.  2.  B's  privilege  personal,  and  he  had  affirmed.  3.  As- 
signment of  firm  goods  valid  without  confirmation,  because  only 
separate  property  of  firm  inf.mt  exempted  from  execution.  Yates  v. 
Lyon,  61  N.  Y.  344  (1874). 

Advance  chattel  Diortgage  executed  by  infant  partners  is  ratified 
by  receipt  of  advatce'^  after  one  attains  majority  a7!d passes,  at  least, 
his  interest.  A  &  B,  minors,  were  in  partnership  as  provision  deal- 
ers. They  executed  a  chattel  mortgage  for  meat  already  bought,  and 
for  purchases  to  be  made.  Most  of  the  meat  was  delivered  after  B's 
majority,  and  $50  was  paid  on  account.  Firm  dissolved,  and  B  sold 
out  his  interest  to  A.  Mortgage  foreclosed,  and  A  replevied  the 
goods. — Judgment  for  defendant.  B  ratified  the  mortgage,  by  re- 
ceiving the  consideration,  which  was  executory,  after  he  became  of 
age,  when  he  had  the  capacity  to  bind  the  firm  by  a  chattel  mort- 
gage. B's  confirmation  of  the  mortgage  made  it  pass,  at  least,  his 
interest  in  the  property,  and  deprived  A  of  the  exclusive  right  of 
possession  necessary  to  maintain  replevin.  Keegan  v.  Cox,  116  Mass. 
289(1874).  The  above  decision  might  be  sustained  upon  the  point 
of  procedure. 

3.  .Supra  I  136,  n.  4. 

4.  Infant  does  not  ratify  partnership  by  enforcing  payment  of  note 
for  contribution  and  share  of  profits  given  on  dissolution  of  partner- 
ship dm-ing  minority.  B,  minor,  contributed  fgoo  to  partnership 
with  C,  adult.  B  &  C  dissolved  before  B's  majority.  C  gave  B  note 
for  |i, 000,  secured  by  mortgage  in  full  for  B's  contribution  and  share 
in  the  profits,  and  agreed  to  pay  the  firm  debts.  Subsequently  B  be- 
came msolvent.  After  majority,  B  proved  for  |i,ioo  against  his 
estate  and  foreclosed  the  mortgage.  A,  firm  creditor,  sued  B  &  C. 
B's  defence :  Minority.  Reply :  Ratification.— Judgment  for  B.  Dana 
V.  Stearns,  3  Cush.  372  Mass.  (1849). 

5.  Infant  cannot  recover  premium  for  admission  to  partnership.  A, 
mfaut,  paid  12,900  premium  for  admission  to  partnership  with  B  &  C, 
remained  in  firm  for  more  than  one  year,  until  firm  failed,  and  then, 
being  still  a  minor,  disaffirmed,  and  held  B  &  C  for  premium.— Judg- 
ment for  B  &  C.    Adams  v.  Beall,  8  A.  Rep'r  664  (1887). 

6.  Partner  purchasing  interest  in  business  not  credited  in  account  with 
price  as  a  contribution.  By  articles,  A  put  |i,ooo  as  capital  in  B's 
restaurant,  $500  down,  balance  to  be  retained  by  B  out  of  A's  share 
ot  profits  A  brought  account.  B  contended  that  the  money  was  the 
price  paid  him  for  a  half  interest  in  the  business,  for  which  payment 
A  was  not  entitled  to  credit  in  account  as  a  contribution.  The  books 
snowed  no  credit  to  A  for  cash  payment,  and  no  charge  against  B  for 
sums  subsequently  taken  from  profits.— Dismissed.  Evidence  com- 
petent to  show  mistake  in  articles.     Isles  v.  Tucker,  5  Duer  393,  N. 


468 


I 


Pt.  2,  Ch.  8.  Powers.  §138. 

§138. 

!3l  married  tuoman,  cicept  u)l)ere  sl)e  is  evempt  from  l)cr  com- 
mon latu  Msabilitii,  camxot  contract  as  a  partner. 

If  a  married  woman  replaced  her  husband  as  a  part- 
ner she  could  maintain  account.  Though  a  trustee 
for  husband,  she  is  entitled  to  a  partner's  rights  and 
interest,  subje6l  to  the  execution  of  his  separate  cred- 
itors.^ 

If  a  married  woman  is  a  partner  her  husband  could 
not  testify  where  interest  excludes  a  witness.  The 
husband  is  identified  with  his  wife  in  interest  and  is 
disqualified. - 

A  husband  is  liable  for  his  wife's  ante-nuptial  part- 
nership debts,  although  he  does  not  acquire  her  per- 
sonal property  by  marriage.^ 

A  husband  can  trade  as  the  agent  of  his  wife  and 
his  minor  son.  His  prior  creditors  cannot  claim  pay- 
ment out  of  the  firm  assets.  The  wife  would  be  en- 
titled to  her  goods,  and  the  father  need  not  make  the 
minor  son  account  for  his  profits  in  order  to  pay  the 
father's  creditors.^ 

The  ratification  by  a  married  woman  after  discover- 
ture  relates  back,  and  validates  all  the  transa(5lions  of 
the  firm.^ 

I.  Married  woman  may  aH  as  partner  for  her  Jnisband.  B  &  C  traded 
as  B  &  Co.  C  retired,  and  A,  his  wife,  took  his  place.  She  brought 
'  account. — Maintained.  Trustee  for  C,  who  should  sue.  As  C  was 
the  real  partner,  his  separate  creditors  might  seize  A's  interest  in  the 
firm.  A,  being  liable  as  ostensible  partner,  entitled  to  a  partner's 
rights.     Bitter  v.  Rathman,  6i  N.  Y.  514  (1870). 

Wife  may  compete  with  husband's  firm  creditors.  A  advanced 
^500  from  iier  separate  estate  to  her  husband,  B.  Firm  B  &  C  used 
and  gave  firm  notes  for  it.  A  proved  against  firm. — Allowed.  45  & 
46  Vidl.,  c.  75,  s.  3,  which  excluded  wife's  proof  if  loan  to  husband 
for  trade,  or  business  carried  on  by  him,  or  otherwise,  did  not  apply 
if  husband  used  as  partner.    In  re  Neff  19  Q.  B.  D.  88  (1887). 

469 


§i^c).  Liabilities.  Pt.  2,  Ch.  9. 

2.  Husband  of  partner  incompetent  witness.  Suit  against  A.  B,  a 
married  woman,  was  his  dormant  partner.  B's  husband,  an  employee 
of  A,  was  admitted  to  testify.  A  obje(fted,  and  brought  bill  of  excep- 
tions.—Krror.    Jackson  v.  Miller,  i  Dutch.  90,  N.  J.  (1855). 

3.  Husband  liable  for  wife's  afite-nuptuai  partnership  debts.  B,  a 
married,  and  C,  a  single  woman,  coutradled,  as  partners,  a  debt  to  A, 
for  merchandise.  U  married  C,  and  A  sued  B,  C,  and  D. — Recovered. 
D  liable  for  C's  ante-nuptual  partnership  debts.  Alexander  v.  Mor- 
gau,  31  Ohio  St.  546  (1877). 

4.  Husband  agent  for  wife ;  son  infant  partner.  B,  insolvent,  bought 
stock,  as  agent  for  C,  his  wife,  who  relinquished  dower  in  payment. 
B  traded  as  her  agent  for  four  years,  then  joining  his  son,  D,  19  years 
old,  as  partner,  traded  two  years,  when  they  stopped.  A,  prior  sepa- 
rate creditor  of  B,  brought  account  for  B's  share,  claiming :  i,  Assets ; 
2,  D's  sers'ices  belonged  to  B. — Dismissed.  C  could  trade  and  make 
B  her  agent.  B  could  emancipate  D,  who  ratified  partnership  after 
age.  Assets  belong  to  creditors  of  the  business,  profits  to  B  &  D. 
Penn  v.  Whitehead,  17  Gratt  503,  Va.  (1867). 

5.  Everett  v  Watts,  supra  ^69,  n.  20. 


-O- 


CHAPTER  IX. 

THE  LIABILITY  OF  A  PARTNER. 

§139. 

CJl  partner  must  ansEDcr  for  tl)c  tort  of  l]ts  co-f  artuer  com- 

mittf L)  in  tl)£  course  of  tl)c  business. 

He  is  liable  for  the  damages  caused  by  tHe  tort. 
The  transadion  must  be  one  which  the  partner  may 
perform  in  the  business.  Securities  pledged  with  a 
firm,  but  withheld  by  a  partner  for  his  independent 
account,  charged  the  co-partners  for  the  conversion.' 
The  partner  received  them  for  the  firm;  which  was 
bound  to  restore  them  upon  payment  of  the  debt  for 
which  they  were  pledged.     The  partners  are  bound 

470 


PT.  2,  Ch.  9.  Liabilities.  §139. 

by  a  co-partner's  receipt,  although  given  for  merchan- 
dise which  was  not  delivered  to  the  firm,  if  money  has 
been  lent  upon  the  faith  of  the  representation."  A 
gambling  contra6l  prohibited  by  law  cannot  be  en- 
forced by  the  partners,  although  the  co-partner  made 
it  in  the  course  of  the  business.^  A  partner  who  is- 
sues execution  on  a  firm  judgment  charges  his  co- 
partners, if  its  enforcement  is  an  abuse  of  legal  pro- 
cess.^ 

The  conversion  of  another's  property  by  a  partner 
to  the  use  of  his  firm  resembles  a  loan,  in  this  respe6l, 
that  it  adds  funds  to  the  firm  capital,  and,  therefore,  a 
loan  is  said  to  underlie  the  tort.  The  innocent  part- 
ner, who  receives  the  benefit  of  the  misappropriation, 
is,  on  this  ground,  charged  for  the  property  upon  an 
implied  contrail.''  Wherever  the  damages  recovera- 
ble for  a  tort  are  assimilated  to  the  damages  for  a 
breach  of  contracft,  the  identity  of  the  transa6lion  is 
assumed.  The  confusion  has  been  already  pointed 
out  (§48,  n.  2). 

1.  Partner  retaining  securities  for  debt  of  custotner  to  different  firm, 
ofivhich  he  had  beeti  a  member,  charges  co-partners  for  the  conversion. 
A,  the  assignee  of  D,  brought  trover  against  B  and  C,  trading  as  B  & 
Co.,  for  the  conversion  of  six  promissory  notes,  drawn  by  various  per- 
sons in  favor  of  D.  The  notes  had  been  deposited  vdth  B  &  Co. ,  by 
D,  and  were  to  be  delivered  up  when  certain  goods  were  deposited  in 
their  stead.  Demand  was  made  on  B  alone,  C  not  being  present,  and 
he  refused  to  give  them  up,  although  the  goods  had  been  deposited. 
At  the  trial  it  appeared  that  B  had  formerly  been  a  partner  in  the 
firm  of  E  &  B,  and  that  as  a  balance  was  due  that  firm  from  D,  B 
claimed  a  right  to  retain  the  notes.  C  requested  the  Court  to  charge 
the  jury  "That  if  they  believe  *  *  *  that  [B]  detained  the  notes 
<<*  *  *  on  behalf  of  [E  &  B],  and  not  in  behalf  of  B&  Co.,  C  is  not 
"liable,"  but  the  Court  said:  "The  law  is  not  so,  but  just  the  con- 
"trary.  The  defendants  being  partners,  and  the  notes  in  question 
"having  been  delivered  to  [B]  for  purposes  connecfted  with  the  busi- 
"ness  of  the  partnership,  the  conversion  of  one  was,  in  point  of  law, 
"the  conversion  of  both."  Verdidl  and  judgment  for  A. — Affirmed. 
Nisbet  v.  Patton,  4  Rawle  120,  Pa.  (1833). 

2.  Partner' s  fraud  in  giving  receipt  for  merchandise  not  delivered, 
estops  the  firm  against  one  who  lent  on  the  faith  of  the  misrepresen- 

471 


§i^o.  Liabilities.  Pt.  2,  Ch.  9. 

tation.  B  &  C,  partners  in  an  elevator.  B  gave  D  receipts  for  grain 
never  delivered,  and  went  with  D  to  A,  and  represented  to  A  that 
the  grain  was  on  hand,  whereupon  A  lent  D  money  on  the  receipts. 
A  sued  B  (S:  C  for  the  grain,  or  its  value  and  damages.  Defence-  B 
had  no  power  to  give  fraudulent  receipts.  He  could  no  more  enlarge 
his  power  than  create  a  power  by  representation.  Trover  would  not 
lie  for  grain  which  had  no  existence. — Recovered.  B's  representa- 
tion not  on  the  point  of  his  power.  He  misrepresented  the  external 
fatts  on  which  a  lawful  exercise  of  his  power  depended.  The  fadls 
were  within  the  scope  of  his  authority.  B  &  C  estopped  from  ob- 
jecting to  a  count  in  trover  by  the  representations  made.  Dissent: 
Unless  trover  could  have  been  brought,  B&  C  not  bound  by  estoppel. 
No  conversion  of  property,  which  complaint  alleges  has  no  exi.st- 
ence.     Griswold  v.  Haven,  25  N.  Y.  595  (1872). 

3.  Firm  cannot  recover  on  contraH.  for  an  illegal  consideration.  B 
emploved  C,  partner  with  D  in  the  commission  business,  to  buy 
ODtions  in  grain,  under  an  agreement  that  B  should  take  no  grain, 
but  settle  with  C  for  the  differences.  C  dealt  for  the  firm  according 
to  the  trade  custom,  but  D  had  no  knowledge  of  the  transadlion.  B 
lost,  and  settled  with  C  &  D.  by  giving  them  the  note  of  a  third 
person  made  to  him,  and  by  guaranteeing  its  payment,  which  note 
they  endorsed  to  A,  before  its  maturity,  and  he  sued  B  on  the  guar- 
anty. Defence:  Illegal  consideration  for  the  guaranty. — Recovered. 
Partner's  want  of  knowledge  did  not  make  consideration  legal. 
Tenney  V.  Foote,  95  111.  99  (1880). 

4-  Firm  liable  for  partner^  s  tort  in  enforcing  avoidjtidgnient.  B  mort- 
gaged a  horse  to  A,  who  let  B  retain  possession.  Firm  C  &  D  ob- 
tained judgment  against  B,  which  was  void,  on  account  of  the  judge's 
consanguinity  with  C.  C  directed  sheriff  to  levy  on  the  horse.  A 
sued  C  &  D  for  the  conversion.  Defence:  Tort,  if  any,  was  C's 
alone. — Recovered.  C  was  adting  for  the  firm.  His  wrong  was  the 
a(?l  of  both,  and  incident  to  the  exercise  of  his  authority  to  colledl 
the  debt  by  legal  process.  Chambers  v.  Clearwater,  i  Keyes  310,  N. 
Y.  (1S64). 

5.  Guillou  V.  Peterson,  iufra  \  141,  n.  i. 

6.  Innocent  partner  liable  for  co-partner''  s  tort  if  founded  on  contrail. 
A  employed  firm  B  &  C,  physicians  and  surgeons,  to  set  his  leg,  and 
sued  them  for  C's  negligence  in  performance.  B  demurred. — Adlion 
lay  against  both.  C's  tort  in  firm  business  charged  B,  because  founded 
on  coutraa.     Whittaker  v.  Collins,  34  Minn.  299  (1885). 


§140. 


1 


If  \\)t  firm  13  merelfl  tl^e  occasion  for  a  partner's  fort,  but 
not  tl)c  agencg  in  its  commission,  tl)e  co-partners  are  not  liable.   . 

If  money  is  left  with  solicitors  for  investment  at 
their  discretion,  and  one  of  them  embezzles  it,  his  co- 


472 


I 


Ft.  2,  Ch.  9.  Liabilities.  §140. 

partner  is  not  liable  for  the  amount,  because  custom 
does  not  justify  an  investment  by  solicitors,  except 
with  tbe  lender's  approval,  upon  submission  of  tbe 
investment  to  bim/  A  partner  who  takes  advantage 
of  his  position,  and  induces  a  customer  to  withdraw 
his  claim  from  the  firm,  and  entrust  it  to  him,  will 
aA,  in  colledling  it,  as  an  individual.  His  tort  in 
dealing  with  the  claim  will  not  charge  his  co-partners.^ 

The  partners  define  the  limits  of  the  business,  which 
they  undertake,  and  each  partner  in  transacting  the 
business  a(5ls  for  all.^  If  he  commits  a  tort  while  add- 
ing within  the  scope  of  the  business,  he  charges  his 
co-partners,  who  take  the  risk  of  working  with  a 
human  instrument,  imperfect  in  its  moral  quality,  and 
are  affected  by  the  imperfect  quality  of  their  agent. 
The  test  is:  Was  the  tort  committed  in  the  prosecu- 
tion of  the  business  ?"* 

The  libel  by  a  newspaper,  for  example,  hardly  ad- 
mits of  explanation.  It  is  not  necessary  for  the  paper 
to  be  a  vehicle  of  calumny  in  order  to  charge  the  pro- 
prietor for  a  libel  by  the  editor.  The  colle6lion  of 
news  is  the  business,  and  the  choice  of  material  is  the 
editor's  fundlion.-^ 

I.  Firm  of  solicitors  not  liable  for  embezzlement  of  money  left  'vith 
a  partner  for  investment  at  their  discretion.  A  became  possessed 
of  ^3.000,  ^,1,300  of  which  she  advanced  to  B  &  C,  who  were  in 
partnership  as  solicitors,  to  be  invested  by  them  in  the  mortgage 
of  an  advowson.  They  signed  a  written  undertaking  to  execute  a 
legal  mortgage  of  the  advowson  to  her  when  the  transadlion  should 
be  completed.  A,  subsequently,  handed  the  remaining  ^1,700  to  C, 
on  the  representation  by  him  alone  that  it  would  be  invested  in  the 
mortgage  of  real  estate.  B  died.  A  was  fraudulently  induced  by  C 
to  constitute  him,  by  deed,  sole  trustee  of  the  ^3,000,  with  power  to 
invest  it  as  he  thought  proper,  without  being  answerable  for  any  loss. 
No  legal  mortgage  of  the  ^1,300,  but  it  was  paid  off  to  C  under  the 
authority  of  the  deed  of  trust,  and  with  the  ^1,700  (which  C  had 
never  invested),  was  spent  by  C.  C  paid  A  interest  on  the  funds  until 
he  died  insolvent.  A  then  filed  a  bill  against  the  executors  of  B  and 
C. — B's  estate  liable  for  the  ^1,300.     In  regard  to  the  /'i,7oo,  Sir  R. 

473 


§1^0.  Liabilities.  Pt.  2,  Ch.  9. 

Malins,  v.  C,  said:  "It  is  clear  that  one  partner  has  no  authority 
"to  bind  the  other  partners  by  borrowing  money,  unless  it  is  bor- 
"  rowed  in  the  usual  course  of  business,  and  for  business  purposes.  *  * 
"The  iKiynicnt  of  tbo  sum  of /"  1,700  to  [C]  was  altogether  outof  the 
"ordinary  course  of  business,  and  the  partner  cannot  *  *  *  be  liable 
for  it."  it  was  not  tlie  custom  of  the  business  to  receive  funds  for 
investment  at  the  discretion  of  the  solicitor.  Plumer  v.  Gregory,  L. 
R.,  iS  Kq.  621  (1874). 

The  plaintiff,  who  seeks  to  charge  the  innocent  part- 
ners, must  make  out  that  the  business  of  solicitors  has 
been  enlarged,  so  as  to  include  that  of  a  scrivener,  or 
that  they  were  aware  of  the  transa(?tions. 

So.'in'/ors'  business  not  embracing  custody  of  bonds, partner' s  taking 
charge  of  them,  though  ostensibly  for  partnership,  does  not  charge 
co-partners,  unless  they  authorize  such  extension  of  business.  B,  C 
&.  D,  solicitors  in  partnership.  A,  executor  of  E,  deposited  bonds 
with  B,  who  accounted  for  them  during  life  of  E's  widow,  and  dealt 
with  beneficiaries.  B  absconded,  having  misappropriated  the  bonds. 
C  died.  A  sued  D.  Evidence  showed  that  B  used  his  position  in 
firm  to  deal  with  the  beneficiaries,  but  not  that  the  partners  enlarged 
the  range  of  the  business  to  authorize  B  to  take  charge  of  the  bonds. 
—Judgment  for  D.     Cleather  v.  Twisdeu,  28  Ch.  D.  340  (18S4). 

2.  If  partner  induces  customer  to  withdraw  securities  from  firm^ 
and  let  him  make  investment,  co-partner  not  charged  by  his  embez- 
zlement of  proceeds.  B,  C  and  others  were  partners  in  the  banking 
business.  C  advised  A,  customer,  to  sell  some  Dutch  stock,  telling 
her  the  firm  could  procure  for  her  better  security,  and  that  he  had 
one  in  view.  He  said  the  money  was,  in  fa<5l,  wanted  by  his  own 
sou  who  was  in  trade.  A  sold  the  stock,  and  paid  the  money  into 
the  bank,  giving  C  a  check  to  draw  it  out  and  invest  it.  He  drew  it 
out,  misapplied  it,  and  absconded,  the  interest  having  been  regularly 
carried  to  A's  account  in  the  meantime  in  the  books  of  the  bank, 
but  by  whom  did  not  clearly  appear.  All  this  took  place  in  the 
banking-house,  and  A  had  no  acquaintance  or  dealings  with  C,  ex- 
cept as  a  banker  and  member  of  the  firm.  C's  co-partners  did  not 
appear  to  have  known  of  the  transaction  at  the  time  they  took  place, 
but  they  did  before  C  absconded.  A  filed  a  bill  against  B  and  others 
to  render  them  liable  for  the  amount  embezzled  by  C. — Bill  dismissed. 
Bi.shop  V.  The  Countess  of  Jersey  et  al.,  2  Drewry  143  (1854). 

If  partner  collects  note  for  strariger,  conversion  of  proceeds  does  not 
charge  the  firm.  A  sued  B  &  C  for  promissory  note  sold  firm.  De- 
fence :  Note  given  B  for  collecftion,  and  B  was  not  firm's  agent  in  the 
transaction.  Judge  requested  to  instrudl  jury:  If  L  received  note  for 
collecftion,  his  conversion  of  proceeds  to  his  own  use  did  not  charge 
the  firm.— Error  not  to  give  the  instnidliou.  Linn  v.  Ross,  i  Harr. 
55.  N.  J.  (1837). 

3-  Partner  liable  for  co-parttier' s  tort  zvithin  scope  of  business.  B 
bought,  of  A,  tobacco  for  firm  of  B  &  C,  and  gave  note  of  a  third  per- 
son, which  he  fraudulently  represented  to  be  good.  C,  learning  the 
fact,  failed  to  disown  it.  A  brought  case  against  B  &  C  for  deceit.— 
Recovered.  C  liable  in  case  or  assumpsit.  Moreover,  C's  failure  to 
disavow  made  him  a  party.  Hawkins  v.  Appleby,  2  Sandf.  421,  N.  Y. 
(1849). 

Partner  individually  liable  for  co-partner's  fraud.  B  &  C,  solicit- 
ors, in  partnership,  with  separate  places  of  business.     B  absconded 

474 


Pt.  2,  Ch.  9.  Liabilities.  §140. 

with  funds  received  in  his  branch  of  A  for  investment.  A  proved 
against  firm  in  bankruptcy.  C  obtained  his  discharge.  A  sued  C  for 
the  debt. — Recovered,  because  debt  arose  from  fraud.  Cooper  v. 
Prichard,  75  L.  T.  91  (1883).  Criticised,  because  C's  individual  fraud. 
do.  95. 

Solicitors  chaj-ged  by  partner  who  -misrepresented  that  he  tnade 
specific  invest->nent  for  customer.  B  and  C  were  in  partnership  as 
solicitors.  C  represented  to  A  that  a  sum  of  money  which  A  had 
paid  into  the  joint  account  of  the  firm  for  the  purpose  of  investment, 
had  been  invested  in  the  selected  mortgage.  Afterwards  B  &  C  dis- 
solved partnership,  and  A's  account  was  transferred  to  C.  C  became 
bankrupt,  and  A  found  that,  though  C  had  regularly  paid  interest  on 
the  money,  the  investment  had  not,  in  facfl,  been  made,  but  that  C 
had  appropriated  the  money  to  his  own  use.  A  filed  a  bill  against 
B  to  make  him  liable  for  the  sum.  Defence:  That  B  was  ignorant 
of  the  transadlion,  and  had  never  derived  any  benefit  from  it. — B 
liable.  Cottenham,  L.  C. :  "Whether  the  defendant  knew  of  the 
"  transacflion  or  not,  he  certainly  had  the  means  of  knowing  it.  But 
"  neither  is  necessary  ;  for  the  duty  of  laying  out  the  money  was  in 
"the  ordinary  course  of  the  business  of  the  firm;  and  they  had  un- 
"dertaken  it.  *  *  *  The  misrepresentation  was,  probably,  made  for 
"a  fraudulent  purpose;  but  the  consequence  is  a  merely  civil  liability; 
"and  as  one  partner  may  certainly  bind  another  as  to  any  matter  within 
"  the  limits  of  their  joint  business,  so  he  may  by  an  aA  which,  though 
"not  constituting  a  contra(?l  by  itself,  is,  in  equity,  considered  as 
"having  all  the  consequences  of  one."  Blair  v.  Bromley,  2  Phil. 
Ch.  354  (1847)- 

Co-tort  feasors  are  liable  jointly,  separately  and  suc- 
cessively without  reference  to  partnership. 

Frq.ud  charges  culprits  with  absolute  liability.  A  sued  B  &  C  for 
sum  in  excess  of  settlement  made  between  them  for  sales  of  land 
effedted  through  their  joint  executions,  on  the  ground  that  items  in 
account  were  fraudulent.  The  facft  denied  and  not  partners — Judg- 
ment for  A.  Liable  in  solido,  if  not  partners.  Baldy  v.  Bracken- 
ridge,  2  S.  Rep'r4io,  La.  (1887). 

Partner  and  stranger  liable  jointly  for  fraud  on  firm.  B  invested 
funds  of  B  &  C  in  land  for  his  own  account,  and  conveyed  to  D,  an 
accomplice,  and  under  circumstances  of  fraud,  by  D  upon  B.  A,  ex- 
ecutor of  C,  sued  B  &  D,  jointly,  to  recover  the  money  of  B  and  the 
land  of  D. — Judgment  for  A.  D's  fraud  upon  B  immaterial,  but  both 
join  in  upholding  a  title  which  is  a  fraud  on  C.  Wade  v.  Rusher,  4 
Bosw.  537,  N.  Y.  (1859). 

4,  Newspaper  firm  liable  for  libel  published  by  editing  proprietor. 
Partners  published  newspaper,  which  reported  a  church  trial,  and 
libelled  the  clergyman,  who  sued  them.  Innocent  partner  liable, 
because  libelling,  though  not  a  necessity,  an  incident  to  the  business. 
Lothrop  V.  Adams,  135  Mass.  469  (1882). 

Partner's  libel  must  groiv  out  of  firm  business,  or  will  not  charge 
innocent  co-part7ier.  A  returned  a  table  because  unsuitable  to  B,  C 
&  D,  trading  as  a  furniture  company.  The  table  was  exposed  in  front 
of  the  shop,  with  this  placard :  ' '  Taken  back  from  ' '  Dr.  A  ' '  who  could 
"  not  pay  for  it ;  to  be  sold  at  a  bargain."  A  tore  the  placard  off,  but 
another  was  put  up,  which  substituted  "would"  for  "could,"  and 
added:  "Moral:  Beware  of  dead-beats."  A  requested  B,  in  D's 
presence,  to  remove  the  placard,  and  D  replied,  that  the  man  who 
placed  it  there  had  gone  to  dinner.    A  sued  B,  C  &  D.     Court  diredled 

475 


^i^i.  Liabilities.  Pt.  2,  Ch.  9. 

venlicfl  for  defendants. — Reversed.  Sufficient  evidence  against  B 
and  D  for  jury.  Libel  not  sufficiently  connecfled  with  business  to 
charge  C.     Woodling  V.Knickerbocker,  31  Minn.  268  (1883). 

This  libel  might  be  treated  either  as  an  advertisement 
which  might  induce  customers  to  stop  and  buy  the  ta- 
ble, which,  on  account  of  the  personal  incident  re- 
counted, would  be  sold  cheap.  Or  the  libel  might  have 
been  a  personal  spite,  and  not  for  the  purpose  of  effecfl- 
ing  a  sale  of  the  table.  The  Court  took  the  latter  view, 
and  refused  to  charge  the  innocent  partner  for  the  venom 
of  his  co-partner. 


§141. 

®r«9t  funbs  put  bw  a  partner  in  l)is  firm  t[)ax%t  l)is  ro- 

partners  for  tl)e  misappropriation. 

The  ccstuy  que  tj^iist  may  waive  the  tort  and  proceed 
in  assumpsit.'    Where  the  tort  of  a  partner  consists  in 
the  unlaw^ful  appropriation  of  the  property  of  another, 
the  defrauded  party's  primary  right  is  for  restitution. 
The  Common  law  a(5lions  were  originally  designed  to 
give  effedl  to  this  primary  right,  but  they  became,  in 
time,  a  medium  for  the  recovery  of  a  mone}^  compensa- 
tion.    The  modification  of  the  process  changed  the 
right  and  enlarged  the  opportunity  for  recovery.     The 
whole  estate  of  the  tort-feasor  might  be  taken  to  com- 
pensate the  owner  of  the  misappropriated  property. 
An  action  to  enforce  a  personal  and  unlimited  liability 
has  taken  the  place  of  a  proceeding  to  recover  the  pos- 
session of  specific  property.    The  equitable  rule  for  fol- 
lowing trust  funds,  is  a  survival  of  this  natural  and 
primary  right  of  restitution.     A  right  of  restitution 
can  not  be  made  available  except  against  the  property 
itself,  or  a  fund  into  which  it  has  passed.     When  a 

476 


Pt.  2,  Ch,  9.  Liabilities.  §141. 

partner  has  made  a  misappropriation  of  a  stranger's 
property,  and  an  attempt  is  made  to  hold  the  firm 
liable,  if  the  plaintiff  asks  for  restitution,  he  can  en- 
force his  right  only  against  that  fund  which  was 
increased  by  the  misappropriation,  that  is,  the  firm 
assets.'* 

If,  on  the  other  hand,  the  plaintiff  is  entitled  to 
compensation  at  the  hands  of  all  the  partners,  this 
liability  charges  their  separate  estates  as  well  as  the 
firm  funds.  But  the  co-partners  are  protedled  in  their 
separate  estate  from  the  owner's  demand  for  restitution. 
The  individual  estate  was  never  contributed  to  the  firm 
stock,  and  remains  the  individual  property  of  the  co- 
partners. They  are  in  a  better  position  than  a  pur- 
chaser for  value  without  notice,  as  they  do  not  require 
any  aid  to  fortify  their  title.  It  is  the  dominion  of  an 
independent  proprietor  who  has  an  absolute  right  at 
law.  To  expropriate  them,  would  be  a  fraud  without 
any  palliation.  Equity  recognizes  the  separate  estate 
as  unconne6led  with  the  firm,  and  allows  no  claimant 
to  come  upon  it,  unless  he  can  establish  a  liability  of 
the  proprietor.  A  firm  contrail  does  create  such  an 
obligation,  but  only  to  the  extent  of  the  partner's 
agency.  The  liability  for  restitution  of  misappro- 
priated property  is  not  charged  against  the  innocent 
partner,  unless  the  fund  can  be  traced  to  his  posses- 
sion, though  he  may  be  charged  in  his  individual  ca- 
pacity, with  damages,  for  the  tort  of  his  co-partner. 

As  soon  as  the  obligation  was  recognized  at  law, 
that  compensation  should  be  made,  instead  of  restitu- 
tion, there  was  no  way  to  limit,  by  means  of  the  Com- 
mon law  adlions,  the  claim  to  recovery  from  the  firm 
■estate. 

477 


§141.  Liabilities.  Pt.  2,  Ch.  9. 

If  there  were  no  separate  creditors,  the  firm  credit- 
ors might  proceed  against  the  separate  estate,  and  the 
ccstuY  que  trust  might  obtain  the  firm  assets.  He 
might  proceed  first,  or  he  might  exclude  the  joint 
creditors,  by  claiming  restoration,  or  an  equivalent 
in  value,  before  allowing  their  claims.  The  effedl 
would  be  to  throw  them  upon  the  separate  estate  for 
satisfaction.  Indirectly,  the  cestuy  que  trust  would 
be  reimbursed  out  of  th*^  separate  estate,  to  which  he 
could  not  resort  diredlly.  If  restitution  in  full  were 
made,  the  separate  estate  would  be  charged  with  that 
amount,  at  the  suit  of  the  firm  creditors,  from  whom 
it  had  been  taken  away.  If  the  cestuy  que  trust  re- 
ceived only  a  dividend,  the  joint  creditors  would  be 
thrown  upon  the  separate  estate  for  the  rate,  instead 
of  for  the  principal.  In  either  event,  the  separate 
partner  would  pay  the  joint  creditors  what  they  had 
lost  by  the  reclamation  of  the  cestuy  que  trust ;  who 
might,  therefore,  be  allowed,  so  far  as  the  partner  is 
concerned,  to  resort  to  the  separate  estate  in  the  first 
instance.  To  the  separate  creditor  it  makes  no  dif- 
ference, for  he  excludes  the  joint  creditors  until  he  is 
satisfied,  in  any  event. 

I .  Cestuy  que  trust  may  sue  innocent  partner  in  contraRfor  trust  funds 
converted  by  trustee  partner  to  firm  use.  B,  of  Philadelphia,  and  C, 
I)  and  E,  of  New  York  city,  entered  into  a  special  partnership  in 
November,  1866,  as  C,  D  &  Co.,  to  transact  in  New  York  the  business 
of  buying  and  selling  stocks  on  commission,  making  loans,  colledl- 
ing  promissory  notes,  drafts,  and  bills  of  exchange.  In  November, 
1S71,  by  an  omission  to  publish,  B  became  a  general  partner,  accord- 
ing to  New  York  law ;  though  l)Oth  he  and  his  partners  thought  him  a 
special  partner  only.  B  carried  on  in  Philadelphia  a  business  of  his 
own.  I)  was  also  executor  of  the  executor  will  of  F,  and  as  such  re- 
ceived bonds,  etc.,  of  great  value.  The  partnership  agreement  stipu- 
lated that  the  general  partners  should  not  enter  into  speculations  of 
any  kind.  C,  D  &  F,  nevertheless,  did  so  without  B's  knowledge; 
and  I),  with  the  approval  of  C  and  E,  used,  in  speculations,  securi- 
ties belonging  to  F's  estate.  The  speculations  resulted  iii  the  insol- 
vency of  the  firm,  and  the  securities  were  used  to  pay  the  losses.     B 

478 


Pt.  2,  Ch.  9.  Liabilities.  §141. 

did  not  know  that  the  trust  property  had  been  used,  till  the  failure 
of  the  firm  ;  but  he  did  know  of  a  loan  of  securities  which  had  been, 
on  another  occasion,  made  by  D  to  the  firm.  A,  the  administrator 
c.  t.  a.  of  the  estate  of  F,  brought  assumpsit  against  B,  C,  D  and  E. 
B  alone  was  serv^ed.  In  the  court  below,  judgment  of  non-suit.  In 
the  court  above ; — -Judgment  reversed,  and  procedendo  awarded.  The 
question  was  whether  there  was  sufficient  evidence  to  entitle  the  case 
to  go  to  the  jury.  C,  D  and  E  were  clearly  liable  upon  the  fadls. 
Paxson,  J.:  "It  remains  to  consider  the  question  of  [E's]  liabilitv. 
"The  right  of  the  plaintiff  to  waive  the  tort,  and  sue  in  assumpsit  for 
"money  had  and  received,  is  too  well  settled  to  need  either  tirgument 
"or  the  citation  of  authority.  It  is  alleged,  however,  that  [B]  is  not 
"liable,  for  the  reason,  among  others,  that  'by  the  terms  ot  the  part- 
"uership  articles,  he  was  liable  only  to  the  extent  of  the  capital  he 
"had  contributed,  and  the  terms  of  these  articles  were  known  to  [D] 
"when  the  securities  were  delivered  for  use.'  *  *  [D]  was  not  acft- 
"  ing  for  his  cestuy  que  trust  when  he  loaned  these  securities  to  his 
"firm,  *  *  and  they  are  not  to  be  affedled  with  his  knowledge.  *  * 
"It  is  said,  however,  that  [B]  is  not  liable,  for  the  further  reason 
"that  the  power  of  one  partner  to  bind  the  others  is,  at  most,  an 
"implied  power;  that  each  partner  is  the  agent  of  hir  co-partners 
"  only  when  acfting  in  the  scope  of  his  power,  and  in  the  usual  course 
"of  the  business  of  the  firm;  and  that  when  his  agency  is  denied  or 
"  forbidden  by  his  co-partner,  with  notice  to  the  party  assuming  to 
"deal  with  him,  as  agent  of  the  firm,  his  adl  is  not  that  of  the  firm, 
"but  his  individual  acft  only.  As  an  abstracft  principle  this  is  corre<ft. 
"*  *  *  It  does  not  apply  to  this  case  as  it  stood  before  the  jury  when 
"the  judgment  of  non-suit  was  entered.  The  cause  has  teen  argued 
"upon  the  theory  that  the  securities  were  borrowed  for  the  purpose 
"of  using  the  money  in  wild  speculations  prohibited  by  the  agree- 
"ment  of  partnership.  The  evidence  is  not  so.  The  money  was 
"used  in  the  business  of  the  firm,  carrying  stocks  for  their  custom- 
"ers,  etc.  *  *  *  Our  owm  books  are  meagre  in  authority  upon  the 
"question  of  the  responsibility  of  a  firm  under  such  circumstances. 
"  It  has  been  largely  discussed  in  England.  *  *  *  It  was  attempted 
"to  distinguish  the  English  cases  from  the  one  in  hand.  *  *  *  i  am 
"unable  to  see  the  distincflion.  The  wrong  done  here  on  the  pait 
"of  the  firm  was  in  converting  the  securities.  It  is  manifest  that 
"they  had  the  custody  of  them  for  [D],  and  collected  the  interest 
"and  dividends  for  him.  Afterwards  they  borrowed  the  securities 
"from  [D].  This  did  not  authorize  their  conversion.  It  imposed 
"an  obligation  to  return  them  in  specie.  If  sold,  it  was  the  duty  of 
"  the  firm  to  have  carried  the  proceeds  to  [D's]  credit  as  executor. 
"  [But  they  were  used  to  pay  debts  for  which  B,  as  a  general  partner, 
"was  liable.]  It  is  entirely  in  the  course  of  the  regular  business 
"of  the  firm  to  pay  its  own  debts.  *  *  *  Here,  the  securities  telong- 
"  ing  to  the  estate  were  sold  by  the  firm,  with  knowledge  of  the  true 
'•ownership,  and  the  proceeds  used  to  pay  its  debts.  This  *  *  * 
"would  make  [B]  liable  without  notice  or  knowledge  en  l.is  part  of 
"the  borrowing  of  the  securities,  or  their  conversion  by  his  partners. 
"But  even  if  we  treat  [B]  as  a  special  partner,  so  far  rs  [F's]  estate 
"is  concerned,  this  judgment  must  be  reversed.  *  *  *  [For]  he  knew 
"in  April,  iS6S,  that  his  firm  had  borrowed  ^28,000  of  the  securities 
"*  *  *  from  the  executor.  *  *  *  [Such  knowledge]  was  ample  to 
"put  [B]  upon  inquiry  as  to  the  nature  of  the  transacflions  of  his 
"firm,  and  if  he  chose  to  sleep  upon  such  a  disclosure,  he  has  no 
"  one  to  blame  but  himself.  *  *  *  We  are  of  opinion  that  the  case 

479 


§i^|2.  Liabilities.  Pt.  2,  Ch.  9- 

"should  li^ve  gone  to  the  jury."  Guillou  v.  Peterson,  31  Leg.  Int. 
112  (1H74);  «  Norris  163,  Pa.  (1879). 
2.  /'ar/fur's  tort  diarizes  innoceiit  co-partner  who  shares  the  proceeds. 
\  &  H,  merchants  in  Rochester,  were  in  the  habit  of  consigning 
merchandise  to  0  &  D,  commission  merchants,  in  N.  Y.  They  also 
gave  commercial  paper,  which  C  &  D  used  and  met  with  proceeds 
of  consignments.  C  wrote  to  A  without  D's  knowledge  that  |i6,ooo 
worth  of  -V  iV  15's  paper,  which  was,  in  fa6t,  outstanding,  had  not  been 
used,  because  payable  at  C  &  D's  office,  and  asked  for  additional 
notes  payable  at  bank  to  meet  indebtedness  of  A  &  B  in  current 
paper.  C  &  D,  after  negotiating  the  notes  and  using  the  proceeds 
m  their  business,  failed,  and  were  discharged  in  bankruptcy.  A  &  B 
sued  them  for  tort  in  procuring  the  notes  which  A  &  B  were  compelled 
to  pay. — Recovered.  C's  fraud  charged  D  for  damages,  and  bankruptcy 
discharge  did  not  extinguish  the  liability.  Strang  v.  Bradner,  114 
U.S.  555(1884). 


§142, 


^  spcrtal  partner,  tofio  becomes  a  general  partner  bri  neglect, 
is  also  liable  u)l)eu  tl)e  firm,  bn  its  negligence,  is  guiltn  of  a  tort. 

He  ought  to  have  complied  with  the  requirements 
of  law,  aud  cannot  set  up  his  dereliAion  of  duty  as  a 
protecT:ion,  for  that  would  be  to  take  advantage  of  his 
own  wrong.  If  the  double  negligence  releases  him 
from  liability,  the  second  tort  does  not  aggravate,  but 
neutralizes,  the  first.  The  taking  no  part  in  the 
business  does  not  exonerate  a  partner,  for  then  a 
donnant  partner  would  escape  liability  for  torts  com- 
mitted by  the  firm.  The  principal  answers  for  the 
discretion  which  he  has  given  his  agent.  This  is  the 
test  of  liability  in  contrail,  as  well  as  in  tort.  How 
can  the  law,  which  makes  the  special  a  general  part- 
ner, release  him  from  the  liability  of  a  principal? 
The  liability  for  each  other  is  the  ground-work  of 
partnership.  Take  away  the  solidarity,  and  no  part- 
nership exists.     He  would  be  a  scapegoat,  says  Judge 

480 


Pt.  2,  Ch.  9.  Liabilities.  §143. 

Thompson.  Isn't  that  the  o£&ce  of  a  partner?  To 
bear  the  sins  of  his  co-partner,  rather  than  visit  them 
upon  innocent  strangers?  The  law  makes  him  a 
general  partner  from  the  time  he  fails  to  comply  with 
the  requirements  which  secured  his  prote(5lion. 

The  liability  for  tort  may  be  independent  of  title. 
Take  a  kind  of  tort  which  creates  no  increase,  or  bene- 
fit, to  the  joint  estate.  How  is  the  deli6l  to  be  brought 
home  to  the  innocent  partner?  With  no  fund  to  be 
followed,  or  equivalent  in  value  to  be  reimbursed,  the 
fadlor  of  title  is  eliminated,  as  a  test.  The  liability 
must  be  resolved  upon  the  theory  of  partnership,  with- 
out the  aid  of  any  collateral  principle.  If  committed 
in  the  exercise  of  a  discretion  delegated  by  the  firm, 
the  tort  is  charged  direAl}^  to  the  innocent  partner, 
as  the  result  of  his  mandate. 

I.  Tort  of  partner  does  not  charge  co-partner  who  becomes  such  by  con- 
struflio?!  0/ taw.  In  an  a6tion  for  causing  the  flooding  of  plaintiff"'s 
coal-mine,  brought  against  B,  C  and  D  individually,  who  were  carry- 
ing on  business  under  a  limited  partnership,  C  and  D  being  general 
partners,  and  B  special  partner,  it  was  sought  to  charge  B,  by  proof, 
that  he  had  done  some  aS.  which  rendered  him  liable  as  a  general 
partner. — But  the  court  decided  that  as  he  was  not  a  managing  part- 
ner, employing  workmen  and  dire<?ting  their  operations,  proof  of  an 
adl  having  no  relation  to  the  trespass  sued  for,  which  might  make 
him  liable  for  firm  debts,  did  not  establish  that  trespass  against  him, 
or  raise  the  presumption  of  his  assent  and  consequent  liability;  and 
hence  it  was  error  to  instru6l  the  jury  that  if  the  special  partner  had 
made  himself  a  general  partner,  and  the  acft  complained  of  was  done 
by  the  agents  of  the  firm,  and  assented  to  by  one  of  the  partners,  the 
special  partner  was  equally  liable  with  the  other,  and  the  verdidl 
must  be  against  both.    McKnight  v.  Ratcliff,  8  Wright  156,  Pa.  (1863). 


143. 


^  partner  is  liable  criminalls  for  Ijis  misappropriation  of  firm 
propertn. 

481 


§144- 


Change  of  Partners.         Pt.  2,  Ch.  10. 


At  the  Commou  law  he  was  not  liable  criminally 
for  the  misappropriation  of  firm  property,  because  he 
was  a  co-proprietor,  and  clothed  with  the  title.  A  man 
could  not  steal  from  himself.  Recent  statutes  have 
made  the  fraudulent  misappropriation  of  firm  prop- 
erty, or  misuse  of  firm  credit  by  a  partner,  a  crime, 
punishable  by  fine  and  imprisonment.^ 

1.     31  &  32  Vi<5l.,  c.  116,  i  I,  1868.     Supra  \  i6,  n.  i. 
Aa  of  Pa.,  3  June,  1885,  P.  L.  60. 


-O 


CHAPTER  X. 


CHANGE   OF  PARTNERS. 


§144. 

^cts  bone  prcniouslji  bp  tl)c  firm  bo  not  cl)arge  \\\t  incoming 
partner,  nor  toulb  l)c  ratifg  tijan,  because  tl]en  mere  not  lione  on 
his  bcljalf. 

The  firm  was  not  his  agent  at  the  time.  Joining 
the  firm  and  carrying  out  its  previous  contrails  do 
not  create  any  liability  to  the  promisees  or  creditors 
of  the  firm.' 

If  the  firm  contraAed  for  an  engine,  and  the  incom-' 
ing  partner  inspected  and  joined  in  accepting  it,  he 
would  not  be  liable  for  its  price.  There  would  be  no 
implied  contrail,  for  the  express  contradl  excludes  it, 
and  the  delivery  was  made  upon  the  express  contrad 
to  which  he  was  no  party .^  The  incoming  partner 
may  be  charged  upon ,3  or  may  enforce,''  a  severable 

482 


Pt.  2,  Ch.  io.     Change  of  Partners.  §i44- 

contrail  of  the  firm.  A  new  contrail  might  be  im- 
plied. If  the  plaintiff  agreed  to  supply  A  with  bricks 
at  so  much  a  thousand,  and  B  went  into  partnership 
with  A,  B  might  be  held  liable  for  the  bricks  subse- 
quently delivered,  because,  although  the  rate  was 
fixed  by  the  original  contraA,  each  purchase  would 
be  a  distin6l  contracfl.^ 

The  incoming  partner  makes  himself  liable  for  the 
prior  debts  of  the  firm  only  by  an  agreement  with  its 
creditors,  and  for  a  consideration,  Bntering  the  firm 
does  not  charge  him,  and  an  agreement  with  the  part- 
ner does  not  enure  to  the  creditors.**  An  incoming 
bought  out  a  retiring  partner  in  a  newspaper,  and 
suit  was  brought  for  paper  supplied  before  and  after 
his  entrance  into  the  firm.  Payments  had  been  made 
on  the  aggregate  debt.  The  incoming  partner  was 
not  liable.^ 

1.  Incoming  partnernoi  liable  for  contraH  of  his  predecessor.  A&B 
agreed  to  sell  D  all  the  feed,  bran,  shorts  and  screenings  made  at  their 
mill  during  one  year.  B  sold  out  during  the  year,  to  C.  D  paid  for 
feed,  &c.,  delivered  by  A  &  B.  Afterwards,  A  &  C  stopped  delivering, 
and  sued  D  for  price  of  feed,  &c.,so  far  delivered  by  them.  Defence: 
Failure  to  complete  contracSt. — Judgment  for  A  &  C.  Contra(fl  severa- 
ble according  to  consideration.  D's  counter-claim  for  breach  of  con- 
tradl  is  against  A&B.    Parmalee  v.  Wiggenhorn,  6  Neb.  322  (1877). 

2.  Helsby,  v.  Mears,  5  B.  &  C.  504. 

3.  Incoming  partner  liable  on  implied  contrail  for  debts  subsequently 
accruing  under  express  contrail  ivhich  is  severable.  A  granted  a 
license  to  a  firm,  reserving  royalties.  Afterwards,  B  entered  the  firm. 
A  sued  the  firm,  including  B,  for  royalties  subsequently  accruing. — 
Recovered.  He  was  not  bound  on  the  express  contract,  but  having 
received  the  benefit  of  the  consideration,  he  is  liable  upon  an  implied 
contradt,  which  corresponds  to  the  terms  of  the  express  contracft,  for 
the  benefit  which  he  has  derived.  Rogers  v.  Riessner,  30  Fed.  Rep'r 
525  (1887). 

4.  Incoming  partner  cannot  sue  on  specialties  previously  given  to  the 
firm,  but  viay  sue  07i  parol  renewal.  A&B,  partners,  1877-8,  insured 
their  stock  in  company  D,  by  two  policies,  for  one  year.  No.  i 
contained  a  covenant  for  perpetual  continuance  on  payment  of  an- 
nual premium.  No.  2  had  no  covenant  for  continuance.  After- 
wards, A&B  paid  the  premiums  for  renewals  until  1882,  when  C  en- 
tered the  firm,  which  continued  to  pay  the  renewal  premiums  until 

4S3 


§1^4-  Change  of  Partners.       Pt.  2,  Ch.  10. 

18S6,  when  the  loss  occurred.  A,  B  &  C  sued  D  in  assumpsit  for  the 
loss  '—Recovered  for  loss  under  policy  No.  2,  because  each  renewal 
was  by  parol,  and  enured  to  the  firm  which  paid  the  consideration. 
Judgment  for  D  under  policy  No.  i,  because  continued  as  a  specialty 
by  its  own  terms.  Firemen's  Ins.  Co.  v.  Floss,  10  A.  Rep'r  139,  Md. 
(18S7). 

5.  Incoming  partner  charged  on  new  contracl  implied  on  severance  of 
running  conlracl  with  Jinn.  A,  in  1847,  agreed  with  B  to  supply 
him  with  bricks  whenever  he  wanted  them,  for  2S.y.  per  i  ,oco,  ready 
money.  In  1S4S,  B  and  C  became  partners;  and  after  that,  B,  from 
time  to  time,  ordered  bricks  of  A,  which  w  ere  used  for  partnership 
purposes.  A  sued  B  &  C  in  debt  for  goods  sold.  B  suflered  judgment 
by  default.  Qplttaded  nunquain  indebitatus. — Verdict  for  A.  Fkle, 
J.':  "If  this  had  been  a  coutracT:  with  the  defendant  B  to  supply  him 
"with  a  certain  number  of  bricks  at  so  much  per  thousand,  that  would 
"not  make  a  subsequent  partner  liable;  but  this  is  only  that  in  all 
"  future  contracts  the  bricks  shall  be  charged  at  28.?.  ready  money. 
"Every  order  is  a  new  contracl."  Dvke  v.  Brewer,  2  Car.  &  K.  828 
(1849). 

6.  firm  creditors  cannot  enforce  the  contraFt  of  in  ccniivg  partner  to  pay 
the  debts  of  the  firm  without  becoming  parties  to  the  contraB  and 
giving  a  new  consideration.  A  &  B,  partners,  bought  of  C  &  D,  a 
one-quarter  interest  in  their  plaster  mill  and  quarries  by  a  ccntradl  in 
writing,  which  contained  provisions  declaring  that  A  &  B  became  part- 
ners of  the  old  firm  of  C&D,  and  were  bound  for  one-fourthof  its  debts. 
The  creditors  of  the  old  firm,  C&D,  threatened  to  sue  the  four  upon 
note  of  C  &  D.  A  &  B  brought  bill  against  C&D  and  their  creditors 
to  reform  in  contract,  upon  the  ground  of  mistake,  by  striking  out 
the  provisions  mentioned,  and  to  enjoin  suits  by  the  creditors. — De- 
cree, as  to  reforming  contrail.  Creditors  were  not  parties  to  that 
contracl,  and  it  was  not  made  for  their  benefit,  though  they  might 
sue  if  they  could  prove  partnership  of  the  four.  The  written  con- 
tradl  would  be  only  evidence,  and  the  parties  made  it  speak  the  truth. 
Wheat  v.  Rice,  97  N.  Y.  296  (1884). 

7.  Incoming,  replacing  retired  partner,  not  liable  with  continuing 
partners  for  goods  supplied  before  and  after  his  entrance,  though  pay- 
ments had  been  made  on  aggregate  indebtedness.  B  &  C,  partners  in 
puljlishing  a  newspaper,  opened  an  account  with  A,  a  dealer  in  paper. 
Subsequently,  C,  by  an  agreement  in  writing,  sold  his  interest  in  the 
business  to  D,  who  therein  assumed,  and  agreed  to  pay  C's  indebted- 
ness. B  &  D  continued  publishing ;  and  A  continued  to  supply  them 
wth  paper.  The  debt  of  the  old  firm  to  A  was  I194,  of  the  new 
firm,  I36.40.  A  brought  assumpsit  against  B  &  D  for  both  bills.  D 
filed  affidavit  of  defence  to  portion  contradled  by  B  &  C,  and  ten- 
dered judgment  for  the  $36.40,  with  interest.  At  the  trial,  D  asked 
the  Court  to  charge  that  he  could  not  be  held  for  any  of  these  items, 
except  those  contracfled  after  he  became  a  partner.  The  Court,  how- 
ever, said  that  if  the  jury  should  find  the  above  fa<5ls  in  reference  to 
the  arrangement  between  C  &  D,  A  could  recover.  Verdidl  accord- 
ingly, and  judgment  for  A.— In  error,  reversed.  A  was  a  stranger  to 
the  coutradt  between  C&D,  and  to  the  consideration.  He  did  noti 
agree  to  release  C,  nor  to  accept  D  as  his  debtor.  Furthermore,- 
there  was  no  evidence  that  B  &  D  agreed  to  be  jointly  liable  for  the, 
debt  ofthe  old  firm.  To  the  present  acflion  against  them  jointly,  each 
might  answer:  "I  did  not  so  agree  with  my  co-defendant."  Kountz  , 
V.  Holthouse,  4  Norris  235,  Pa.  (1877). 

484 

If 

i. 

\ 


Pt.  2,  Ch.  10.       Change  of  Partners.  §145. 

§145. 

It  appears  from  tl)e  autljaritics  tijat  tl]c  necessity  of  noxiation 
is  being  graliualln  superceLiCLt  bi)  t\]t  tljtorw  of  trust  ani>  ton- 
sibtxat'ion. 

The  incomiug  partner  has  received  a  fund  charged 
with  a  trust  in  favor  of  outstanding  creditors.  Having 
received  a  consideration  for  his  promise,  he  becomes 
himself  an  original  debtor,  and  his  undertaking  is  not 
within  the  statute  of  frauds,  notwithstanding  the  fa6l 
that  his  assignor  remained  liable  for  the  debt.  The 
property,  treated  as  a  trust  fund,  subjedls  him  to  a 
dire6l  a6lion  by  the  creditors;  treated  as  a  considera- 
tion, deprives  him  of  the  benefit  of  the  statute  of 
frauds.  It  must  result  from  this  change  that  when  a 
retiring  partner  assigns  his  interest  to  his  co-partners, 
or  to  a  stranger,  upon  an  agreement  to  be  protected 
against  the  debts  of  the  firm,  the  remaining  and  the 
incoming  partners  are  liable  to  creditors,  who  have 
not  released  the  retiring  partner.  The  arrangement, 
it  has  been  held,  creates  a  trust  which  stops  the  statute 
of  limitations.^  But  this  last  position  is  untenable,  for 
j  the  trust  is  not  dire6l  and  continuing,  exclusively 
cognizable  in  equity  or  between  trustee  and  cesttiy  que 
trusty  and,  therefore,  is  within  the  statute  of  limita- 
tions.- 

The  effe6l  of  a  partner's  retirement  without  wind- 
ing up  the  business  is  a  transfer  of  his  interest  and 
title  to  the  continuing  partners. 

I.  Succeeding  firm's  agreement  to  pay  debts  charges  assets  with  a  trust 
for  old  firm  creditors.  A,  B  &  C,  partners,  solvent,  but  indebted  to 
D.  A,  in  1877,  sold  his  interest  to  E,  and  new  firm  agreed  to  pay  A 
13,500,  and  pay  firm  debts  and  indemnify  him.  In  1879  firm  became 
involved,  and  to  protecft  A  against  D's  claim,  assigned  A  securities 
which  he  turned  over  to  D.     The  transfer  held  an  adl  of  insolvency. 

485 


§146.  Change  of  Partners.        Pt.  2,  Ch.  10. 

A,  being  compelled  to  pay  D,  sued  for  reimbursement  out  of  assets  of 
original  firm. — Recovered.  New  firm,  taking  the  stock  and  agreeing 
to  pay  debts,  made  the  assets  a  trust  fund  for  creditors  of  the  old  firm. 
A,  therefore,  not  barred  by  statute  of  limitations.  Bowman  v.  Spald- 
ing, 2  S.  W.  Rep'r  911,  Ky.  (1687). 

2.  Trust,  unless  dircfl  ami  continuing ,  exclusively  cognizable  in  equity 
and  betzcccn  trustee  and  ccstuy  que  trust,  barred  by  statute  of  limita- 
tions. R  ct  al.,  13  November,  1872,  executed  promissory  note,  pay- 
able on  demand  to  C,  for  |2, 200.  B  died,  and  29  August,  1877,  Dtook 
out  letters  testamentary.  A,  executor  of  C,  on  15  August,  1884,  with- 
out prior  notice,  cited  D  to  file  his  account,  and  upon  its  confirmation 
and  appointment  of  auditor  to  distribute  the  balance  of  15,088.55, 
which  widow,  as  distributee,  had  received,  presented  the  note.  De- 
fence :  Statute  of  limitations. — Claim  barred  by  six  years.  Fund  in 
administration  not  a  technical  trust.  York's  Appeal,  17  N.  Y.  17,  33, 
Pa.  (1886). 


§146, 


ull]e  retiring  partner  remains  bounb  to  tl)e  firm  creditors  until 
tl)nj  release  l)im. 

So  far  as  the  personal  obligation  of  the  retiring 
partner  is  concerned,  a  novation  is  always  necessary 
in  order  to  relieve  him.  The  liabilities  of  the  firm 
represent  the  rights  of  third  persons,  and  they,  and 
not  the  debtors,  are  the  proprietors,  whose  consent 
is  essential  to  any  modification  of  claims  against 
the  firm.  The  retiring  partner  may  assign  his  in- 
terest to  his  co-partners,  and  had  he  incurred  no  debt 
by  reason  of  his  share  in  the  partnership,  the  assign- 
ment would  be  simply  a  transfer  of  property.  But 
he  has  incurred  debts  while  a  partner.  The  creditor 
has  the  right  of  dominion  over  his  claim,  and  he 
may  agree  to  the  transfer  and  novation,  which  give 
him  a  different  debtor  in  the  place  of  the  original 
firm.  An  exchange  of  debtors  would  be  sufiicient 
consideration    to    sustain  the  creditor's    contradl    to 

486 


Pt.  2,  Ch.  io.        Change  of  Partners.  §146. 

make  the  substitution.  The  agreement  between  the 
partners  does  not  control  the  creditor.  He  is  the 
master  of  the  situation.  The  termination  of  the 
partnership  does  not  affe^l  him  or  disturb  past  trans- 
adlions,^  The  dissolution  relates  only  to  the  future. 
The  law  raises  no  presumption  that  the  creditor 
discharges  a  retiring  partner's  liability.  The  fa6l 
must  be  made  out.  Taking  security,  unless  it  merges 
the  debt,  might  be  collateral.  The  taking  as  satisfac- 
tion must  be  proved.  The  retired  partner  is  released 
if  the  creditor  accepts  a  new  partner  as  debtor  in  his 
stead.^ 

The  creditor  does  not  release  the  retiring  partner 
unless  he  accepts  the  continuing  firm's  obligation  as 
a  substitute.  The  creditor  who  takes  the  note  of  a 
new  firm  trading  under  the  name  of  the  old,  does  not 
release  the  retiring  member,  unless  he  knew  of  the 
change,  and  meant  to  substitute  the  new  for  the  old 
obligation.^ 

1.  Partners  remain  liable  after  dissolution  on  contraHs  made  during 
the  partnership.  B  &  C,  partners,  received  A's  goods  to  sell  on  com- 
mission. B  retired,  and  C  sold  the  goods.  A  sued  B  &  C  for  the  pro- 
ceeds.— Judgment  for  A.  The  joint  undertaking  preceded  dissolu- 
tion, and  was  not  discharged  by  it.  Briggs  v.  Briggs,  15  N.  Y.  471 
(1857). 

2.  Finn  creditor'' s  acceptance  of  new  partner^ s  obligation,  releases  re- 
tiring partner.  B  &  C,  partners,  indebted  to  A.  B  assigned  to  D, 
who  assumed  the  firm  debts.  A  assented  to  the  novation,  and  after- 
wards sued  B  &  C.  Defence  by  B  :  Release. — Judgment  for  B.  No- 
vation sufficient  consideration  for  release.  Loucks  v.  Martin,  9  A. 
Rep'r  279,  Pa.  {1887). 

3.  Retiring  partner  liable  until  notice  given.  B  &  C  owed  A,  when 
C,  Sr.,  retired.  B  formed  partnership  with  C,  Jr.,  under  same  name 
of  B  &  C.  A,  without  notice  of  the  change,  took  a  note  of  B  &  C  in 
satisfadlion.  He  sued  B  &  C,  Sr.— Recovered,  because  no  notice.  A 
question  to  witness:  Was  it  note  of  new  or  old  firm? — Inadmissible, 
because  a  mixed  question  of  law  and  fadl.  Hervey  v.  Van  Pelt,  4 
Bosw.  60,  N.  Y.  (1859). 

Partner  by  estoppel  7iot  bound  by  co-partner's  admissions.  B  C,  D 
C,  &  E  C,  traded  as  C  &  Co.  B  C  retired.  Remaining  partners  con- 
tinued the  business  as  C  &  Co.     A,  an  old  customer,  who  had  no  no- 

487 


§1^-.  Change  of  Partners.       Pt.  2,  Ch.  10. 

tice  of  B  C's  retirement,  sued  the  three  for  a  debt  subsequently 
incurred,  and  offered  the  firm  books  in  evidence.  Objedlion  that  B  C 
was  not  a  partner  when  entry  made,  and,  therefore,  not  bound  by  it. 
— Objecliou  sustained.     Pringle  v.  Leverich,  97  N.  Y.  181  (1884). 


§147. 


iiljc  liabilitti  of  tl]e  retiring  partner  for  tl^c  outstantiing  i^ebts 
of  tl)e  firm  is  tl]c  foimiiation  of  l)ig  rigljt  in  equity  to  present  tl]e 
continuing  fiartncr  from  tiiDerting  tl)e  assete,  anb  not  leauing 
enongl)  to  meet  tl]e  tiebts. 

His  equitable  lien  is  an  implied  term  of  the  sale.^ 
He  proceeds  to  enforce  the  original  destination  of  the 
firm  stock  by  bill  on  behalf  of  himself  and  of  the  cred- 
itors.' The  firm  creditors  have  a  right  to  follow  the 
fund  in  the  hands  of  the  new  firm,  but  they  have  no 
priority  over  the  creditors  of  the  new  firm.  On  the 
other  hand,  the  creditors  of  the  new  firm  have  no 
priority  over  the  creditors  of  the  old  firm,  notwith- 
standing the  change  in  the  title.  Both  sets  of  cred- 
itors share  the  assets  upon  an  equal  footing.  The 
right  of  firm  creditors  is  not  derived  through  the 
partners,  and  hence  is  not  destroyed  by  a  change  in 
the  personnel  of  the  firm.  For  the  purposes  of  their 
priority,  the  firm  fund,  and  not  the  partners,  is  con- 
sidered the  debtor,  and  the  firm  fund  remains  the 
same  in  the  hands  of  the  new  partners.  This  fund 
ma\^  become  subje(5l  to  the  claims  of  new  creditors  in 
the  hands  of  the  new  firm,  just  as  it  might  have  done 
in  the  hands  of  the  old  firm,  had  there  been  no  change 
of  partners.    For  this  reason  the  creditors  of  the  new 


Pt.  2,  Ch.  io.       Change  of  Partners.  §148. 

firm  compete  witli  the  creditors  of  the  old  firm  in  the 
distribution  of  the  assets.  Neither  set  of  creditors 
is  entitled  to  priority,  because  both  have  the  same 
debtor.' 

1.  Retiring  partner  may  compel  application  of  assets  of  firm  to  the 
payment  of  its  debts.  A  sold  out  to  his  co-partner  B,  a  minor.  B 
agreed  to  pay  the  firm  debts  and  indemnify  A.  B  refused  to  pay  firm 
debts  on  the  ground  of  infanc}',  and  assigned  the  assets  to  C,  with- 
out consideration.  A  brought  bill  for  injun6lion,  receiver,  and  to  com- 
pel the  application  of  the  assets  to  the  payment  of  the  firm  debts. 
Defence:  Infancy. — Decree.  Infant  could  not  retain  the  property 
without  performing  the  condition  upon  which  he  received  the  sole 
title.     Kitchen  V.  Lee,  ii  Paige  Ch.  107,  N.  Y.  (1844). 

Contra.  Retiring  pariner  no  equity  to  ^narshal  assets  for  his  relief 
Articles  of  a  banking  association  provided  that  the  assignee  of  stock 
and  remaining  partners  should  exonerate  retiring  partners  from  old 
debts  contraAed  before  or  after  his  assignment.  A  paid  profits  and 
debts  against  the  firm,  a  few  contradled  before,  but  most  after  his  re- 
tirement. Other  debts  were  still  outstanding,  and  A  brought  bill 
against  his  assignee  and  the  continuing  partners  to  compel  them  to 
appropriate  the  assets,  which  were  sufficient  on  his  retirement,  though 
subsequently  put  in  the  hands  of  a  receiver  to  pay  the  indebtedness. 
— Dismissed.  Acflion  at  law  adequate  remedy.  Clarke's  Appeal,  1 1 
Out.  436,  Pa.  (1884). 

This  decision  disregards  the  partner's  equity,  which 
entitles  him  to  marshal  the  assets  for  the  relief  of  his 
liability. 

2.  Retiring  partner  tnust  proceed  by  bill,  and  not  intervene  in  aFtion 
between  conti^iuing  partners.  A  sold  out  his  interest  in  A  &  B  to  C, 
who  continued  business  with  B,  they  to  use  firm  assets  in  paying  old 
firm  debts.  C  sued  B  for  dissolution  and  account.  A  intervened,  be- 
cause B  &  C  insolvent,  and  assets  of  old  firm  not  applied  according  to 
covenant. — A  bill  necessary  to  prote6l  equity  of  A  and  old  firm  cred- 
itors.   Dayton  v.  Wilkes,  5  Bosw.  655,  N.  Y.  (1859). 

3.  Creditors  of  old  and  new  firm  share  the  assets  pro  rata.  B,  C  &  D, 
partners,  indebted  to  A.  D  died.  B  &  C  continued  the  business,  and 
became  indebted  to  E.  Upon  insolvency  A  claimed  the  whole  fund. 
E  asked  to  share  the  fund.— Judgment  for  E.  B  &  C  were  bound  in 
equity  to  apply  the  assets  to  payment  of  A,  but  the  fund  was  subse- 
quently increased  by  E's  credit,  and  he  is  entitled  to  2^pro  rata  share. 
Filley  v.  Phelps,  18  Conn.  294  (1847). 


§148. 


®l]c  rontinuinci  firm  is  not  an  assignee  for  creditors,  unless 
It  becomes  insolvent. 


489 


§148.  Change  of  Partners.       Pt.  2,  Ch.  10. 

Such  a  construdlion  would  contradi(5l  the  continu- 
ance of  the  business,  and  imply  its  winding  up.^  The 
retiring  partner  cannot  specifically  enforce  the  con- 
tract with  the  continuing  partner,  who  takes  the  stock 
and  agrees  to  pay  the  firm  debts.  Neither  the  retir- 
ing partner  nor  the  firm  creditors  have  any  standing 
to  control  the  disposition  of  firm  assets  until  the  mar- 
gin of  insolvency  is  reached,  when  the  disposition 
would  expose  the  retired  partner  to  the  debts  provided 
for  by  the  assets.  While  the  continuing  firm  is  solvent 
the  remedy  of  the  retiring  partner  at  law  is  adequate, 
but  when  insolvency  supervenes,  his  equity  will  sus- 
tain a  bill  on  behalf  of  himself  and  of  the  firm  creditors 
to  marshal  the  assets  in  ease  of  his  liability.^ 

The  continuing  partner's  agreement  to  indemnify 
the  retiring  partner  against  firm  debts  is  a  separate 
obligation,  collateral  to  the  partnership,  and  in  ease 
of  its  liability.  The  claim  for  indemnity  is  subjedl 
to  the  set-off  of  any  indebtedness  of  the  outgoing 
partner  to  the  indemnifying  partner.^  Any  subse- 
quent purchaser  from  the  indemnifying  partner,  if  he 
assumes  the  firm  debts,  becomes  liable  on  the  indem- 
nity.^ 

1.  Agreement  by  purchaser  of  firm  stock  to  pay  firm  debts  does  not 
make  him  assignee  for  creditors.  B,  C  &  D  sold  out  to  E.  F  sued 
firm,  which  compromised  by  each  giving  individual  note  for  his  quota. 
B  paid  his  note  and  assigned  his  claim  to  A,  who  sued  E,  assignee 
for  creditors,  on  alleged  oral  agreement  to  pay  firm  debts  from  assets 
and  profits.— Judgment  for  E.  A  could  enforce  an  assignment  for 
creditors  only  by  a  creditor's  bill.  Colgrove  v.  Fallmadee,  6  Bosw. 
289,  N.  Y.  (i860). 

2.  Deveau  v.  Fowler,  supra  \  ro6,  n.  7. 

3.  Bond  of  indemnity  to  retiring  partfier  subject  to  set-off  of  his  indi- 
vidual debt  to  obligor.  B  &  C,  partners.  B  had  overdrawn  his  ac- 
count. C  sold  out  to  D,  who  continued  business  with  B,  and  took  his 
note  for  quota  of  overdraft  due  to  C's  account.  D  bought  out  B,  and 
gave  him  a  joint  and  several  bond  of  indemnity  against  firm  debts, 
with  E  as  surety.    D  endorsed  note  to  E.    B  assigned  bond  to  A,  who 

490 


I 


Pt.  2,  Ch.  io.     Change  of  Partners.  §149. 

was  creditor  of  B  &  D.  A  sued  D  &  E  on  the  bond,  and  E  set-oflF  the 
note. — Set-off  allowed.  The  covenant  was  to  B,  and  not  to  firm  cred- 
itors. The  note  was  an  individual  debt  of  B,  and  a  proper  set-off. 
Merrill  v.  Green,  55  N.  Y.  270  (1873). 

4.  Promise  of  purchaser  of  firm  assets  to  pay  firm  debts  not  within 
statute  of  frauds.  A  sold  out  his  interest  in  firm  to  B  &  C  for  I700, 
they  paying  firm  debts.  B  sold  out  to  C,  also  subjedl  to  same  debts. 
C  sold  to  D  on  same  terms.  A  sued  D.  Defence  :  Statute  of  frauds. — 
Recovered.  Purchase  of  assets  pledged  for  claim.  Townsend  v. 
Long,  27  Smith,  143,  Pa.  (1874). 


§149. 

^txt  must  be  a  mro  partner  to  make  i\\t  uouation  binbing. 

The  contradl  of  a  creditor  with  the  partners  to  re- 
lease the  retiring,  and  look  only  to  the  continuing 
partner  for  the  firm  debt,  is  void  for  want  of  consider- 
ation.' 

The  novation  was  formerly  recognized  as  having  a 
consideration  in  the  substitution  of  a  several  for  the 
joint  contra6l."  But  now  that  the  joint  contrail  of 
the  firm  is  held  to  include  the  several  contrails  of  the 
partners,  there  is  no  consideration  for  the  creditor, 
who  acquires  no  additional  obligation. 

The  New  York  cases  present  a  modification  of  this 
dodlrine.  The  retiring  partner  becomes  a  surety  for 
the  continuing  partner,  and,  by  giving  creditors  notice 
of  the  dissolution,  and  of  the  continuing  partner's 
agreement  to  discharge  the  firm  debts,  secures  to  him- 
self all  the  rights  of  a  surety.^ 

1.  Walstrom  v.  Hopkins,  supra  ?95,  n.  5. 

2.  Wallace  v.  Fairman,  supra  |  95,  n.  3. 

3.  Agreement  that  continuing  partfter  shall  pay  firm  debts,  does  not 
make  retiring  partner  a  surety  unless  communicated  to  firm  creditor. 
B,  C,  D  &  E,  partners,  took  a  lease  of  premises  for  firm  business.  D  & 
E  retired,  and  B  &  C  agreed  to  pay  the  subsequent  rent.     Landlord  A 

491 


§150- 


Change  of  Partners.       Pt.  2,  Ch.  10. 


was  notified  of  the  retirement,  but  not  of  the  agreement  of  B  &  C  to 
pav  the  entire  rent.  A  took  notes  of  B  &  C  for  subsequent  arrears, 
with  the  understanding  that  he  did  not  thereby  release  D  &  E.  A 
sued  B,  C,  D  &  E  for  the  rent.  Defence  by  D  &  E:  Agreement  made 
Ihcni  sureties,  and  A  released  them  by  taking  note  of  B  &  C— Judg- 
ment for  A.  Agreement  made  D  &  E  sureties  as  between  the  part- 
ners, but  not  as  to  A,  who  was  not  notified  of  the  agreement.  More- 
over, the  extension  was  not  absolute,  but  was  conditional  upon  the 
assent  of  D  &  E,  which  was  never  given.  D  &  E,  therefore,  were 
not  released.     Palmer  v.  Purdy,  83  N.  Y.  144  (1880). 


§150. 


iri]c  incoming  partner  receiving  tljc  assets  unber  an  agreement 
to  pan  tl)E  oIli  tirm  iiebts  becomes  liable  to  tkm  ereliitors  in  a 
personal  action. 

The  transfer  of  the  firm  assets   to  the  incoming 
partner  under  an  agreement  to  pay  the  old  firm  debts, 
is  in  substance  a  payment  to  him  for  the  benefit  of  a 
stranger;   that  is,  the  old  firm  creditor.    This  makes 
the  incoming  partner  a  trustee  of  the  assets  in  the 
interest  of  the  firm  creditor.     The  trust  is  enforced 
at  law  by  an  adlion  of  assumpsit,  which  involves  the 
personal  liability  of  the  trustee.     The  judgment  ob- 
tained against  him  is  for  a  firm  debt,  and  its  primary 
purpose  is  to  subje6l  the  assets  in  the  hands  of  the 
new  firm  to  the  claims  of  the  old  firm  creditors.     Its 
secondary  e£fe6l  is  to  fix  an  ultimate  liability  upon 
the  separate  estate  of  the  incoming  partner,  thus  ac- 
complishing, by  means  of  the  procedure  and  by  indi- 
redlion,  a  result  which  could  not  have  been  accom- 
plished diredll}^  without  proof  of  a  novation,  in  which 
the  personal  obligation  of  the  incoming  partner  was 
substituted  for  that  of  the  outgoing  partner,  with  the 
consent  of  the  firm  creditor.' 

492 


Pt.  2,  Ch.  II.  The  Relation.  §151. 

If  the  continuing  partner  indemnifies  tlie  retiring 
partner  against  scheduled  creditors,  the  indemnity 
enures  to  the  specified  creditors,  and  the  assets  are 
appropriated  to  their  claims." 

1.  The  transfer  of  jinn  assets  is  a  consideration  for  incoming  part- 
ner's  promise  made  to  firm  creditor  to  pay  fij^m  debts.  B,  after  giving 
a  note  to  A  for  merchandise,  took  C,  D  &  E  into  partnership,  the 
assets  exceeding  his  debts  by  150,000,  and  they  agreed  to  assume  the 
debts.  The  firm,  in  a  letter,  acknowledged  the  note  as  a  firm  debt, 
and,  later,  included  it  in  statement  of  its  liabilities.  A  sued  firm. — 
Recovered.    White  v.  Thielens,  10  Out.  173,  Pa.  (1884). 

2.  Transfer  of  assets  sufficient  consideration  for  assuming  the  debts, 
and  this  consideration  enured  to  firm  creditor.  B  &  C  sold  out  to 
stranger,  D,  who  assumed  the  debts,  which  were  scheduled  and  de- 
ducted from  the  amount  of  the  assets  as  a  basis  of  the  sale.  A,  creditor 
of  B  &  C,  sued  D. — Recovered.  A  acquired  beneficial  interest  in  the 
assets  by  the  transfer,  and  may  enforce  the  promise,  Elton  v.  Perken- 
piue,  I  E.  Rep'r  637,  Pa.  (1855). 


-O- 


CHAPTER  XI. 

THE  RELATION  OF  PARTNERS. 

§151. 

(ill]£  relation  of  partnersljip  requires  tljat  tl)c  partners  sl)oulb 
act  totuarlis  eaci)  otl)er  loitl)  tl)e  utmost  goob  faitl).' 

The  history  of  partnership  shows  that  the  exaAion 
of  uberiHma  fides  was  based  upon  the  closeness  and 
intimacy  of  the  relation  (§  i,  §  2).  But  at  the  present 
•day  the  requirement  is  not  founded  upon  blood,  friend- 
ship or  affe6lion.  The  partnership  does  not  derive  its 
force  from  sentiment.  The  nexus  of  partnership  is 
property,  and  the  interest  of  the  partners  springs 
from  and  is  bound  up  in  the  firm  estate.     The  func- 

493 


Sji^i.  The  Relation.  Pt.  2,  Ch.  ii. 

tious  of  the  partners  are  summed  up  in  the  process 
of  buying  and  selling  property  (§7).  In  title  and 
in  fundion  the  partners  are  identified,  and  this  iden- 
tification justifies  the  continued  application  of  the 
maxim.  Each  stands  for  and  replaces  the  other.  A 
partner,  therefore,  must  a6l  in  reference  to  the  busi- 
ness for  the  firm.  If  he  tries  to  acfl  for  himself  the 
law  brings  his  a6l  into  consistency  with  the  relation, 
and  makes  it  enure  to  the  firm.^  This  is  the  ground- 
work of  the  maxim.  It  is  upon  this  principle  that 
a  partner  who  competes  with  the  firm  by  transact- 
ing business  of  the  same  kind  on  his  own  account,'^ 
or  makes  use  of  the  firm  property,^  or  of  his  position^ 
in  the  firm,  to  secure  a  separate  advantage  is  com- 
pelled to  share  with  his  co-partners  the  profits  thus 
acquired.  But  on  the  other  hand,  a  partner's  engaging 
in  a  different  business,  although  it  might  constitute 
a  breach  of  the  articles  and  furnish  a  ground  for  an 
injunclion  against  the  partner,  or  for  a  dissolution  of 
the  firm,  would  not  entitle  his  co-partners  to  share  his 
profits  earned  in  the  independent  business.^ 

I.     Good  faith  requires  a  disclosure  of  all  the  informa- 
tion possessed  by  a  partner  in  regard  to  the  business. 

Surviving  partjiev's  account  as  ti-ustee  for  deceased  partner's  share 
must  furnish  exact  information  of  the  business  condition,  or  his  pur- 
chase, based  on  the  account,  will  be  set  aside.  B  &  C,  partners.  Arti- 
cles provided  that,  in  spite  of  a  partner's  death,  the  business  should 
be  continued  until  i  May,  1876.  B  died,  17  November,  1875.  A,  ad- 
ministrator, brought  bill  for  account,  not  only  up  to  B's  death,  but  to 
I  May,  1876,  and  averred  that  in  reliance  upon  C's  statement  of  the 
value  of  B's  interest,  $14,578.85,  and  of  a  subsequent  depreciation  of 
the  stock,  he  sold  out  to  C  for  19,582.32,  and  that  he  had  discovered 
that  the  statement  was  false.  C  pleaded  a  settlement  of  account  after 
full  investigation,  and  a  purchase  at  A's  instance  upon  his  terms,  fol- 
lowed by  A's  recovery  of  judgment  for  the  price  and  payment  thereof 
^y  C.— Plea  sustained.  Harrison  v.  Farrington,  15  Stew.  353,  N.  J. 
(1885).  At  the  hearing  C  did  not  prove  such  a  complete  and  detailed 
account  as  would  enable  A  to  understand  the  exa<5l  value  of  B's  share. 
C  told  A  that  the  stock  depreciated,  though  inventory  increased  |4,ooo 
between  B's  death  and  i  May,  1876.     C  did  not  know  whether  this  re- 

494 


Pt.  2,  Ch.  II.  The  Relation.  §151. 

suited  from  increase  of  stock  or  of  values. — Plea  not  proved.     C,  a 
trustee  of  B's  share.    lo  A.  Rep'r  105  (18S7). 

One  partner' s  exaFling  indemnity  from  another  against  miscofiduf? 
0/ their  co-partner  without  communicating  an  explained  discrepancy 
in  his  account,  not  a  breacli  of  good  faitli.  A,  B  &  C,  bankers  in  part- 
nership. C  desired  to  give  B  the  superintendence  of  the  business. 
A  refused,  unless  C  would  indemnify  him  any  loss  by  the  acft  or  omis- 
sion of  B.  C  gave  A  bond  of  indemnity.  A  knew  at  the  time  of  a 
discrepancy  in  the  account  between  the  bank  and  one  of  itt.  New 
York  correspondents,  a  matter  which  B  had  in  charge.  A  did  not 
know  of  any  fraud,  or  that  this  irregularity  might  not  be  explained. 
B  misappropriated  firm  funds,  and  A  sued  C  on  the  bond.  Defence : 
Breach  of  good  faith  in  withholding  information  of  the  discrepanc}-. 
^^udgment  for  A.  Requiring  bond  sufficient  notice  of  distrust. 
Pardee  v.  Markle,  17  W.  N.  211,  Pa.  (1886). 

This  decision  hardly  meets  the  standard  of  good  faith 
required  of  partners  in  their  dealings  with  each  other  in 
reference  to  the  firm  business.  Each  partner  is  bound  to 
make  a  clean  breast  of  everything.  He  is  not  the  judge 
who  can  determine  the  importance  of  any  suspicious 
circumstance,  but  must  communicate  it  and  not  leave 
his  co-partner  to  surmise  the  reason  for  his  conducl. 

2.  Partner  can  acquire  no  separate  property  in  the  business  which  the 
firm  carries  on.    B  formed  a  mining  partnership  in  1874,  with  C  and  D, 

which  continued  until  1878,  he  furnishing  the  capital  and  they  pros- 
pering and  locating  mining  properties.  C  and  D  located  three  mines 
and  certain  coal  lands,  which  they  reported  to  B,  and  bought  him  out 
for  I400.  The  day  of  purchasing  his  share  they  consummated  a  sale 
of  tlie  coal  lands,  for  |i,8oo.  During  1876  and  1877,  they  discovered 
four  more  mines,  which  they  sold,  after  1878,  for  ^12,000.  A  de- 
manded account  for  his  third  of  the  proceeds. — Decree.  Entitled  to 
all  discoveries  made  during  the  partnership.  Jennings  v.  Rickard,  15 
'  Pac.  Rep'r  677,  Cal.  (1887). 

3.  Purchaser  of  article  for  firtn  with  individual  goods  must  share  his 
profits  with  co-partner.  A  &  B  were  partners,  dealing  in  lapis  calam.i- 
naris.  B  was  a  shopkeeper,  and  paid  the  miners  for  the  lapis  cala- 
viinaris  with  goods  from  his  shop.  In  his  account  with  A,  he  charged 
him  as  for  cash  paid  to  the  amount  of  the  price  of  the  goods.  A 
claimed  that  B  must  divide  with  him  the  profit  made  on  the  sale  of 
the  goods. — Decree.  Sir  John  Leach,  V.  C. :  "It  is  a  maxim  of 
"courts  of  equity  that  a  person  who  stands  in  a  relation  of  trust  and 
"confidence  to  another,  shall  not  be  permitted,  in  pursuit  of  his 
"private  advantage,  to  place  himself  in  a  situation  which  gives  him 
"a  bias  against  the  due  discharge  of  that  trust  or  confidence."  It 
"was  B's  duty  to  buy  the  lapis  calaminaris  at  the  lowest  possible 
price,  but  when  "he  obtained  it  by  barter  for  his  own  shop  goods, 
"he  had  a  bias  against  the  fair  discharge  of  his  duty  to  the  plaintiff. 
"The  more  goods  he  gave  in  barter  for  the  article  purchased,  the 
"greater  was  the  profit  which  he  derived  from  dealing  in  store 
"goods,  and  as  this  profit  belonged  to  him  individually,  and  as  the 
"saving  by  a  low  price  of  the  article  purchased  was  to  be  equally 
"  divided  between  him  and  the  plaintiff,  he  had  plainly  a  bias  against 
"the  due  discharge  of  his  trust  or  confidence  towards  the  plaintiflf." 
Burton  v.  Wookey,  6  Mad.  Ch.  367  (1822). 

495 


§!-!_  Thk  Relation.  Pt.  2,  Ch.  ii. 

I\trtmr  compel  ins;  with  firm  in  supplying  meal  lo  government  ac- 
coufttiihli-  for  his  profits.  A  &  B  agreed  to  acSt  as  partners  in  obtain- 
ing contracts  for  the  supply  of  provisions  for  the  troops  in  Ireland. 
Hut  H  made  secret  arrangements  with  other  persons  to  share  the 
profits  of  any  similar  contradls  they  might  take.  A  filed  a  bill,  inter 
alia,  for  an  account  of  the  profits  made  by  E  from  such  secret  partner- 
shit)S.  H  atlmilted  the  faCts,  but  denied  A's  right  on  the  ground  that  he 
r  H]  had  never  agreed  not  to  enter  into  such  contradls. — Lord  Chancel- 
lorllRADY  concluded  thus:  "I  think,  therefore,  there  are  questions 
"arising  on  this  view  of  the  case  which  can  hardly  be  satisfacflorily 
"di.sposed  of  without  further  inquiry,  and  that  I  should  send  the 
"case  into  the  office  without  prejudicing  it  as  to  the  length  I  ought 
"to  go,  or  saying  that  the  petitioner  is  absolutely  entitled  to  any- 
"  thing'  in  respea  of  these  contradls. "  Lock  v.  Lynam,  4  Irish  Ch. 
188(1854). 

Partner  cannot  carry  on  independent  business,  which  tn  any  parti- 
cular is  in  competition  with  his  firm.  A,  B,  C  &  D  v^^ere  in  partner- 
ship as  sugar  refiners.  B  was  managing  partner,  and  made  all  the 
purchases  of  sugar.  He  carried  on  an  independent  business  as  a 
sugar  dealer,  and  was  able  to  buy  to  great  advantage.  Accordingly, 
in  1851,  he  bought  a  quantity  at  a  time  when  he  thought  it  likely  to 
rise,  and  it  having  risen,  and  the  firm  being  in  want  of  some,  he  sold 
it  to  the  firm  at  a  profit,  but  at  the  fair  market  price  of  the  day.  A 
complained  on  the  ground  that  they  were  refiners,  not  speculators. 
B  took  offence  and  cancelled  the  transacftion,  but  continued  to  specu- 
late, and,  unknown  to  his  partners,  sold  his  own  sugars  occasionally 
to  the  firm,  but  always  at  the  market  prices.  In  this  w-ay  he  made 
great  profits.  A  filed  a  bill  against  him  and  the  other  co-partners  to 
compel  an  account,  claiming  that  the  firm  was  entitled  to  the  profits 
B  had  made. — B  accountable.   Bentley  v.  Craven,  18  Beavan  75  (1853). 

4.  Co-owner  of  trading  ship  accountable  for  profits  made  by  trading 
cm  his  own  account.  B,  part  owner  and  master  of  a  ship,  made  a  long 
voyage,  touching  at  several  ports  and  trading  on  the  joint  account  of 
himself  and  the  co-owners.  He  sold  the  ship  at  Sydney,  and  soon 
after  made  large  purchases  of  wool,  in  part  of  which  C  &  Co.,  had 
an  interest.  The  wool  was  consigned  to  D,  E  &  Co.  A  and  others, 
co-owners  of  the  ship,  claimed  that  the  wool  was  purchased  with 
partnership  property,  on  partnership  account,  and  belonged  to  the 
partnership.  B  insisted  that  besides  acting  as  master  of  the  ship, 
and  trading  on  the  joint  account,  he  had  a  right  to  trade,  and  did 
trade  on  his  separate  account ;  and  that  with  the  profits  of  such  sepa- 
rate trading  he  bought  the  wool  in  question.  A  having  already  ob- 
tained an  injunction  against  D,  E  &  Co.,  asked  for  an  injunAion  to 
restrain  B  from  receiving  the  wool. — Injuncftion  granted.  Gardner 
V.  M'Cutcheon,  4  Beavan  534  (1842). 

Collateral  business  secured  by  a  partner  through  his  position  in  the 
firm,  enures  to  the  firm,  ifgermajie  to  its  purpose.  A,  B  and  others 
agreed  to  carry  on  the  business  of  a  common  carrier  between  London 
and  Falmouth,  a  separate  portion  of  the  road  being  allotted  to  each, 
and  It  having  been  stipulated  also  that  no  partnership  should  exist 
between  them.  B  for  himself  and  the  other  parties  agreed  with  the 
Mint  to  carry  coin  from  London  to  Falmouth  and  intervening  towns. 
Afterwards  he  made  another  agreement  -with  the  Mint  to  carrv  other 
com  to  places  not  on  the  road.  A  and  the  others  claimed  shares  of 
the  profits  made  out  of  the  second  contradl— All  the  parties  were  en- 
titled to  share  in  the  profits.  Russell  v.  Austwick,  i  Sim.  Ch.  52 
(1826). 

496 


.  2,  Ch.  II.  The  Relation.  ^152. 

Contracl  secured  by  partner  by  means  of  his  position  in  firm,  entires 
to  the  firm.  A  and  others  were  partners  with  B,  in  the  coal  busi- 
ness, under  the  name  of  B  &  Co.  C  enabled  D,  a  clerk  in  the 
office  of  B  &  Co.,  to  get  a  government  contrail  for  coal,  with  B  as 
his  surety.  D  assigned  the  contrac?t  to  an  association  of  coal  com- 
panies. Between  these  companies  there  was  a  memorandum  signed 
by  B  in  his  own  name,  and  signed  also  by  all  the  companies  who 
were  parties.  At  meetings  of  the  association,  each  company  was 
represented  by  one  of  its  members ;  B  attended,  but  none  of  his 
partners.  All  the  other  parties  treated  the  transaAion  as  if  the  firm 
of  B  &  Co.  was  one  of  the  members,  and,  in  fact,  their  understanding 
was  that  the  original  contrail  had  been  awarded  to  the  firm.  The 
arrangement  was,  that  the  parties  should  all  furnish  coal  to  the  asso- 
ciation in  various  proportions,  at  twenty-five  cents  above  the  market 
price ;  the  association  then  delivered  the  coal  to  the  government, 
and  the  profit  or  loss  was  to  be  shared  by  the  parties  in  proportion 
to  the  coal  furnished.  B  &  Co.  sold  coal  to  the  association,  and  B, 
after  settlement  with  the  government,  received  one-sixth  of  the 
profits  made  by  the  association.  He  divided  with  C,  but  none  of  the 
profits  ever  came  into  the  hands  of  the  firm.  B  died,  and  A  et  at. 
filed  a  bill  against  his  executors,  for  an  account  and  payment,  aver- 
ring that  B's  share  was  received  by  him  for  the  use  of  the  partner- 
ship. Master  reported  in  favor  of  defendants;  report  confirmed; 
appeal. — Decree  reversed.  Thompson,  C.  J.  :  "In  the  absence  * 
"*  *  of  special  provisions,  each  partner  is  in  a  fiduciary'  relation 
"to  his  co-partners,  and  must  devote  all  his  energies  for  the  promo- 
"  tion  of  the  firm  exclusively,  and  account  for  all  moneys  received 
"  by  him  in  and  through  its  legitimate  business.  These  being  the 
"duties  and  obligations  of  every  member  of  a  partnership,  he  who 
"claims  exemption  from  them  must  show  that  it  exists  either  in  the 
"  terms  of  the  organization,  or  by  the  assent  of  all  his  co-partners." 
Bast's  Appeal,  20  Smith  301,  Pa.  (1872). 

.  Partner's  b^-each  ofi  articles  not  to  engage  in  other  business  gives  firm 
no  right  to  his  profit,  nnless  he  co^npetes  with  firm,  A  Bros.,  com- 
posed of  A,  B  &  C,  were  salt  merchants  and  brokers  for  seven  years. 
By  articles,  C  and  D  covenanted  not  to  engage  in  any  business  ex- 
cept on  account  of  A  Bros.  For  the  last  two  years  C  was  dormant 
partner  with  his  son  D,  in  the  manufacture  of  salt,  and  at  end  of  seven 
years  became  ostensible  partner.  A  and  B  brought  bill  for  C's  profits 
in  salt  manufadlure. — Dismissed.  Breach  of  covenant's  remedy,  in- 
junAion  or  dissolution  and  damages,  not  profits  of  business,  because 
not  competing  with  firm  business.  Dean  v.  MacDowell,  8  Cli.  D.  -^45 
(1877). 


§152 


In  bmlings  luitl]  tl)irb  persons,  tl)e  autl)oritn  of  mcl)  partner 
is  Umiteb  bn  tl)e  equal  pou)cr  of  l)is  co-partner;  in  questions  of 
bomestic  administration,  tl)e  inaioritn  tontrols. 


497 


5i;^2.  Thk  Relation.  Pt.  2,  Ch.  ii. 

The  fundamental  principle  of  partnership  is  equality 
between  tlie  partners,  and  each  partner  unites  in  him- 
self all  the  attributes  of  the  firm.  When  he  is  ailing 
alone,  strangers  are  entitled  to  deal  with  him  on  this 
basis.  But  the  partnership  relation  implies  the  una- 
nimity of  the  partners;  therefore,  in  contrails  with 
third  persons,  a  prohibiting  partner  may  avoid  lia- 
bilit}'  b}'  notifying  them  of  his  dissent  and  refusal  to 
be  bound.'  But  where  the  question  arises  between  the 
partners  themselves,  and  relates  to  the  administration 
of  the  firm  business,  the  will  of  the  majority  controls. 
Third  persons,  whose  rights  are  incidentally  involved, 
must  respedl  the  determination  of  the  majority."  This 
doclrine  establishes  a  modus  Vivendi^  and  prevents  a 
partner  from  frustrating  the  purpose  of  the  firm.  He 
is  alwa^-s  sufiicientl}^  prote6led  by  his  right  to  dissolve 
if  dissatisfied  with  the  management.  If  the  matter  in 
dispute  involves  a  material  alteration  of  the  constitu- 
tion of  the  partnership,  unanimity  is  required. 

I.  /'ar/ner's  collusive  sale  passes  no  title.  Partner  may  coioiterinand 
/lis  co-partner's  sale  before  delivery.  B  &  C.  partners  "in  marble  busi- 
ness. D,  father  of  C,  while  engaged  in  removing  marble  was  notified 
by  B  to  desist.  D  removed  the  marble,  alleging  a  sale  to  him  b}'  C. 
A,  assignee  of  B  &  C,  brought  trover.  By  plaintiff's  evidence  maVble 
taken  was  worth  51,411.  Charge:  If  sale  collusive,  void;  if  not,  title 
passed.  Verdidl,  fo, 243.30.  A  released  all  above  11,838,  to  hold  his 
verdict.— Judgment  affirmed.  Jury  found  sale  collusive.  Dictum, 
V.'s  dissent  revoked  C's  agency.  Yeager  v.  Wallace,  7  Smith  565,  Pa. 
(1868). 

Partner  may  revoke  co-partner's  implied  authority  to  buy  by  notice 
to  seller.  B  was  dormant  partner  of  C.  C  bought  goods  of  A  on 
joint  account,  and  proposed  to  give  joint  note  for  price.  B  declined 
to  be  bound  by  purchase  and  sign  note  as  a  principal  debtor,  but  did 
sign  It  as  endorser.  A  sued  B  &  C  as  makers.  Defence  by  B :  He 
had  refuse(l  to  be  bound  by  the  purchase.  Instruction  to  jury  :  B's 
rei^usal  to  sign  note  as  maker  relieved  him  from  liability  as  co-princi- 
P^'-— Krror.  New  trial.  Court  should  have  instrudled  jury  that  if  B 
refused  to  be  bound  by  the  purchase,  and  not  merely  refused  to  sign 
the  note  as  maker,  the  verdi(5l  should  be  for  B.  Leavitt  v.  Peck,  2 
Conn.  124  (1819). 

Partner  may,  by  twti/yins^  seller,  escape  liabilitv  for  co-partner's 
vt  A^S'  ^"^"^"S^  floods  received  by  firm.  B,  C.'D  &  E,  partners. 
U  and  E  managed  the  business.     B  notified  A  not  to  sell  to  D  and 

498 


Pt.  2,  Ch.  II.  The  Relation.  §153. 

E  without  an  order  from  him.  A  sold  without  order,  and  the  goods 
were  used  by  the  firm.  A  sued  B,  C,  D  &  E  for  the  price.  B's  de- 
fence :  Revocation  of  authority. — Judgment  for  B.  Feigley  v.  Spone- 
berger,  5  \V.  &  S.  564,  Pa.  (1843).  The  goods  should  have  been  re- 
turned to  exonerate  defendant.  Johnston  v.  Bernheim,  supra  \  1 15, 
n.  3. 

2.  Partner  prevented frotn  frustrating  business,  and  bound  by  majority 
management.  A,  B  ct  at.  had  a  ship  built,  and  ran  her  on  joint  ac- 
count. A  owned  1-4,  and  was  agent;  B  was  master.  A  and  B  disa- 
greed, and  a  majority  displaced  A  from  the  position  of  agent.  A 
asked  for  an  account,  a  receiver,  and  an  injun6lion  against  his  asso- 
ciates to  prevent  them  from  continuing  to  run  the  boat. — Dismissed, 
except  for  an  account.  Defendants  allowed  to  run  the  boat  upon 
giving  security  to  A.    Dunham  v.  Jarvis,  8  Barb.  88,  N.  Y.  (1850). 

Majority  controls  in  partnersliip  organized  as  joint  stock  company. 
In  a  newspaper  firm  organized  as  a  joint  stock  company,  with  fifty 
shares  of  capital  stock  ;  the  majority  held  27,  and  the  minority  23, 
shares.  The  majorit}^  at  a  regular  meeting,  hy  resolution,  displaced 
the  publisher  and  elecled  one  of  their  number,  A,  in  his  place.  A  et 
at.  brought  bill  to  enjoin  former  publisher  and  minority  from  inter- 
fering with  A's  management. — Decree.  Peacock  v.  Cummings,  10 
Wright  434,  Pa.  (1864)'. 


§153. 

IDuring  tl]e  partncrsl]ip,  litigation  bctroeen  t[]e  partners  10 
suspenbeli. 

A  partner  can  not  sue  his  co-partner  on  a  firm 
transadlion.  Nothing  but  a  final  balance,  after  all 
the  assets  and  liabilities  of  the  firm  have  been  taken 
into  account,  would  show  what  the  defendant  owed, 
if  he  owed  anything.  A  settlement  of  the  account 
must  be  made  between  them.  No  balance  in  favor 
of  the  plaintiff  would  show  that  he  could  recover  the 
amount  from  his  co-partner.  A  similar  amount  might 
stand  to  the  defendant's  credit,  and  the  two  accounts 
would  balance  each  other.  The  assets  might  be  in 
the  plaintiff's  hands,  and  he  might  be  the  debtor,  in 
spite  of  the  accounts.  The  ultimate  balance,  after 
every  item  and  asset  has  been  brought  into  account, 
is  the  only  basis  of  a  settlement.* 

499 


§123.  '^^^  Relation.  Pt.  2,  Ch.  ii. 

Tradiug  as  a  company  would  not  enable  the  firm 
to  sue  the  members  for  advances  in  the  business.  As 
a  partnership,  the  company  cannot  sue  until  the  ac- 
counts are  settled,  although  it  had  taken  a  promissory 
note  for  the  amount  advanced.'  The  prohibition  ap- 
plies to  ever3'thiug  which  is  an  item  in  the  account. 
It  applies  to  freight  earned  on  a  voyage  by  partners 
in  the  vessel.  The  fa(51;  of  partnership  settles  the 
question,  and  shows  that  the  freight  is  an  item  in  the 
firm  account.'  If  co-owners,  the  voyages  would  be 
distinct,  and  each  trip  would  be  a  different  transac- 
tion. 

1.  Balance  struck  infirm  books  showing  value  of  each  partner' s  share, 
not  a  settlement  affinal  account  upon  which  assumpsit  will  lie.  A,  B, 
C  &  D  were  partners  in  trade.  During  the  year  ]86o,  A  died.  At  the 
end  of  the  year,  the  surviving  partners  balanced  their  books,  and  hav- 
ing ascertained  how  much  was  due  to  each  of  the  members  of  the  firm, 
credited  the  estate  of  A  with  the  amount  that  would  have  been  his,  if 
living.  In  January,  1869,  A's  administrator  brought  assumpsit  to  re- 
cover this  sum  as  a  debt  due  by  the  partnership.  The  Court  diredled 
the  jury  to  find  a  verdict  for  the  plaintiff",  reserving  the  point  whether 
the  jilaintiff"  was  entitled  to  recover.  The  verdicl:  was  accordingly  for 
the  plaintiff  for  521,725.44. — But  judgment  was  afterwards  entered  for 
the  defendant  on  the  point  reserved  non  obstante  vercdiHo.  Judge 
H.^Rii:  "The  point  (whether  the  adlion  could  be  maintained  on  the 
"above  account  and  balance)  has  frequently  been  before  the  courts, 
"and  always  decided  in  the  negative.  For,  as  the  objedl  of  such  an 
"accounting  is  to  ascertain  what  is  due  or  coming  to  each  of  the 
"parties  from  the  assets  of  the  firm,  it  cannot  be  interpreted  as  a 
"guarantee  that  the  assets  will  be  adequate  to  pay  the  debt.  *  *  * 
"  It  may  be  that  a  partner  who  stands,  on  the  face  of  the  account,  as 
"a  creditor,  has  the  bulk  of  the  property  of  the  firm  in  his  hands, 
"and  would,  if  it  were  turned  into  cash,  be  largely  a  debtor. "  And 
the  Supreme  Court  affirmed  the  decision,  adding:  "Whether  an  ex- 
"  press  promise  to  pay  be  essential,  or  an  implication  of  a  promise 
"will  arise  from  a  settlement  and  balance  struck,  it  is  immaterial; 
"all  the  authorities  coinciding,  that  to  support  assumpsit,  there 
"mu.st  be  a  settlement  and  balance  found  due  to  the  other  partner 
1^' who  sues  for  it.  *  *  *  Clearly,  therefore,  the  suit  should  have 
"been  account  render,  or  a  bill  in  equitv  for  an  account."  Fergu- 
son V.  Wright,  II  Smith  258,  Pa.  (1869). 

2.  Member  of  partnership  cannot  sue  for  an  advance  without  an  ac- 
count. A  &  B  subscribed  to  a  projected  joint  stock  companv.  The  . 
company  needing  money,  the  firm  of  A,  B  &  C  lent  them  /a.ooo  on 
their  promissory  note,  which  coming  due,  suit  was  brought.— A  &  B, 
partners  in  the  company,  and,  therefore,  the  suit  would  not  lie.  Per- 
nng  V.  Hone,  4  Bingham  28  (1826). 

500 


Pt.  2,  Ch.  II.  Thk  Relation.  §154. 

3.  Partner  cannot  sue  for  his  share  of  profits  'without  an  account.  A 
&  B  owning  one-third  of  a  sloop,  brought  debt  against  the  co-owners 
for  one-third  of  the  freight  earned  in  sailing  the  vessel.  They  ob- 
tained verditl  and  judgment  in  the  lower  court. — In  the  upper  court, 
reversed.  The  demand,  from  its  nature,  brings  into  controversy  an 
unsettled  partnership  account,  which  cannot  be  determined  in  this 
form  of  adlion.     Young  v.  Brick,  Pennington  663,  N.  J.  (1810). 


§154. 

^  partner  tul)o  Ijas  paib  a  firm  bebt,  raimot  flahu  as  against 
\\\%  partner  to  be  subrogated  to  tl)e  creator  iDl)oni  l)e  l)as  paib. 

He  acquires  no  right  against  his  co-partner  by  pay- 
ment of  the  firm  debt  until  a  final  settlement,  and  the 
creditor  will  not  be  compelled  to  assign  the  claim 
upon  a  tender  of  the  debt  by  the  creditor  of  a  partner, 
in  order  that  he  may  use  the  claim  to  colle6l  the  debt 
out  of  the  co-partner.  Indiredlly,  the  partner  would 
thus  enforce  from  his  co-partner  repayment  of  the  debt 
before  a  final  settlement.^ 

I.  Partner  paying  judgment  against  firm  cannot  have  it  marked  to 
his  use.  A  iSi  B,  partners,  gave  C  a  judgment-note  for  ^600,  which  he 
entered  up,  December  26,  1S74.  On  November  17,  1875,  he  caused  exe- 
cution to  be  issued  and  levied  upon  the  real  and  personal  estate  of  B 
alone.  D,  a  creditor  of  B,  tendered  C  the  full  amount  of  his  judg- 
ment, interest  and  costs,  if  he  would  stay  the  writ  and  mark  the 
judgment  to  his  use.  C  consented  on  condition  that  he  might  be 
allowed  to  release  A  from  the  payment.  D  refused  this,  and  B  &  D 
petitioned  the  Court  for  a  nale  on  C  to  show  cause  why  he  should  not 
accept  the  money,  stay  the  execution,  and  mark  the  judgment  to  D's 
use.  The  lower  court  granted  the  petition,  and  decreed  that  C  should 
assign  to  D,  without  recourse,  that  U  might  receivfe  and  collecfl  from  A 
the  amount  to  which  he  would  be  entitled  by  subrogation  or  by  way 
of  contribution. — Error.  Paxson,  J. :  "The  radical  error  of  the  de- 
"  cree  made  by  the  Court  below,  consists  in  the  facl  that  it  attempts 
"to  work  out  the  equities  between  A  and  his  partner  B  in  a  summary 
"  manner.  Where  one  partner  has  paid  a  partnership  debt,  he  is  not 
"  entitled  to  subrogation  against  his  co-partner  until  an  account  has 
"been  settled  between  them.  In  what  other  way  can  it  be  ascer- 
"  tained  which  is  the  creditor,  and  which  the  debtor  partner?  How 
"  can  it  be  ascertained,  upon  the  execution,  how  much  of  the  debt  A 

501 


§i^(^_6.  The  Relation.  Pt.  2,  Ch.  h. 

• '  ouKht  to  pay  ?     Clearly,   this  cannot  be  done  without  a  settlement 
"of  the  partnership  accounts."     Fessler's  Appeal,  3  W.  N.  C.  71,  Pa. 

(l^-Jb). 

Uul  subrogation  is  permitted  between  different  firms  with  a  com- 
mon member.     Laughlin  v.  Lorenz,  supra  72,  note  2. 


§1.55, 

vl  partner  cannot  sue  l)is  co -partner  during  tlje  partncrsl)ip 
for  niismanagement  in  transc*ctinci  tl)e  business. 

The  miscondu6l  cannot  be  accounted  for  until  the 
affairs  are  wound  up,  although  it  might  accelerate  an 
adjustment  by  furnishing  the  ground  for  a  dissolu- 
tion/ 

1.  Neglis;e7ice  furnishes  no  ground  of  aElion  independent  of  account. 
A,  B  &  C  were  joint  owners  of  a  sloop.  B,  without  A's  knowledge, 
.sold  or  lent  the  anchor  and  cable  belonging  to  the  sloop,  for  want  of 
which  the  sloop  went  adrift  and  was  lost  in  the  ice.  A  sued  B  for 
his  mismanagement. — The  state  of  demand  does  not  raise  a  sufficient 
ground  to  support  an  adlion.  Patterson  v.  Burton,  Pennington  717,  N. 
j.  (i8io). 


§156, 


^  set-off  liocs  not  at)ail  be tuieen  partners,  except  as  incii^ental 
to  tl)c  account  tor  a  settlement. 

The  claim  must  be  liquidated  to  be  available  as  a 
set-off.' 

A  partner  cannot  set  off  the  co-partner's  quota  of 
a  firm  debt.  The  firm  debt  must  be  first  liquidated, 
and  then  the  co-partner's  share  of  it  ascertained.  This 
requires  an  account.^  A  partner  can  not  set  off  his 
co-partner's    unliquidated    share    of   firm    liabilities 

502 


J 


Pt.  2,  Ch.  II.  The  Relation.  §156. 

against  the  price  of  the  co-partner's  share.  The  bal- 
ance depends  upon  a  settlement  of  the  account,  the 
sale  being  made  subject  to  the  firm  debts.^  If  the 
price  is  paid  in  stock,  and  not  in  cash,  the  debt  is  de- 
du6led  from  the  a6lual  value  of  the  stock,  and  not 
from  its  nominal  or  par  value. ^  If  a  partner  sues  a 
co-partner  on  his  note,  he  could  not  set-off  an  unliqui- 
dated balance  of  account,  especially  if  there  was  a 
third  partner,  because  the  account  would  involve  him 
in  the  settlement,  and  would  not  be  simply  between 
the  plaintiff  and  defendant.^ 

The  partners  must  be  parties  to  the  adjustment. 
The  debtor  to  a  partner  and  creditor  of  the  co-partner 
cannot  make  his  settlement  depend  upon  the  balance 
of  the  partnership  account.  Equity  would  not  take 
the  account  as  accessory  to  the  suit  between  one  part- 
ner and  a  stranger  to  save  a  payment  by  the  co-part- 
ner, if  the  partner's  balance  should  be  in  his  favor." 

1.  Unliquidated  balance  on  partnership  account  no  set-off.  A  sued  B 
on  a  promissory  note.  B  attempted  to  set-off  an  unsettled  claim 
arising  out  of  partnership  between  himself  and  A. — Disallowed,  be- 
cause partnership  accounts  must  be  settled  in  equity.  Love  v.  Rhyne, 
86  No.  Car.  572  (1882). 

1/  in  anion  against  firm  the  debt  is  denied,  partner  cannot  set-off 
separate  claim.  A  sued  B  &  C,  for  services  which  were  to  have  been 
paid  in  money  and  board.  Firm  denied  the  debt.  B  offered  to  set 
up  a  counter  claim  against  A  for  board. — Disallowed,  because  having 
denied  original  debt,  counter  claim  could  not  arise  out  of  the  trans- 
adlion.     Jenkins  v.  Barrow,  35  N.  W.  Rep'r  510,  Iowa  (1887). 

2.  Unsettled  partnership  account  no  set-off  against  claim  of  co-partner. 
A  sued  B  on  a  separate  claim.  B  attempted  to  set-oxf  a  balance  of 
account  in  firm,  of  which  B  &  C  were  members. — Disallowed,  be- 
cause no  account  had  been  taken.  Wood  v.  Brush,  13  Pac.  Rep.  627, 
Cal.  (1887). 

3.  Partner's  advances  to  pay  firin  debts  not  a  set-off  against  a  note  for 
the  price  of  CO- partner's  share,  unless  partnership  account  settled.  B 
bought  out  C's  interest  in  C  &  D,  subjecft  to  the  firm  debts,  and  gave 
him  in  payment  a  note  for  ^250.  D  &  E  signed  it,  without  consider- 
ation, as  sureties,  on  an  agreement  that  D  would  take  C's  share,  sub- 
jedl  to  the  firm  debts,  if  B  did  not  wish  to  keep  it.  D  did  take  it.  C 
died,  and  A,  his  widow,  sued  D  &  E  on  the  note.  D's  defence:  C 
died  insolvent  and  indebted  to  D,  JJ358.40,  for  half  the  firm's  debts 

503 


ji;^,^,.  The  Relation.  Pt.  2,  Ch.  ii. 

paid  by  D.  Firm  debts  still  outstandiug,  -which  D  would  have  to 
pay,  amounted  to|i,cK)o,  aud  extent  of  firm  assets,  $200. — Recovered. 
1)  could  not  set-off  against  the  note  payments  made  on  firm  account, 
because  the  balance  could  be  ascertained  only  by  a  settlement.  Tom- 
linsou  V.  Nelson,  49  Wis.  679  (1880). 

rartncr  cannot  set-off  co-partner's  quota  of  a  firm  debt  in  a  dhrU 
atlion.  Must  bring  account.  A  sold  out  his  share  of  the  firm  prop- 
erty to  B,  and  sued  him  on  his  note  for  the  price.  B  admitted  the 
claim,  but  set-off  two  items  of  charge  for  services  of  his  sons  to  the 
firm,  euiployed  by  B  upon  A"s  promise  to  procure  other  employees 
to  do  ecjuivalent  services.  A  excepted  to  B's  evidence,  because  it 
constituted  a  variance  from  the  declaration  in  set-ofF. — Sustained. 
The  charges  are  not  claims  of  B  against  A,  but  of  B  against  the  firm. 
A  can  be  charged  with  his  quota  of  the  items  only  in  an  adlion  of 
account.  A  direcl  suit  for  a  partnership  claim  does  not  lie  between 
partners  even  after  di.ssolution.     Dodd  v.  Tarr,  116  Mass.  287  (1874). 

4.  Partner  may  recover  his  quota  of  price 'for  sale  by  co-partner  of 
whole  firm  stock.  A  contributed  land,  and  B  took  title  for  firm.  B, 
without  A's  consent,  assigned  firm  property  to  corporation  for  6000 
shares  of  its  capital  stock,  A  sued  for  his  quota,  less  number  of 
shares  which,  at  par,  equalled  his  debt  to  B. — Judgment  for  A  for  his 
share  of  price,  but  payment  of  his  debt  in  stock  at  par  disallowed. 
Cheeseman  v.  Sturges,  6  Bosw.  520,  N.  Y.  (i860). 

5.  Unliquidated  balance  of  partnership  account  not  a  subjeH.  of  set-off, 
because  a  confusion  of  parties.  B,  C  &  D,  partners.  B  gave  his  note 
to  C,  who  endorsed  it  to  E.  E  assigned  the  note,  after  its  maturity, 
to  .\,  in  consideration  of  certain  shares  of  stock,  to  be  transferred 
when  the  note  was  paid.  A  sued  B  on  the  note.  Defence :  A  not  a 
holder  for  value,  because  no  consideration  passed  until  note  was  paid. 
Set-off,  unliquidated  balance  of  partnership  account  against  C. — Re- 
covered. Consideration  sufficient.  Set-ofF  disallowed,  because  coun- 
ter claim  unliquidated,  and  not  between  B  &  C  alone.  B's  only  ex- 
pedient would  be  a  cross-a<5lion,  with  D  as  a  party,  by  which  a  set- 
tlement of  the  partnership  accounts  could  be  efFedled.  The  equitable 
character  of  tlie  set-off  would  be  no  objecflion.  Cummings  v.  Mor- 
ris, 25  N.  Y.  625  (1862). 

6.  No  balance  of  a  partnership  account  is  available  as  a  set-off,  even 
by  the  partners'  consent,  unless  they  are  parties  to  the  proceed inzs  for 
a  settlement.  B  &  C,  partners  in  2,700  sheep.  B  sold  1200  to  D,  for 
|3,ooo.  D  paid  |i,50o,  and  resold  600  sheep  to  C,  for  11,575,  and  it 
was  agreed  by  the  three  that  the  debtor  should  be  ascertained  by  the 
partnership  account.  C  owed  D  and  D  owed  B.  If  B,  in  the  part- 
nership settlement,  owes  C,  C  need  not  pay  D,  but  can  set-ofF  B's 
debt  against  D's  claim.  B  assigned  A,  who  had  knowledge  of  the 
arrangement,  and  he  sued  D  for  |i,5oo,  the  balance  due.  By  agree- 
ment of  counsel,  a  reference  was  made  to  ascertain  the  state  of  the 
partnership  account,  in  order  to  carry  out  the  arrangement.  The 
referee  found  that  C  was  indebted  to  B,  and  accordingly,  that  A  might 
recover. — Reversed.  No  adjustment  of  partnership  accounts  will  be 
instituted  in  any  collateral  proceedings,  unless  the  members  of  the 
firm  are  made  parties  to  the  settlement.  Young  v.  Hoglan,  52  Cal, 
467  (1877). 


504 


Pt.  2,  Ch.  II.  The  Relation.  §157. 

§157. 

^n  accptiou  is  mabc  to  tl)c  proljibition  of  suits  bettofcn  part- 
ners iul)£ii  t\)t^  \)am  statcb  an  account. 

This  is  equivalent  to  a  settlement,  and  makes  a  final 
balance  by  agreement  of  the  parties.  Such  an  agree- 
ment will  sustain  an  a(5lion  of  debt/  or  assumpsit  ;- 
though  not  an  a6lion  on  the  case/  because  it  involves 
a  tort. 

If  a  settlement  was  made,  assumpsit  would  lie  with- 
out an  express  promise  to  pay  the  balance.  It  would 
be  implied  in  consequence  of  the  settlement,^ 

1.  Partner  may  sue  co-partiier  in  debt  after  settlement  and  division  of 
assets  for  balance  still  due  by  reason  of  mistake  in  addition.  A  owned 
a  peach  orchard,  and  agreed  to  market  the  crops  with  B,  each  taking 
one-half  the  profits  and  paying  one-half  the  expenses.  They  real- 
ized 12,000,  and  divided  the  profits.  A  sued  for  I56,  on  the  ground 
of  a  mistake  in  addition  of  the  items  of  accounts.  B  pleaded  the 
settlement  in  bar. — ^Judgment  for  A,  as  a  partner  may  sue  his  co- 
partner on  an  account  stated.    Jaques  v.  Hulit,  i  Harr.  38,  N.  J.  (1837). 

2.  Assumpsit  lies  on  balance  struck  and  express  promise  to  pay.  A 
brought  assumpsit  against  B  &  C  on  certain  accounts,  one  of  which 
was  a  balance  due  him  on  a  statement  and  settlement  of  certain  stage 
accounts,  in  which  transadlion  they  and  others  had  been  partners. 
The  payment  of  this  balance  had  been  assumed  by  B  &  C.  The  de- 
fendants pleaded  the  partnership,  under  which  they  claimed  the 
adlion  was  not  maintainable. — AcStion  sustained.  "If  there  has  been 
"a  dissolution  of  the  partnership,  a  settlement,  a  balance  struck, 
"and  an  express  promise  to  pay,  an  a<?tion  maybe  maintained." 
Gulick  V.  Gulick,  2  Green  578,  N.  J.  (1835). 

3.  Partner  cannot  sue  in  case  for  his  share  of  profits.  A  sued  his  part- 
ner in  trespass  on  the  case  for  one-half  profits  of  business. — If  any 
adlion  could  have  been  maintained  for  the  cause  set  forth,  it  should 
have  been  an  a<ftion  of  debt,  and  not  trespass  on  the  case.  Dunham 
V.  Rappleyea,  i  Harrison  75,  N.  J.  (1837). 

4.  Anion  lies  for  balance  due  on  settlement  without  express  promise. 
B  &  C,  partners.  A,  who  was  B's  separate  creditor,  attached  funds 
of  B  in  the  hands  of  C.  There  was  evidence  that  after  the  attach- 
ment C  had  stated  that  he  had  |;620  of  B,  as  balance  of  partnership 
account.  Defence  by  garnishee  :  Partnership  and  no  account  stated. 
— Judgment  for  A.  Evidence  of  admission  justified  jury  in  inferring 
a  settlement.  The  law  implied  a  promise.  Knerr  v.  Hoffman,  15 
Smith  126,  Pa.  (1870). 


505 


§1^8.  The  Relation.  Pt.  2,  Ch.  ii. 

§158. 

vlucitl)cr  cvfcptiou  is  made,  u)l)icl)  prows  tl)£  rule,  because  it 
is  iuitl)in  tl)c  principle  of  tl)e  proljibitiou:  ^nn  transaction  u)l)icl) 
is  iniicpcniicnt  of  tl)e  tirni  accounts,  man  be  tl)e  subject  of  a  suit  bu 
a  partner  aqainst  i)is  cc-partner. 

The  exception  covers  a  partner's  liability  for  his 
contribution.  The  liabilit}^  is  antecedent  to  his  mem- 
bership, and  may  be  enforced  by  his  co-partners  in 
an  action  at  law.'  Any  transaction  between  partners 
wliicli  is  not  part  of  the  partnership  business,  is  for- 
eign to  the  account,  and  may  be  the  subjedl  of  a  suit 
at  law."  An  account  is  also  unnecessary  where  the 
partnership  consists  of  a  single  transa(5lion,''  or  where 
the  firm  business  has  been  settled,  the  debts  paid,  the 
propert}^  distributed  or  exhausted,  and  the  a(?tion  is  for 
contril)ution  upon  a  limited  number  of  transadlions.^ 

1.  yhlion  lies  at  law  by  partner  against  co-partner  for  his  contribu- 
tion. A  ic  R  bought  an  interest  in  a  sloop  in  common.  A,  who  paid 
the  price,  and  also  the  license  fee,  sued  B  for  his  half  Defence  :  A 
partnership,  and  no  acfliou  at  law. — Action  lay.  No  partnership  ac- 
count involved  in  suit      Reeves  v.  GofF,  Pen.  609,  N.  J.  (1S09). 

Joint  stock  company  a  partnership.  Trustees  of  unincorporated 
srjciety  sued  stockholder  on  his  contradl  of  subscription.  He  set  up 
partnership,  and  that  trustees  should  bring  account. — Stockholders 
declared  partners,  but  suit  maintained,  because  contradl  of  subscrip- 
tion antecdent  to  partnership.  Townsend  v.  Goewey,  iq  Wend.  424, 
N.  Y.  (1S38). 

2.  Coles  V.  Coles,  supra  ?  13,  n.  2. 

/'artner  may  recover  loans  from  firm  in  -which  his  co-partner  is  a 
mcmlwr.  B  borrowed  money  of  A,  his  partner,  for  B,  C  &  D,  and 
gave  firm  notes  for  loans.  A  sued  B,  C  &  D.  B  served,  but  C  &  D 
not  found.— Judgment  for  A,  ^16,038. 36.  Subsequently  sci.  fa.  served 
on  C  &  D,  and  court  excluded  B's  admission  that  loans  were  made 
by  .\  for  C  &  D,  under  charge  that  A  couldn't  recover  because  B  a 
member  of  both  firms.  Judgment  for  C  &  D.— Reversed.  Notes 
make  a  contracfl  between  A  and  B,  C  &  D,  and  entitle  him  to  sue 
without  reference  to  A  &  B.  Contra^  could  not  be  varied  by  parol. 
Moore  v.  Gano,  12  Ohio  300  (1843). 

3.  Parltier  may  .<;ne  at  law  for  his  share  of  the  profits  in  a  single  irans- 
atlion  ivithout  a  previous  accounting.  A  sued  his  co-partner  B,  alleg- 
ing partnership  in  a  single  transadlion,  its  close  and  B's  appropria- 

506 


Pt.  3,  Ch.  II.  The  Relation.  §159. 

tion  of  the  profits.     Defence  :  Account  necessary. — ^Judgment  for  A. 
Pettingill  v.  Jones,  28  Kan.  749  (1882). 

Partner  in  single  transaHion  zvIkj  has  advanced  sum  as  capital 
may  sue  his  co-partner  at  laze  for  balance  due.  A  &  B  partners  in 
ai  single  venture.  A  advanced  price,  and  then  sold  contrary  to  B's  in- 
stru6tions,  and  compromised  debt.  A  sued  B  for  his  proportion  of 
loss,  but  he  repudiated  transa(5lion. — Liable,  as  partner :  A  entitled  to 
exercise  his  own  discretion  in  selling.  Cunningham  v.  Littlefied,  i 
Edw.  Ch.  104,  N.  Y.  (1831). 

4.  Partner  may  sue  co-partner  for  contribution  upon  advance  without 
a  settlement.  A  paid  joint  note  and  sued  his  partner  B  for  contribu- 
tion. No  outstanding  claims  by  or  against  firm,  and  no  assets  left. 
Defence  :  Note  for  firm  business,  A  kept  accounts  and  no  settlement. 
— ^Judgment  for  A.  Claim,  contribution  to  over-advance  recoverable 
without  account,  if  upon  a  limited  number  of  transadlions.  Clarke 
V.  Mills,  13  P.  Rep'r  569,  Kan.  (1887). 

Massachusetts  and  Pennsylvania  rule  against  general  authorities. 


§159. 

^\\t  account  stanba  upon  tl)e  same  footing  as  otl)er  litigation. 

As  a  general  rule,  account  does  not  lie  during  the 
continuance  of  the  partnership,  because  a  complete  ac- 
count implies  a  termination  and  settlement  of  all  firm 
transadlions.  But  the  distincflion  which  is  applied  to 
other  litigation  between  partners,  also  applies  to  an 
account.  An  account  may  be  had  of  all  transadlions 
which  may  be  isolated  from  the  general  business  of 
the  firm,  and  the  settlement  of  which  does  not  neces- 
sarily involve  a  dissolution  of  the  firm,'  This  segrega- 
tion may  arise  from  the  nature  of  the  transadlion,  or 
may  have  been  brought  about  by  the  contract  of  the 
parties. 

I.      CoL,LYERon  Partnership,  ^30,  and  notes. 

Article  by  Tracy  G0UI.D,  Esq.,  21  Albany  Law  Journal  168  (1880). 
507 


5i6o.  Thk  Relation.  Pt.  2,  Ch.  ii. 

^\]t  form  of  prorciinrc  raises  a  barrier  against  a  partner 
auing  l)is  fuin,  or  r'/tr  z'crsa. 

The  firm  could  not  recover  in  a  suit  at  law  upon  a 
claim  against  a  member,  because  there  is  no  person 
who  can  institute  proceedings  and  adl  in  the  litigation 
as  a  party  plaintiff.  The  partners  are  the  only  plaint- 
iffs who  can  sue  for  the  firm,  and  they  must  all  join 
in  the  a6lion.  The  absurdity  would  then  be  pre- 
sented of  a  person  being  both  plaintiff  and  defendant 
in  one  and  the  same  suit.  He  would,  in  his  capacity 
of  plaintiff,  ask  judgment  against  himself  in  the  ca- 
pacity of  defendant.' 

The  law  tolerates  no  such  incoherence.  The  con- 
sequences which  follow  from  the  partnership  being 
an  aggregate  of  the  partners,  are  carried  out  with  con- 
.sistcnc}'.  As  no  debt  could  be  colle(fled  by  the  firm 
from  a  member,  or  vice  versa,  no  attempt  to  enforce 
collection  is  made.  The  claims  of  the  firm  against 
its  members,  or  their  claims  against  the  firm,  are  not 
computed  among  the  assets  of  either  the  joint  or  of 
the  separate  estate.  Being  uncolledlible,  the  debts 
have  no  legal  or  equitable  existence. 

I.  Partner  cannot  sue  co-partner  on  a  firm  obligation.  A's  name  was 
entered,  as  a  subscriber,  on  B,  a  company's  books,  and  scrip  was 
issued  to  him,  which  he  sold  before  the  company's  deed  was  exe- 
cuted. A  never  signed  the  deed.  He  sued  C,  a  member,  on  a  note 
j,nyen  by  the  proje(?lors,  which  was  altered,  without  authority,  from 
joint  into  joint  and  several. — No  recovery,  as  A  w-as  a  partner,  and 
also  liable  on  the  note.    Perring  v.  Hone,  '4  Bing.  20  (1826). 


508 


I 


Pt.  2,  Ch.  II.  The  Relation.  §i6i. 

§1B1. 

^u  !3lct  of  ^sseinbln  in  |3cnnsrilDauia  rfinoBcb  tl)e  obstacle 
of  pl■ofe^ul•c,  auLi  alloiucLi  fiartntrs  to  bt  boti)  plaiutitTs  auL>  be- 
fcuLiauts  in  tl)c  same  action.' 

The  A61  does  not  enable  a  partner  to  sue  his  firm. 
An  independent  plaintiff  is  required,  who  is  not  also 
liable  on  the  contradl  which  he  seeks  to  enforce.  The 
evil  is  more  extensive  than  the  remedy  provided. 
The  limited  scope  and  technical  chara6ler  of  the  stat- 
ute make  the  form  of  procedure   control  the   right. 

A  party  who  was  a  co-promissor  in  a  joint  contradl, 
and  at  the  same  time  was  the  promissee,  could  not 
sue  his  co-contradlors  on  the  promise  at  law,  because 
they  could  plead  in  abatement  his  non -joinder  as  co- 
defendant.'  This  evil  can  be  cured  by  nothing  less 
than  a  procedure  which  will  enable  the  plaintiff  to 
recover  his  claim  in  spite  of  his  being,  in  form,  one 
of  the  contractors  who  agree  to  pay  it.  This  should 
be  the  case  wherever  the  claim  does  not,  from  its  na- 
ture, involve  an  account,  and  where  it  is  possible  to 
ascertain,  by  simple  division,  the  sum  due  to  the 
plaintiff  from  his  associates.  If  there  was  a  joint 
promise  of  all,  including  the  plaintiff,  as  promissor, 
to  the  plaintiff,  as  promissee,  he  may  recover  from  his 
associates  the  amount  promised,  less  his  quota.  It 
depends  upon  the  nature  of  the  claim  whether  the 
plaintiff  can  have  a  judgment  against  his  associates 
in  solido^  or  a  judgment  against  each  for  his  rateable 
portion.'^  No  mere  difficulty  of  procedure  should  de- 
prive the  plaintiff  of  his  aClion  at  law.  This  view  has 
received  the  san6lion  of  the  English  courts,  and  there 

509 


§i6i.  Thk  Relation.  Pt.  2,  Ch.  ii. 

the  a(5lion  at  law  is  permitted  when  the  contra6l  may 
be  interpreted  as  a  claim  by  the  beneficiar}^  against 
the  co-contracT;ors,  excluding  himself  as  a  debtor- 
contraclor/  This  constrnc^tion  gives  effe(5l  to  the 
contrail.'  If  the  plaintiff  was  meant  to  contribute  to 
the  payment  out  of  a  fund,  as,  for  example,  out  of 
profits,  his  quota  would  be  deducl;ed  from  the  claim. 
The  co-contra(5lors  might  not  be  liable  unless  a  fund 
arose,  or  they  might  be  liable  in  any  event.  The 
plaintiff's  claim  might  be  limited  according  to  his 
share,  or  a  guarantee  might  be  intended. 

In  a  suit  at  law  under  the  statute  between  two  firms 
with  a  common  member  execution  is  confined  to  the 
joint  estate."  Wherever  the  procedure  allows  suits  at 
law  between  firms  with  a  common  member,  the  execu- 
tion is  necessarily  confined  to  the  firm  assets.  This 
is  the  result  of  the  statute  in  Pennsylvania,  and.  of  the 
pra6lice  in  New  York.' 

1.  The  Pennsylvania  statute  provides :  "ThatnoaAion  *  brought 
"by  partners  *  against  partners  *  shall  abate,  or  the  right  of  such 
"partners  *  plaintiffs  to  sustain  their  action  be  defeated  by  reason 
"of  one  or  more  individuals  Vjeing,  or  having  been  members  of  both 
"  firms,  or  being  or  having  been  parties  plaintiffs,  and  also  of  parties 
"defendants  in  the  same  suit,  *  but  the  same  shall  proceed  to  trial 
"and  judgment  as  though  the  parties  plaintiffs  and  defendants  were 
"separate  and  distindl  persons."     14  April,  1838,  P.  L.  457. 

2.  Party  joining  iti  promise  cannot  sue  his  co-promissors.  A,  B,  C, 
and  others  covenant  with  A  that  he  shall  go  to  Mexico,  and  explore 
and  work  some  mines  there  for  three  years  for  |5,ooo  a  year.  A 
brings  an  a<5ljon  of  covenant  against  B,  C  and  the  rest  for  his  salary. 
The  defendants  plead  non-joinder  of  A,  to  which  A  denmrs. — A  had 
no  a(ftion  at  law.  He  had  none  under  the  law  prior  to  the  A<51  of 
1838,  and  it  is  well  settled  that  that  statute  only  applies  to  contradls 
where  one  or  more  of  the  parties  plaintiffs  are  not  bound  by  the 
agreement  which  they  seek  to  enforce.  A  can  only  obtain  redress 
in  equity.  Price  v.  vSpencer,  7  Phila.  179  (1870).  In  Equity,  40  L.  I. 
76,  Pa.  (1873). 

3.  Raiguel's  Appeal,  infra  \  162,  n.  i,  a. 

4-  Parties  contracting  for  performance  to  one  of  them  may  be  sued  by 
htm.  A  signed  an  agreement  with  B,  and  others,  for  exhibition  of 
his  dwarf  at  their  expense,  though  A  furnished  stage-dresses.  They 
had  3-4  and  he  1-4  clear  profits.     A  was  also  employed  by  B,  et  at.    A 


510 


I 


Pt.  2,  Ch.  II.  The  Relation.  §i6i. 

brought  trover  for  his  stage-dreSvSes.  Plea  :  Non-joinder  of  A  as  co- 
defendant. — Recovered.  A  was  a  separate  coutracftor,  and  did  not 
agree  to  pay  himself    Bryant  v.  Wardell,  2  Exch.  479  (1848). 

5.  One  of  several  may  sue  his  associates  on  the  protnise  of  all  to  him. 
A,  B,  C,  D,  E  &  F  agreed,  in  writing,  that  A  should  go  to  California 
and  sele6l  a  mine,  to  be  bought  on  joint  account.  They  each  sub- 
scribed lioo  to  pay  his  expenses  to  California,  and  his  compensation 
was  left  open.  A  made  the  trip  and  seledled  the  mine,  but  his  asso- 
ciates abandoned  the  speculation.  A  brought  bill  against  his  associ- 
ates for  compensation  and  expenses.  Defence  :  Subscription  limit 
of  liability. — Decree.  Plaintiff  may  recover  five-sixths  of  sum  which 
will  repay  expenses  and  be  a  fair  compensation.  Duff  v.  Maguire,  107 
Mass.  87  (187 1 ). 

6.  If  the  same  person  is  Joined  ivith  plaintiff  and  defendant,  the  execu- 
tion is  limited  to  the  joint  assets.  A  was  a  member  of  both  the  firms 
A,  B  &  C  and  A  &  D.  The  firm  A,  B  &  C  obtained  judgment  against 
the  firm  of  A  &  D,  and  after  some  preliminaries,  not  pertinent  to  the 
statement  of  the  case,  issued  a.fi.fa.  The  sheriff  returned  nulla  bona 
as  to  the  joint  property  of  A  &  D,  and  a  levy  on  the  personal  property 
of  D.  D  moved  to  set  aside  the  levy,  because  A  was  both  plaintiff  and 
defendant,  and  the  judgment,  if  valid  at  all,  was  only  so  against  the 
partnership  effects  of  A  &  D.  The  lower  Court  set  aside  the  levy. — 
Judgment  affirmed.     Gibson,  C.  J. :     "The  adlion  authorized  by  the 

"Statute  (1838)  may  readily  be  condudled  to  judgment;  but  how 
"could  it  be  thought  that  a  writ  of  execution  might  be  applied  to 
"the  persons  or  the  separate  estate  of  the  individuals  who  compose 
"the  debtor  firm,  without  doing  injustice  to  some  of  them,  or  pro- 
"ducingsome  whimsical  absurdity,  it  would  require  all  the  ingenuity 
"  of  the  person  who  framed  the  a6l  to  explain.  It  was  enacted  be- 
" fore  the  abolition  of  imprisonment  for  debt:  and  to  have  allowed 
"the  judgment  authorized  by  it  the  full  common  law  effedl,  would 
■'  have  subjecfled  one  of  the  defendants  to  arrest  on  his  own  execution, 
"but  still  with  the  means  of  regaining  his  liberty  by  ordering,  in  his 
"  capacity  of  plaintiff,  his  body  to  be  set  at  large  in  its  capacity  of  de- 
"fendant;  an  operation  which  would  have  discharged  the  debt.  The 
"same  absurdity  would  appear  in  the  seizure  of  the  separate  estate  if  a 
"party  plaintiff  in  satisfaction  of  his  own  execution.  It  might  be 
"avoided,  indeed,  by  direfting  the  sheriff  to  seize  the  property  of  the 
"other  defendant  which,  though  it  would  be  less  absurd,  would  be 
"more  unjust.  *  vSay  that  only  a  moiety  of  the  debt  shall  be  thus 
"levied,  and  you  mitigate  the  injury,  but  do  not  prevent  it;  for  the 
"ultimate  justice  of  the  case  would  depend  not  on  the  apparent  duty 
"of  equal  contribution  in  the  first  instance,  but  on  the  balance  of  the 
"partnership  accounts,  which  a  court  of  law  is  incompetent  to  ascer- 
"tain.  *  What  effecft,  then,  must  we  give  to  such  a  judgment? 
"  Its  office  is  obviously  to  settle  the  general  question  of  indebtedness 
"between  firm  and  firm,  and  it  was,  doubtless,  intended  to  be  fol- 
"  lowed  by  execution  ;  but  when  we  subject  the  joint  effects  to  seizure, 
"we  do,  perhaps,  all  that  was  contemplated.  That  the  adlion  was 
"considered  as  a  proceeding  between  firms  as  independent  bodies, 
"having  an  existence  distin6l  from  the  individuals  who  compose 
"  them,  seems  clear  ;  for  the  solecism  of  an  adlion  brought  by  a  man 
"  against  himself  for  the  purpose  of  self-execution,  could  scarcely  have 
"been  entertained  by  the  Legislature.  The  levy  was  therefore  prop- 
"erly  set  aside,  and  D's  separate  property  cannot  be  seized  until  the 
"accounts  are  taken  and  the  equities  settled  between  the  defend- 
"ants."    Tassey  v.  Church,  6  W.  &  S.  465,  Pa,  (1843). 

511 


ej52.  '^HK  Relation.  Pt.  2,  Ch.  ii. 

Firms  •icilh  a  common  member  may  sue  each  other  as  if  corpora- 
lioti^  A,  H  &  C,  were  indebted  to  C,  D  &  E,  on  account  stated.  A 
&  R  sued'c  I)  &'k  for  the  amount,  averring  that  C  was  not  joined 
as  plaintifT, 'because  he  refused  his  consent.  Defence:  Account  ne- 
cessaVv  to  determine  each  partner's  position.— Recovered.  "Let  the 
"debtor  firm  pay  its  debt,  and  the  creditor  firm  after  receiving  their 
"debt  adjust  their  individual  equities  among  themselves.  Equity 
"treats  a  co-partnership  firm  for  purposes  of  trial  as  an  artificial 
"body,  a  quasi  corporation."     Cole  v.  Reynolds,  i8  N.  Y.  74  (1858). 


§162, 


But  sucl)  firms  art  not  linutEi)  for  rciJresa  to  an  action  nnkr 
tl)c  statute;  tl)nj  man  still  resort  to  equitn.' 

The  difficulty,  however,  does  not  arise  from  pro- 
cedure, and  is  not  obviated  by  a  resort  to  a  remedy 
in  equity.  The  obstacle  is  equally  formidable  in 
equity.-  The  common  member  of  two  firms  must  be 
put  by  the  decree  in  one  firm  or  the  other. 

If  he  is  held  a  plaintiff,  he  may  be  the  debtor  in  the 
defendant  firm,  and  a  decree  might  enable  him  to  com- 
pel his  co-partners,  w^ho  are  alread}^  his  creditors  in 
the  defendant  firm,  to  pay  an  additional  debt  for  him. 
He  might  colle(5l  the  debt  out  of  their  separate  estate, 
or  he  might  turn  around  and  pay  it  himself  by  setting 
off  his  debt,  release  his  co-partners  defendants,  com- 
pound the  debt,  or  delay  its  colleAion,  at  his  discre- 
tion, and  the  only  redress  of  his  plaintiff  co-partners 
would  be  an  account. 

If  he  is  made  a  defendant,  he  is  excluded  from  the 
plaintiff  firm  by  his  co-partners,  although  he  is  enti- 
tled to  a  share  of  its  property  and  to  a  joint  control 
in  the  business.  He  is  compelled  to  pay  his  co-part- 
ners in  the  plaintiff  firm,  not  their  quota  of  the  claim, 

512 


Pt.  2,  Ch.  II.  The  Relation.  §163. 

but  the  whole  amount,  which  is  more  than  they  could 
receive  if  it  was  his  individual  debt.  They  might 
collect  all  from  him ;  they  might  seize  and  sell  his 
separate  estate  to  pa}^  the  debt.  He  might  be  a  cred- 
itor of  his  co-partners,  and  yet  they  would  coUedl 
more  out  of  him  instead  of  setting  off  what  they  owed 
him  in  payment  of  the  claim. 

I.  If  a  decree  against  his  co-partners  for  a  misappro- 
priation of  the  assets  to  their  separate  debts  would  set- 
tle and  close  up  the  firm  transa6lions,  the  court  will 
dispose  of  the  case,  although  the  mutual  rights  of  the 
wrong-doing  partners  in  respecft  of  the  contribution  to 
the  payment  of  this  decree,  are  left  unadjusted  for  a 
subsequent  bill.'' 

a.  Suit  ill  equity  between  firm  witli  a  common  member  not  superceded 
by  statutory  remedy.  Firm  of  B  &  C  dissolved,  and  new  firm  of  A, 
B  &  C  formed.  Without  A's  consent  the  assets  of  the  new  firm  were 
applied  by  B  &  C  to  the  payment  of  the  debts  of  the  old  firm  of  B  &  C. 
A  brought  a  bill  against  B  &  C  for  his  share  of  the  sum  misappro- 
priated. The  transa6lions  of  both  firms  had  been  closed,  and  the  ac- 
count settled.  This  suit  involved  the  only  unsettled  item. — Decree: 
"Prior  to  A61,  14  April,  1838,  the  firm  of  A.  B  &  C  could  not  have 
"maintained  an  adlion  against  the  firm  of  B  &  C.  The  appropriate 
"  remedy  of  A  would  have  been  a  bill  to  account.  *  *  *  Until  either 
"  B  or  C  pay  this  debt,  for  which  they  are  jointl}-  and  severally  liable, 
"what  they  respedlively  owe  each  other,  cannot  be  ascertained  and 
"  settled.  The  A(5l  of  1838,  which  gave  the  remedy  at  law,  could  not 
"take  away  the  previously  existing  remedy  in  equity."  Wentworth 
v.  Raiguel,  9  Phila.  275  (1873);  s.  c.  Raiguel's  Appeal,  50  vSmith  234, 
Pa.  (1876). 

2.  Article  entitled  :  "  Suits  Between  Firms  with  a  Common  Member. " 
5  Am.  Law  Rev.  47  (1870). 

Partner  in  two  firins  makes  dissolution  condition  of  an  account. 
A  &  B  brought  bill  against  A  <S:  C  to  enforce  of  a  bill  of  exchange 
made  to  plaintiff  by  defendants. — Dismissed.  Account  between  firms 
would  not  disclose  A's  standing  with  both  B  and  C.  If  A,  the  debtor 
in  defendant  firm,  he  shouldn't  collect  what  he  owes  from  C  by  means 
of  association  with  B  ;  nor  if  debtor  in  plaintiff  firm  should  he  receive 
what  belongs  to  B.  Equity  does  nothing  by  halves,  and  account  in- 
volves dissolution.  Rogers  V.  Rogers,  5  Iredell's  Eq.  31,  No.  Car.  (1847). 


§1B3. 

Qll)c  equities  of  eact)  inliiDibual  plaintiff  or  befeni)aut  must  be 
astertaineb  aub  tuorkeb  out,  altl)ougl)  tl)is  innobes  a  dissolution 
of  boll)  firms. 

513 


§163.  The  Relation.  Pt.  2,  Ch.  ii. 

The  first  thing  to  find  out  is  what  each  partner  is 
entitled  to.  Other  equities  than  an  account  between 
the  firms  are  involved.  The  creditor-firm  might  be  in- 
debted to  the  common  member.  He  should  not  then 
pay  over  an  additional  sum,  and  increase  the  firm's 
delDt  to  him,  but  set  off  his  claim.  The  debtors  may 
not  owe  the  debt  in  equal  amounts,  or  the  creditors 
be  entitled  to  equal  parts  of  it.  A  settlement  of  the 
accounts  between  the  partners  of  each  firm  must  be 
made ;  but  a  general  account  cannot  be  taken  without 
dissolving  the  firm.  The  balance  of  account  shifts 
until  the  ultimate  balance,  upon  a  disposition  of  all 
the  assets,  is  ascertained.  If  the  firm  be  regarded  as 
a  person,  the  remedy  would  avail,  as  the  common 
member  would  be  identified  with  either  firm,  and  his 
equities  would  enure  to  it,  and  his  liabilities  could 
not  be  severed  from  it  and  enforced  apart  by  an  exe- 
cution against  his  separate  estate.  If  any  settlement 
short  of  a  dissolution  is  made,  all  the  courts  can  do  is 
to  omit  an  adjustment  between  the  partners  and  let 
the  plaintiff  firm  proceed  against  the  defendant's  firm 
assets  alone.' 

If  a  succeeding  firm  pays,  at  request,  the  debts  of 
a  prior  firm,  and  then  sues  for  reimbursement,  it 
would  be  subrogated  to  the  rights  of  the  creditors 
whom  it  had  paid.  But  suppose  there  was  a  common 
member  of  both  firms  and  no  subrogation.  The 
plaintiff  would  be  restrided  to  the  firm  assets,  so  far 
as  the  common  member  was  concerned.  Would  he 
be  entitled  to  go  against  the  separate  estate  of  the 
other  partner?  A  &  B  are  succeeded  by  B  &  C  upon 
A's  death.  A  was  indebted  to  A  &  B,  $12,000.  B 
was  indebted  to  A  &  B,  $36,000.    B  &  C  sued  A  & 

514 


Pt.  2,  Ch.  II.  The  Relation.  §163. 

B  for  money  lent.  If  the  plaintiffs  sought  to  treat 
A's  debt  of  $12,000  as  an  asset  of  his  firm,  could  they 
enforce  its  colle6lion  until  B  had  paid  his  debt  of 
$36,000?  Could  not  A's  representatives  set  off  this 
debt  against  $12,000  of  B's  debt,  and  claim  that  A 
owed  his  firm  nothing?  This  is  the  Scotch  plan, 
which  has  been  unconsciously  applied  in  Pennsyl- 
vania.^ If  the  common  membership  of  B  in  both 
firms  would  prevent  any  recovery  against  his  sepa- 
rate estate,  the  answer  is,  that  what  he  owes  his  firm 
is  joint,  or  partnership  assets,  and  not  his  separate 
estate.  It  is  not  the  balance  after  deducing  what  A 
owes  the  firm  ($12,000),  or  $24,000,  but  both  debts  of 
the  partners,  or  $48,000,  which  are  the  firm  asset. 
If  B's  debt  could  not  be  colle(5led,  then  A's  debt, 
which  involves  the  same  adjustment  of  accounts, 
could  not  be  collected  by  the  firm  to  repay  its  debt. 
Although  McCormick's  Appeal  makes  the  debt  of 
each  partner  to  his  firm  partnership  assets,  yet  that 
notion  confli(5ls  with  the  refusal  of  the  courts  to  settle 
the  partners'  accounts  in  suits  between  firms  with  a 
common  member.  The  Scotch  plan  is  inconsistent 
with  the  principle  which  prohibits  any  collection  of 
claims  between  the  joint  and  separate  estates  upon  in- 
solvency, and  which  is  based  upon  the  impossibility  of 
settling  the  partner's  accounts  without  a  dissolution 
of  the  firm.  All  the  courts  could  do  was  to  omit  ad- 
justment between  the  partners,  and  let  the  plaintiff 
proceed  against  the  firm  assets  alone.  By  Judge  Ag- 
NEw'S  theory,  the  firm  assets  are  made  to  depend  upon 
the  partner's  accounts,  and  then  the  plaintiff  cannot, 
logically,  touch  even  firm  assets. 


515 


i 


^j5^  The  Relation.  Pt.  2,  Ch.  ii. 

,  A',,  suit  behiurn  firms  zcit/i  common  ^nember  A  &  B,  partners  as 
<;liin  carpenters  repaired  a  ship  owned  by  B  &  C.  B  failed  and  as- 
signed liis  share  to  C,  releasing  all  interest  in  this  claim  to  A,  who 
su-dBSiC  C's  defence:  When  B  relinquished  to  C  one-half  interest 
tn'ship^ie  agreed  to  repair  ship.  His  knowledge  of  this  duty  con- 
structix'e  notice  to  his  partner  A,  and  negatived  a  promise  by  C  to 
mv  — hulmnent  for  C.  Notwithstanding  assignment,  C  may  treat 
thi's'as  a  partnership  claim  of  A  &  B,  admit  liability  of  B  &  C  as  co- 
owners  to  A  &  B ;  then  A  might  make  C  party  to  aclion  for  account 
airaiust  B  and  make  C  liable  for  any  balance  due  on  the  account  to 
the  extent  of  the  cost  of  the  repairs.  But  this  is  simply  an  aclion 
of  debt  bv  one  firm  against  another,  and  yet  necessarily  raises  equi- 
ties between  the  parties.  If  inequitable  that  B  should  colledl  this 
monev  from  C,  A  cannot  claim  through  B.  A's  objection  that  C 
could'not  set-off  claim  for  want  of  mutuality  met  by  A's  incapacity 
to  sue  on  firm  claim  on  account  of  common  member.  In  equity 
A  must  show  that  this  money  is  due  B  on  settlement  of  account  be- 
tween B  ii:  C.  A  might  show  that  B  improperly  withdrew  money 
from  A  isL  B,  and  Equity  would  marshal  assets,  but  no  such  case 
proved.     Englis  v.  Furnis,  4  E.  D.  Smith  5S7,  N.  Y.  (1855). 

2.  Partner's  debt  to  his  firm  is  a  firm  asset  on  insolvency.  A  &  B  were 
partners.  B  died,  and  soon  after  A  made  an  assignment  of  all  the 
firm  property  for  the  benefit  of  its  creditors.  The  assignee  claimed 
against  B's  administrators  for  116,790.13,  the  amount  he  owed  the 
firm.  A  was  also  indebted  to  the  firm  to  the  amount  of  $11,204.68. 
Both  A  and  B,  as  well  as  the  firm,  were  insolvent. — The  debt  of  the 
partner  to  the  firm  is  a  firm  asset  for  which  he  must  account  to  his 
co-partner,  who  would  first  dedudl  his  own  debt  to  the  firm,  and 
claim  one-half,  $2,792.72>^,  the  balance  of  $5,585.15  as  due  on  account 
of  his  share  of  the  firm  assets.  McCormick's  Appeal,  5  Smith  252, 
Pa.  ( 1 866). 


§164. 


iLl]c  effect  of  alloiDmg  a  single  person  to  tra^e  as  a  partner 
in  i)itTcrent  firms  is  to  acknoiuletige  tiifferent  capacities  in  a  single 
inlnniLiual. 

But  the  tenet  of  the  Common  law  was  the  indivisi- 
bility, not  the  divisibility,  of  a  person.  A  capacity 
was  recognized  only  when  it  was  embodied  in  a  per- 
son. 

Ill  tlie  main  business  of  partnership  the  Common 
law  adhered  to  this  position,  which  could  not  be  as- 
saulted in  front,   and   had  to  be  turned  by  a  flank 

516 


Pt.  2,  Ch.  II.  The  Relation.  §164. 

movement.  It  has  been  shown  that  the  firm  estate 
served,  under  the  tradition  of  the  Common  law,  as  an 
equivalent  for  the  separate  capacities  of  partners  (§5, 
103) .  So,  in  this  minor  point  of  partnership,  as  the  law 
is  now  developing,  the  common  member  is  acquiring 
distindl  capacities  by  means  of  the  different  business 
enterprises  in  which  he  is  engaged.'  This  applies 
only  to  cases  in  which  the  two  lirms  are  not  composed 
of  entirely  the  same  members. 

Partnership,  from  its  origin,  has  been  considered  a 
relation  of  persons,  and  comprehends  the  total  capacity 
of  each  partner.  No  restriction  can  be  imposed  upon 
his  power,  for  he  enters  into  the  partnership  as  a  man, 
and,  as  such,  he  is  an  individual  who  cannot  be  sev- 
ered into  parts.  As  he  cannot  divide  himself  into 
sections,  he  is  unable  to  trade  in  different  capacities, 
and  must  enter  into  partnership  as  a  unit,  or  not  at 
all.  The  delegation  of  authority  is  absolute,  and 
cannot  be  restri6led  by  any  contra(?t  between  the  part- 
ners. Hence  there  cannot  be  two  partnerships  com- 
posed of  the  same  partners.  The  fa6l  that  each  busi- 
ness is  distinct,  that  it  is  carried  on  in  a  locality  apart, 
and  has  no  dealing  with  the  other,  does  not  make  any 
difference."  Three  partners  might  conduct  a  hotel  in 
Philadelphia,  and  might  also  be  cotton  factors  in  New 
Orleans;  each  partner  could  exert  the  powers  of  all, 
and  bind  the  firm,  in  spite  of  any  allotment  of  the 
partners  to  either  business.  The  distribution  of  func- 
tions would  be  a  domestic  arrangement  which  could 
not  affedl  strangers.  The  two  trades  could  not  be 
kept  apart  without  dividing  the  capacity  of  each  part- 
ner, and  apportioning  the  fragments  to  each  business. 
As  the  capacity,  like  its  possessor,  is  indivisible,  the 

517 


§164.  The  Relation.  Pt.  2,  Ch.  ii. 

different  trades  are  consolidated  into  an  aggregate 
business,  and  any  partner  may  disregard  the  sub- 
divisions, which  cannot  tramel  his  powers,  for  they 
are  co-extensive  with  the  undertaking. 

Thus  a  banker's  general  lien,  if  the  firm,  com- 
posed of  the  same  members,  embraces  distin(51:  houses 
alike  in  name,  extends  to  the  securities  pledged  with 
each  house;  though  if  the  firms  vary  in  name,  the 
implication  of  separate  control  must  be  rebutted  by  a 
convention  expressed,  or  if  tacit  based  upon  full 
knowledge  of  the  relation,  in  order  to  create  an  ulte- 
rior general  lien.' 

A  partnership  within  a  partnership,  or  collateral  to 
it,  has  less  pretension  to  independence,  or  to  recogni- 
tion.^ Should  some  of  the  partners  in  the  coal  busi- 
ness constru61;  and  run  a  railroad,  would  each  business 
be  kept  apart,  or  would  both  be  consolidated  into  a 
single  business?  Let  the  original  firm  consist  of 
three  partners,  then  let  the  firm  join  in  the  new  busi- 
ness as  one  party,  with  one  of  the  members  as  the  other 
party.  How  are  the  parts  to  be  distributed  in  the  new 
business?  Would  the  terms  of  the  original  partner- 
ship be  extended  to  the  new  enterprise,  and  regulate 
both  as  departments  of  a  common  undertaking?  The 
shares  might,  by  the  original  plan,  be  equal,  but  the 
new  arrangement  would  give  the  individual  member 
a  share  of  one-half  as  a  party,  and  also  one-third  of 
the  other  half,  as  a  partner  in  the  firm,  which  entered 
as  a  single  party  into  the  new  business.  Nothing 
would  prevent  both  plans  of  distribution  from  taking 
effecfl  between  the  partners,  but  this  domestic  arrange- 
ment would  not  prevent  a  consolidation  of  the  firm. 


518 


Pt.  2,  Ch.  II.  The  Relation.  §164. 

Each  partner  would  have  power  to  bind  his  co-part- 
ners in  either  branch  of  the  business. 

It  has  been  asserted  that  the  creditor's  equity  at  the 
Civil  law  was  a  jits  separationis.  They  might  insist 
that  the  stock  of  each  business  should  be  kept  to- 
gether as  a  whole,  iinivcrsitas  rermn^  and  that  the 
debts  should  be  paid  .out  of  the  assets."^  But  the  in- 
stances in  the  Digest  of  a  contest  between  different 
classes  of  creditors,  related  to  slaves  and  sons  under 
paternal  power  who  were  allowed  to  do  business  on 
their  own  account.  If  either  carried  on  distindl 
trades,  the  creditors  of  each  business  could  insist 
upon  a  severance,  and  demand  satisfadlion  out  of 
the  stock  to  which  they  gave  credit. **  No  credit  could 
l3e  given  to  the  person,  and  therefore,  the  creditors' 
only  reliance  was  upon  the  fund.  The  stock  was  ap- 
plied as  an  aggregate  to  the  total  indebtedness.^ 

The  reason  is  obvious,  if  Ulpian  had  not  stated  it. 
The  price  of  the  stock  is  unpaid.  Until  an  equiva- 
lent for  it  has  been  rendered,  no  stranger,  though  he 
is  also  a  creditor  of  the  debtor,  has  any  equity  to  ap- 
propriate the  stock.  His  claim  is  legal  and  against 
the  person  of  his  debtor,  but  not  equitable  and  against 
the  fund.  The  liabilit}'-  of  the  debtor  to  him  exists, 
but  the  merchandise  which  he  endeavors  to  seize  was 
not  the  produ6l  of  his  credit,  but  of  the  credit  given 
by  another.  The  equity  goes  to  the  substance  of  the 
transadlion,  the  liability  stays  in  the  form. 

I.  Equity  admits  a  suit  between  firms  with  a  comition  member  with- 
out a  general  accounting.  B  &  C  were  indebted  to  A  &  B.  A,  sur- 
viving and  liquidating  partner  of  A  &  B,  offered  to  prove  in  bank- 
ruptcy against  B  &  C. — Allowed.  By  reason  of  A's  independent 
right.  The  firms  are  treated  as  distindl  persons.  In  re  Buckham,  lo 
Nat.  Bank  Rep'r  20  5  (1874). 

Discharge  iti  bantiruptcy  for  firm  and,  separate  liabilities  does  not 
release  common  member  from  debts  of  another  firm.     B  was  a  part- 

519 


§165.  The  Relation.  Pt.  2,  Ch.  ii, 

iier  in  two  firms,  B  &  C  aud  B  &  D.  The  firm  o£E  &  D  filed  a  petition 
in  bankruptcy  to  be  relieved  from  their  debts,  firm  and  individual, 
and  were  discharged.  A  then  brought  an  adtiou  against  B  &  C  on  a 
bill  accepted  by  them.  B  pleaded  his  discharge.  Judgment  for  B. — 
Reversed.  B's  discharge  did  not  release  him  from  liability  as  a  mem- 
ber of  firm  of  B  &  C.    Perkins  v.  Fisher,  80  Ky.  11  (1882J. 

2.  Siiutt'  partners  doitig  business  at  different  places  under  different 
names,  remain  one  firm.  Two  brothers,  B  &  C,  traded  in  London, 
as  their  father's  Sons,  and  in  Oporto,  Portugal,  as  Brothers.  Bills 
drawn  by  the  Brothers,  and  accepted  by  the  Sons,  were  proved  against 
the  Portugal  firm  by  the  holder.  Claim  :  The  contracts  were  distincfl, 
as  each  firm  could  be  held  upon  its  oyvn. — There  were  no  two  firms, 
but  only  one  firm  doing  business,  under  two  names,  at  different 
places.  Ex.  parte  Banco  de  Portugal,  11  Ch.  D.  317  (1879);  Banco  de 
Portugal  v.  Waddell,  5  App'l  Cas.  161  (1880). 

3.  Hanker  s  general  lien  covers  collaterals  pledged  with  the  firm  trad- 
ing under  a  different  name  in  another  locality.  B  pledged  collaterals 
with  C,  D  &  E,  bankers,  in  Philadelphia,  trading  as  C  &  D,  for  a 
loan.  B  also  pledged  other  collaterals  for  another  loan  with  them  in 
New  York,  where  they  traded  as  C,  D  &  E.  The  proceeds  of  the  col- 
laterals with  C  &  D  in  Philadelphia  exceeded  the  debt  by  1:55,000; 
proceeds  of  collaterals  with  C,  D  &  E,  in  New  York,  fell  short  of 
debt,  $57,000.  C  &  D,  with  B's  knowledge  and  assent,  mingled  the 
securities,  and  afterwards  sold  them  all  for  the  aggregate  debt.  A, 
assignee  in  bankruptcy  of  B,  brought  bill  against  C  &  D,  inter  alia, 
to  recover  surplus  value  of  the  securities  in  Philadelphia  over  the 
amount  of  the  Philadelphia  loan. — Claim  disallowed.  Sparhawk  v. 
Drexel,  i  W.  N.  560,  Pa.  (1875). 

4.  Part  cannot  prove  in  bankruptcy  against  the  whole.  B,  C  &  D, 
partners  in  Toronto,  trading  as  B  &  C,  sold  goods  to  A,  B,  C,  D  &  E, 
trading  as  E  &  Co.,  at  Syracuse,  and  drew  on  E  for  the  price.  E  ac- 
cepted, and  an  understanding  was  proved  that  E  &  Co.  should  pay 
the  acceptance.  A  discounted  the  paper  for  B  &  C,  and  took  an  as- 
signment of  their  claim  against  E  &  Co.  A  oflfered  to  prove  for  the 
acceptance  against  the  estate  of  E  &  Co.  in  bankruptcy. — Disallowed. 
Could  not  prove  on  the  acceptance,  because  not  in  firm  name.  Could 
not  prove  on  the  assignment  of  B  &  C's  claim,  because  all  the  mem- 
bers were  partners  with  E  in  E  &  Co.  In  re  Savage,  16  Nat.  Bank 
Rep'r  368  (1878). 

5-     Dig.  14,  4,  5,  16. 

6.  The  actio  tributoria  furnished  the  means  to  enforce  the  severance. 
^  Cours  de  Droit  Romain,  par  Charles  Maynz,  Professeur  de  droit  a 

I'Universite  de  Liege,  4eme  edition,  1877,  \  111,  No.  5. 
14  fyiiicf'  276-8. 

7.  HiJRLEMANN,  supra  \\o\,  n.  3. 


§165.  \ 

^  partner,  in  l)is  boublc  position  of  proprietor  anb  creditor 
of  tl)e  firm  funti,  Ijas  a  priority  oBcr  Ijis  co-partners  for  I)i3 


520 


Pt.  2,  Ch.  II.  The  Relation.  §165. 

Each  partner  has  a  lieu  on  the  firm  assets  for  any 
advance  he  has  made  to  the  firm,  or  for  any  outlay  on 
its  behalf.'  From  his  position  he  cannot,  stri6lly 
speaking,  be  a  creditor  of  his  co-partners;  his  ad- 
vances and  outlays  cannot  be  recovered  until  the 
account  between  them  has  been  stated,  and  if  the 
assets  of  the  firm  are  absorbed  by  the  debts,  he  has 
only  a  right  against  his  co-partners  for  contribution, 
and  not  for  reimbursement  of  the  entire  amount  ad- 
vanced. Inasmuch  as  he  has  no  claim  against  his  co- 
partners for  repayment  in  full  of  his  advances,  or 
outlay,  at  all  events,  the  portion  which  represents  his 
share  is  put  at  the  risk  of  the  business,  and  in  conse- 
quence he  may  stipulate  against  his  co-partners  and 
the  firm  fund  for  any  rate  of  interest,  without  incur- 
ring the  penalties  of  usury."  Upon  distribution,  he  is 
entitled  to  priority  for  the  full  amount  of  the  advance 
or  outlay  before  anything  can  be  awarded  to  the  part- 
ners on  account  of  their  shares  in  the  firm  property.^ 
In  relation  to  the  firm  fund,  therefore,  his  claim  is  as 
much  a  debt  of  the  firm,  although  deferred,  as  is  the 
claim  of  a  third  person;  his  lien  stands  upon  the  same 
footing  as  the  lien  of  an  ordinary  firm  creditor.^  In 
addition,  however,  to  the  rights  of  a  creditor,  he  may 
exercise,  in  his  own  behalf,  his  right  as  a  partner,  to 
apply  the  firm  assets  to  the  payment  of  his  firm  debt. 

1.  Partner  has  lien  on  firm  assets  for  advances  to  firm,  but  none  for 
advances  to  co-partner.  A  lield  title  for  himself,  B,  C  &  D,  of  a 
quarry,  which  was  sold  out  under  a  mortgage.  Sheriff  held  surplus 
of  |4,ooo  for  distribution.  A  sought,  by  bill,  reimbursement  of  his 
advances  to  firm,  and  also  for  advances  to  B,  used  in  the  firm.  De- 
fendants, attaching  creditor  of  B  and  his  assignee. — A  recovered  his 
advances  to  firm,  but  had  no  equitable  lien  on  B's  interest.  Hill  v. 
Beach,  i  Beas.  31,  N.  J.  (1858). 

2.  Partner' s  promise  to  pay  for  withdrawals  interest  in  excess  of  legal 
rate  not  usurious.  A,  B  .S:  C,  partners,  contributed  $10,000  each  to 
banking  capital,  stipulating  for  6^2  per  cent,  interest,  and  agreeing 

521 


§i66.  The  Relation.  Pt.  2,  Ch.  ii. 

to  pay  10  per  cent,  on  average  overdralts  if  allowed  during  partnership. 
C  overdrew  for  550,000.  and  belore  his  death  the  notes  and  renewals 
were  charged  up.  He  gave  A  as  trustee  for  firm,  his  bond  and  mort- 
gage for  amount  with  10  per  cent,  interest.  A  foreclosed.  Defence: 
l^'siiry.— Decree.  Not  a  loan,  payable  absolutely;  but  profits  contin- 
gent upon  risk  of  business  discounted.  The  advance  by  or  to  partner 
not  a  loan  or  debt.  Selllement  subjedl  to  state  of  firm  accounts.  If 
profits  exceed  rate  of  10  per  cent,  partner  pays  nothing,  if  less,  he 
pays  10  per  cent.  He  chances  the  risk.  A's  withdrawal  deprives 
partners  of  fund  whicn  makes  profits.  He  guarantees  stipulated 
amount  and  insures  them  a  certain  amount  of  gain  against  a  loss  of 
capital.  The  notes  and  renewals  were  forms  of  banking  business, 
but  did  not  affe6l  characfler  of  advance ;  mortgage  security  for  amount. 
Payne  v.  Freer,  91  N.  Y.  43  (1883). 

3.  luterest  on  overdrafts  by  partner  not  allowed  until  dissolution.  A 
&  H  nianufa6lured  steel  from  1854  to  1874,  and  owned  mills,  ma- 
chinery and  real  estate.  On  A's  death,  his  executrix  brought  ac- 
count. IMaster  allowed  interest  on  over  advances  to  B,  172,400,  after 
dissolution,  but  no  interest  until  dissolution. — Affirmed.  Overdrafts, 
perhaps,  not  made  with  A's  knowledge,  as  account  unsettled.  After 
dissolution,  B  should  have  settled  accounts,'  and  is  charged  with  in- 
terest     Buckingham  v.  Ludlam,  2  Stew.  345  E.  A.,  N.J.  (1878). 

4.  Advance  by  partner  to  firm  carries  interest  without  express  agree- 
ment. A,  a  railroad  contraAor,  construdled  a  road  in  partnership 
with  B,  an  engineer.  Thev  had  no  capital,  and  relied  on  loans  for 
temporary  means.  They  were  paid  in  bonds,  stock  and  cash.  A  ad- 
vanced 590,000  for  firm,  with  B's  knowledge,  and  the  master  allowed 
interest  on  the  advance.  B  objeAed  to  allowance,  and  charged  A 
with  loss  caused  by  negotiating  bonds  for  firm. — Interest  allowed 
without  agreement  for  advance  by  partner,  and  no  charge  for  exer- 
tion of  discretion  in  selling  firm  assets.  Morris  v.  Allen,  i  McCart. 
Ch.  44,  N.J.  (1S61). 

Partner  entitled  to  interest  on  advance  to  firm,  and  may  mingle 
firm  Jitnds  loilli  his  Oivn  if  no  loss  results.  A  contributed  |i,ooo,  and 
B  jhe  rest  of  the  capital,'  to  build  a  State  prison.  B  also  advanced 
527.064  for  firm  use,  and  deposited  the  funds,  with  his  own,  in  bank. 
A  brought  account.  B  claimed  interest  on  his  advance  — Allowed. 
Mingling  firm  and  individual  funds  presumably  with  A's  knowledge, 
and  paused  no  loss.     P.arker  v.  Mayo,  129  Mass.  517  (1880). 

Uhler  V.  Semple,  supra  ^112,  n.  6. 


§1B6, 


<i:!}c  conBcrsiou  brj  a  partner  of  firm  propertn  to  liig  onm  use 
is  a  frauLi  upon  l)is  co-partners,  anb  entitles  tl]em  to  recocer  from 
l]is  separate  estate  tl)e  amount  abstractet).' 

^  As  the  embezzlement  i.s  equivalent  to  stealing,  a 
bill  in  equity  would  lie,  to  compel  restitution.'    The 


522 


i'T.  2,  Ch.  II.  The  Relation.  §i66. 

separate  estate  need  not  be  increased  by  the  tort. 
The  funds  might  have  been  lost  in  stock  speculations. 
The  partner  would  have  been  relieved  by  the  ex- 
tinguishment of  his  debts,  and  have  received  a  benefit 
from  the  diversion  of  firm  assets.  But  though  he  had 
given,  or  thrown,  them  away,  the  right  of  dominion, 
which  he  exerted,  was  sufficient  to  charge  him  with 
the  tort.  The  stealing  was  the  wrong,  without  refer- 
ence to  the  purpose  for  which  the  a6l  was  committed, 
or  the  subsequent  disposition  of  the  property  stolen. 
The  increase  of  an  estate  by  means  of  a  tort,  is  a  rea- 
son to  charge  a  stranger  who  shares  the  estate.^  No 
reason  is  necessary  to  charge  the  tort-feasor  himself. 
The  a6l  which  he  committed  establishes  his  guilt,  and 
any  collateral  argument  is  surplusage.^ 

1.  The  employment  of  firm  funds  in  traiisa6lions  which 
do  not  form  part  of  the  business,  amounts  to  a  conver- 
sion.'* 

a.  Partner's  employment  of  firm  capital  in  a  new  partnership  which 
he  forms  for  his  firm  with  a  third  person,  charges  the  partner  for  a 
conversion  of  the  fund  to  his  own  use.  A  contributed  |6,ooo  and  B 
^4,000,  to  buy  and  sell  cotton.  B  went  to  Memphis,  but  not  finding 
any,  formed  a  partnership  on  account  of  A  &  B,  though  without  A's 
knowledge,  with  C,  a  cotton  buyer,  and  gave  him  |;ig,ooo  to  buy  in 
Arkansas.  C  sent  back  word  that  he  had  been  robbed  by  the  Con- 
federates. B  returned,  and  paid  A  f  1,000,  and  he  sued  B  for  |^5,ooo. 
Verdi6l  for  A. — Judgment  affirmed.  B's  entering  into  partnership 
with  C,  and  giving  him  the  firm  capital,  amounted  to  a  conversion 
of  it  to  his  own  use.     Reis  v.  Hellman,  25  Ohio  St.  180  (1S74). 

2.  An  injun(5lion  will  lie  to  prevent  the  partner's  fraudu- 
lent removal  of  firm  stock.'' 

a.  Fraudulent  removal  of  stock  by  co-partner  ground  for  injunBion, 
not  for  arrest.  A  asked  for  order  of  arrest  against  his  co-partner,  B, 
upon  affidavits  showing  fraudulent  removal  of  goods. — Refused. 
Remedv,  injundlion  and  receiver.  Cary  v.  Williams,  i  Duer  667,  N. 
Y.  (1S53). 

3.  A  stranger  who  cooperates  with  a  partner  in  efie6ling 
the  conversion,  is  jointly  liable  for  the  wrong.* 

No  one  can  dispute  the  firm's  right  but  a  purchaser 
for  value.  A  volunteer  must  account  for  the  property, 
and  for  its  proceeds.'' 

523 


§j(,-  The  Relation.  Pt.  2,  Ch.  ii. 

a.  Wailc  V.  Rusher,  sit/>r(7  I  140,  n.  3. 

b.  I'irm  funds  used  bv  partner  followed  into  his  investments.  A,  B, 
C  &  n  cneaj^ed  in  leather  business.  D  kept  books,  and  was  firm 
financier.  On  his  death,  co-partners  discovered  that  he  had  a])pro- 
priated  i«io3,o<x)  firm  assets.  He  bought  lands,  and  put  title  in  his 
wife.  lie  insured  his  life  lor  |;40,ooo,  and  assigned  the  policy  to  her. 
A  H  iS:  C  charged  widow,  as  trustee. — She  claimed  insurance,  and 
re-tendered  premiums. — Trustee  ex  7naleficio.  Assignee  paid  no  con- 
siileration,  and  stood  in  D's  shoes.  vShaler  v.  Trowbridge,  i  Stew. 
595.  N- J-  (i«77)- 

4.  Ill  a  banking  firm,  the  city  and  managing  partner  took 
firm  a.ssets,  and  lost  them  in  stock  speculations.  The 
firm  creditor  sought  to  recover,  in  equity,  from  his 
separate  estate,  for  this  diversion  of  partnership  funds. 
The  abstractions  were  concealed,  and  not  entered  in  the 
firm  books. ^ 

a.  Partner's  abslraclion  and  use  of  firm  funds,  without  authority,  in 
stork  speculation  charc^ed  against  his  separate  estate.  Clerk's  knowl- 
edge not  notice  to  co-partner.  B,  banker,  took,  in  i860,  A  into  busi- 
ness. .\  contributed  no  capital,  had  no  experience,  and  took  no  part 
in  the  management.  B  abstracted  firm  funds,  to  pay  losses  in  stock- 
speculation,  and  concealed  his  thefts  by  fictitious  entries  in  the  books. 
In  1.S70,  B  committed  suicide.  A  being  bankrupt,  his  trustee  proved 
on  behalf  of  A  &  B's  joint  estate,  against  B's  separate  estate.  De- 
fence :  Separate  estate  not  increased  by  B's  thefts,  and  clerk's  knowl- 
edge of  entries  notice  to  A. — .\llowed.  Separate  estate  exonerated 
from  liability  by  fraudulent  payments  out  of  joint  assets,  and  clerks 
not  likely  to  communicate  to  A  items  direcled  by  managing  partner.j 
Lacey  v. 'Hill,  4  Ch.  D.  237  (1876) ;  s.  c.  3  App.  Cas.  94  (1877). 


I 


U67. 


^  partner  ml]a  appropriates  firm  assets  for  1)13  mbicibnalU 
account,  cominits  aw  act  U)l)icl)  is  ul/ra  vires. 

The  a6l  iu  excess  of  his  authority  created,  it  waj' 
thought,  a  right  in  his  co-partner  to  recover  a  nioiet); 
by  a  separate  a6lion.  The  injury  was  outside  of  th( 
partnership,  and  against  his  co-partner,  as  an  indi 
vidual.  The  acl  effected, /r^  laiifo^  a  dissolution,  anc 
the  co-partner,  as  a  tenant  in  common,  had  an  indi 
vidual  right  of  adion.'    The  tort,  however,  is  agains; 

524 


Pt.  2,  Ch.  II.  The  Relation.  §167. 

the  firm,  and  is  not  a  separate  injury  against  the  co- 
partner. 

The  theory  of  a  tenancy  in  common,  or  of  several 
titles  in  the  partners,  at  first  mystified  the  remedy. 
The  partners  were  required  to  join  their  titles  in  order 
to  maintain  an  adlion.  A  barrier  presented  itself  in 
the  partner  who  committed  the  wrongful  a6l.  He 
could  not  take  advantage  of  his  own  wrong,  and 
bring  a  suit  to  avoid  his  a6l.  Without  his  joinder, 
the  a(5tion  would  not  lie.^ 

The  attack,  however,  was  made  upon  the  firm,  and 
its  title,  if  impeached,  could  be  reinstated  by  any  repre- 
sentative of  the  firm.  The  joint  title  is  devested  only 
by  an  a(5l  performed  on  behalf  of  the  firm,  and  a  dispo- 
sition for  any  other  purpose  does  not  afife(fl  the  title. 
The  doctrine  of  estoppel  is  misapplied.  It  is  the  re- 
cipient of  firm  assets  who  is  estopped  by  thp  fraud, 
because  he  gives  no  consideration  for  them  to  the  firm, 
and  not  the  partner  who  made  them  over  to  him.*  The 
partner  reclaims  the  property  for  the  firm,  and  joins  in 
thea6lion  with  his  innocent  co-partner  for  conformity.* 

The  fa6l  that  the  partner  uses  the  firm  funds  to  sat- 
isfy his  separate  debt,  does  not  give  the  creditor  any 
right  to  retain  the  property.  He  can  acquire  a  title 
only  by  giving  a  consideration  to  the  firm.'^  Though 
all  the  partners  appropriated  the  firm  stock  to  their 
separate  debts,  the  concert  of  a(5lion  would  not  justify 
the  disposition,  or  devest  the  firm  title." 

The  technical  obstacle  is  removed  when  the  firm  is 
insolvent.  The  creditors  then  have  a  dire6l  remedy 
against  the  recipient.^  The  disposition  is  a  fraud 
upon  them.     The  assignee  for  creditors  also  repre- 


525 


^lO;.  '^'"^'  Relation.  Pt.  2,  Ch.  n. 

sents   tlicni,  and  may  recover  the  property  from  any 
alienee  who  cannot  make  out  a  title  from  the  firm. 

The  partner  is  also  liable  to  his  co-partner  for  his 
fraudulent  acl  in  misusing  the  firm  assets."  He  must 
reimburse  him  for  expenditures  caused  by  the  misap- 
propriation, and  compensate  him  for  any  injury  which 
the  business  may  sustain. 

I.  Money  paid  for  independent  elaini  out  of  finn  funds  recovered  in 
separate  ad  ions.  A  &  B  vi  ere  partners.  A  &  C  were  sureties  on  D's 
1)on(l.  C  (lied,  and  B  became  his  executor.  A  &  B  paid  the  bond 
out  of  firm  funds.  A  sued  D  for  moiety.  Defence:  B  should  join. — 
Recovered.  A  liable  at  law,  and  C's  estate  in  equity.  Quotas  pre- 
sumed equal,  and  payment  severed  according  to  liability  of  each.  No 
joinder  required  in  suit  for  moiety  at  law.  Gould  v.  Gould,  8  Cow. 
l68  (1S2S);  s.  c.  6  Wend.  263,  N.  Y.  (1830). 

A  partner's  use  of  finn  paper  for  his  individual  debt 
was  a  fraud  on  his  co-partners,  and  not  on  the  firm. 
They  must  sue  for  their  quotas  of  loss.  Dissent,  be- 
cause fraud  on  firm,  which  had  the  title  and  should 
sue.'' 

a.  Separate  creditors  taking  firm  note  from  debtor  partner  a  several 
fraud  on  co-partners  in  pioportion  to  their  shares.  A,  B,  C  &  D 
were  partners.  B  gave  to  E,  for  a  separate  debt,  his  individual 
note,  with  the  firm's  endorsement.  Bank  discounted  it  for  E.  Firm 
dissolved,  and  receiver  paid  the  bank.  A  &  F  bought  out  the  inter- 
ests of  B,  C  &  D,  and  took  from  receiver  an  assignment  of  the  estate 
in  his  hands.  A  &  F  sued  E  for  fraud. — ^Judgment  for  E.  His  fraud 
a  separate  injury  to  each  partner  in  proportion  to  his  share  in  the 
firm,  and  founds  no  joint  cause  of  a<5lion  in  favor  of  the  firm,  nor  of 
the  plaintiffs  as  assignees  of  the  firm. — Dissent:  E's  fraud  committed 
against  the  firm,  and  payment  by  receiver  gave  him,  as  trustee  for 
creditors,  a  cause  of  adlion,  which  passed  by  his  assignment.  Cal- 
kins V.  Smith,  48  N.  Y.  614  (1872). 

2.  If  a  partner  endorsed  the  receipt  of  his  claim  on  _ 
note  held  by  the  firm,  they  could  not  recover  without 
admitting  the  receipt.  The  partner  is  estopped  to  deny 
his  a6l,  and  his  estoppel  bars  a  joint  suit.'* 

a.  Credit  friven  for  individual  debt  on  note  to  firm,  is  payment  whicU 
cannot  recovered  back.  C  &  D  gave  a  note  to  A  &  B.  B  was  individu- 
ally indebted  to  C  &  D.  and  endorsed  a  receipt  of  his  debt  of  $700. 
on  the  note.  A  &  B  sued  for  the  full  amount— Could  not  recover,; 
unless  they  allowed  the  credit.  B,  as  co-plaintiff,  could  not  take  ad- 
vantage of  liis  own  wrong,  and  his  estoppel  bars  the  joint  suit*" 
Craig  V.  Hulschizer,  5  Vr.  363,  N.J.  (1871). 

Any  receipt  by  a  partner  would  bar  his  firm's  re- 
cover>-.     The  partner  could  not  be  co-plaintiff.** 

526 


Pt.  2,  Ch.  II,  The  Relation.  §167. 

b.  A  partner's  receipt,  given  for  a  debt  to  the  firm,  in  payment  of  his 
individual  debt  to  the  firm  creditor,  bars  the  firm  by  precluding  a 
joint  aBion  to  recover  the  claim.  B  owed  A  &  D.  A  gave  B  a  receipt 
for  his  debt  to  the  firm,  in  payment  of  a  debt  due  by  A  to  B,  for  gro- 
ceries. A  &  D  sued  B  in  assumpsit. — ^Judgment  for  B.  Any  relief  of 
the  firm  against  a  partner's  fraud  in  paying  his  individual  debt  with 
firm  assets,  must  be  in  equity  ;  he  cannot  be  a  co-plaintiff  at  law. 
Homer  V.  Wood,  ii  Cush.  62,  Mass.  (1853). 

3.  Fraudulent  receipt  given  by  one  of  two  trustees  to  a  joint  debtor  no 
bar  to  joint  suit.  A  &  B,  trustees,  sued  D  for  a  debt.  He  produced  a 
receipt  given  him  by  A.  Plaintiffs  proved  that  the  receipt  was  a  fraud 
onXhe  cestuy  que  trust,  aud  obtained  a  verdicfl.  Defence:  A  estopped 
by  his  own  fraud  as  much  when  co-plaintiff  as  if  sole  plaintiff.  Though 
D  is  equal  in  ^uiXt  potior  est  conditio possidetttis. — Verdicfl  sustained. 
D  the  party  estopped  by  his  fraud,  because  he  could  not  set  it  up 
against  B.  Receipt  is  only  prima  facie  evidence  of  payment.  Skaife 
V.  Jackson,  3  B.  &  C.  421  (1824). 

4.  If  a  firm  debtor  credited  the  debt  on  his  judgment 
against  the  partner  with  his  consent,  the  joint  title 
would  be  unajSfe(5led  by  the  credit,  and  the  firm  might 
recover.  ^ 

a.  Record  credit  of  firtn  claim  by  plaintiff  on  jtidgtn en t  against  part- 
ner no  bar  to  firm  aElion.  A  &  B  sued  C  for  merchandise.  C  had 
credited  his  debt  to  the  firm,  with  B's  consent,  upon  a  judgment 
against  B. — Action  sustained.  Misappropriation  void,  and  joint  title 
unaflFe6led.     Purdy  v.  Powers,  6  Barr  492,  Pa.  (1847.) 

If  a  partner  receipts  for  a  firm  claim  in  payment  of 

his  individual  debt,  the  firm  can  recover  in  spite  of  his 

receipt.     The  firm  title  is  not  aflfe(5led  by  the  receipt.'' 

b.  Payment  by  partner  of  his  separate  debt  <vith  partnership  receipt, 
no  bar  to  firm  assignee's  recovery.  B  owed  C  &  Co.  |ii2.o6  for  lum- 
ber. A,  C  &  Co.'s  assignee,  sued  B.  Defence:  Firm  receipt  given 
by  C  in  payment  of  his  individual  debt  to  B  for  groceries. — Recov- 
ered. C  could  be  co-plaintiff  to  reclaim  firm  title,  which  was  not 
affedled  by  his  attempt  to  appropriate  the  claim  to  his  individual 
debt.     Thomas  v.  Pennrick,  28  Ohio  St.  55  (1878). 

5.  The  firm  can  recover  assets  paid  in  satisfadlion  of  a 
separate  debt.  Although  the  separate  creditor  did  not 
know  of  the  firm's  title,  yet,  as  he  did  not  pay  a  con- 
sideration, he  acquired  no  title.'' 

a.     Geery  V.  Cockroft,  supra  ?iio,  n.  11. 

Amount  of  partner's  individual  note,  endorsed  by  firm 
creditor,  and  paid  back  through  his  endorsement,  not  a  set-off  against 
his  claim.  A  brought  account  against  his  co-partner,  B.  C  &  D, 
trustees  of  E,  sold  his  claim  against  A  &  B  to  F.  Against  the  claim  a 
firm  creditor  opposed  a  set-off".  C  &  D  had  received  A's  note,  payable 
to  their  order,  endorsed  it,  and  had  it  discounted  by  G,  a  bank.  A  had 
drawn  a  check  on  the  firm  deposit,  to  pay  the  note,  and  had  endorsed 
the  check  and  sent  it,  with  an  individual  check,  to  H  C  &  Co.  H, 
without  C  or  D's  knowledge,  endorsed  the  firm  check,  and  delivered 
it  to  G.     He  returned  the  note  to  A.     This  payment  of  A's  individual 

527 


§167.  The  Relation.  Pt.  2,  Ch.  n. 

debt  to  E's  estate  out  of  firm  funds  was  offered  as  a  set-off  against  F's 
claim.— Disallowed.  G,  and  not  C  &  D,  held  the  note,  and  received 
the  check  in  ])ayment.  G,  as  a  bona  fide  purchaser,  could  not  be  com- 
pelled lo  refund'  the  firm  assets,  lor  he  could  not  be  reinstated  after  he 
had  surrendered  the  note  and  released  the  endorsers.  They  did  not 
receive  the  firm  funds,  although  the  title  passed  through  them,  and  by 
the  payment  escape  only  a  contingent  liability.  Moriarty  v.Bailey,46 
Coini.'592  (1879). 

If  Arm  property  is  taken  in  execution,  and  sold  for  a 
separate  debt,  all  the  partners  can  sue  for  the  trespass. '^ 

b.  Scmblc :  Partner  co-plaintiff  in  trespass  for  sale  of  firm  property  for 
his  separate  debt.  D,  separate  creditor  of  C,  levied  on  and  sold  firm 
l)roperty  of  A,  B  &  C.  They  sued  D,  E,  sheriff,  and  F,  auctioneer, 
for  the  trespass.  Defence,  made  after  trial:  Joinder  of  A. — Recov- 
ered. Objeolion  too  late.  A,  probably,  a  proper  party.  Bates  v. 
James,  3  Ducr  45,  N.  Y.  (1854). 

If  the  firm  note  includes  a  separate  debt,  the  payee 
can  recover  on  the  note,  but  only  the  firm  debt,  not 
the  separate  debt,  though  included  in  the  note/ 

c.  Payee  of  firm  note  may  recover  on  it  the  firm  debt,  but  not  a  sepa-. 
rate  debt  also  included  in  the  note.  C  made  a  note  in  the  name  of  B, 
C  &  Co.,  to  A,  who  brought  suit  upon  it.  B's  defence:  Part  of  con- 
sideration a  debt  existing  before  B  joined  the  firm. — Recovered,  be- 
cause A  did  know  when  B  became  a  partner,  and  cause  of  acSlion  is 
the  note  and  not  the  consideration.  But  consideration  being  in  part 
for  the  separate  debt  of  the  other  partners,  was  a  fraud  on  B,  and 
barred  A's  recovery  upon  the  note  to  that  extent.  Guild  v.  Belcher, 
1 19  Mass.  257  (1876). 

Contra:  The  separate  debt  of  all  the  partners  paid  with 
firm  funds  could  not  be  recovered  by  the  firm.  The  debt 
was  due  from  each  partner,  and  they  had  no  equity  to 
recover  it.*^  If  a  partner  pays  his  individual  debt  with 
firm  funds,  his  co-partner  was  estopped  from  reclaim- 
ing the  payment  by  receiving  payment  of  his  debt  out 
of  the  firm  a.ssets." 

d.  A  separate  debt  of  all  the  partners,  paid  out  of  firm  assets,  can- 
not he  recovered  by  the  firm.  On  dissolution,  four  of  the  partners 
continued  the  business,  and  retained  the  bookkeeper,  A,  to  whom  the 
old  finn  owed  $161.90.  A  carried  this  amount  to  his  own  credit  on 
the  books  of  the  new  firm,  B  &  vSons.  At  the  end  of  the  first  year, 
A  claimed  a  balance  due  him  of  1300,  in  which  he  included  the  I161.90, 
without  knowledge  of  B  &  Sons.  They  gave  him  a  note  for  |ioo, 
and  paid  him  |2oo  in  cash.  A  sued  B  &  Sons  on  the  note,  and  for 
subsequent  salary.  The  defendants  having  ascertained  that  I161.90 
was  due  A  by  the  old  firm,  denied  any  liabilitv  on  the  note,  and  re- 
clamied  the  I61.90  paid  him  in  cash.'  Court  below  gave  B  &  Sons 
judgment  on  the  note,  but  allowed  plaintiff  to  retain  the'|6i.90.  De- 
fendants appealed.— Judgment  affirmed.  Defendants,  as  partners  in 
old  firm,  were  liable,  jointly  and  severally,  for  its  debt,  and  had  no 
equity  to  reclaim  it.     Strong  v.  Miles,  45  Conn.  52  (1877). 


528 


Pt.  2,  Ch.  II.  The  Relation.  §i68. 

e.  Partner  waives  co-partner' s  payment  of  his  individual  debt  with 
firm  funds  by  receiving  them  in  payment  of  his  own  individual  debt. 
B  was  managing  partner  of  firm,  A,  B  &  C,  railroad  contradlors,  who 
dissolved  and  made  B  liquidating  partner.  The  title  to  firm  real 
estate  was  in  D,  a  railroad  company,  which  conveyed  upon  B's  order. 
A  notified  D  not  to  convey,  but,  on  that  date,  conveyance  was  made 
to  E,  both  D  and  B  thinking  that  A  consented  to  this  deed,  which 
was  made  as  security  for  B's  debt  to  E.  D  owed  firm  |2 2,000,  and  B 
transferred  one-third  of  the  claim  to  A,  in  payment  of  an  individual 
debt.  B  had  advanced  more  money  for  firm  debts  than  the  value  of 
this  lot.  A's  assignee  brought  account,  and  asked  to  have  the  lot  ap 
plied  as  partnership  assets. — Dismissed.  Though  payment  of  indi- 
vidual debt  with  firm  assets,  prima  facie,  fraudulent,  presumption 
may  be  rebutted.  A  receipt  of  firm  claim  for  his  individual  debt 
estops  him  from  objecting  to  B's  use  of  firm  property  to  pay  his  sepa- 
rate debt.     Corwin  v.  Suydam,  24  Ohio  St.  209  (1873). 

7.  If  the  firm  is  insolvent  when  its  fnnds  are  used  to 
pay  the  separate  creditor,  the  firm  creditor  may  recover, 
because  it  is  a  fraud  on  him.* 

a.  Menagh  v.  Whitwell,  supra  \  103,  n.  4. 

If  a  partner  transfers  firm  assets  for  his  separate  debt, 
the  firm  creditors  may  recover  them.  The  firm  title 
does  not  pass,  and  the  firm  creditors  are  entitled  to  sue.'' 

b.  Partner's  transfer  of  firm  assets  for  his  separate  debt,  a  fraud  on  a 
firm  creditor,  who  may  recover  the  assets  direFtly  from  the  assignee. 

B  &  C,  partners.  B  transferred  judgments  and  notes  of  the  firm,  for 
his  separate  debt,  to  D,  without  C's  knowledge.  The  firm  was  in 
debt,  and  became  insolvent.  E,  a  firm  creditor,  obtained  judgment, 
and  attached  the  proceeds  colle<fled  by  D,  and  in  his  hands  as  gar- 
nishee.— Judgment  for  E's  claim,  which  was  less  than  the  amount 
colle6led  by  D.  The  firm  title  did  not  pass  by  D's  transfer  in  fraud 
of  the  joint  creditors.      Hartley  v.  White,  13  N.  31,  Pa.  (1880). 

8.  If  a  partner  uses  the  firm-name  for  a  separate  debt, 
and  the  co-partner  has  to  pay  a  moiety  of  the  debt  to 
release  his  separate  estate  from  execution,  he  can  re- 
cover the  payment  from  his  partner.  The  payment 
would  be  under  sufficient  duress  to  entitle  him  to  reim- 
bursement.^ 

a.     Smith  v.  Loring,  supra  1 126,  n.  i. 


§16S. 

^0  a  partner  tul)o  uses  t[]c  firm  crebit,  or  firm  ftinbs,  in  pap- 
mcnt  of  l)is  intiiribual  inbebtebness,  commits  a  fraub  upon  tt)£ 
firm  1)13  co-partner  is  not  bounb  to  Mssent. 

529 


§i68.  The  Relation.  Ft.  2,  Ch.  ii. 

If  a  partner  converts  firm  funds  to  his  own  use, 
this  is  a  fraud  upon  his  co-partners,  for  which,  in 
some  jurisdidions,  he  is  liable  to  a  criminal  prose- 
cution for  embezzlement  (§  143);  but  he  is  everywhere 
responsible  to  his  co-partners  in  a  civil  adlion  for  such 
a  sum  as  upon  his  own  account  he  is  shown  to  have 
abstradled  in  excess  of  his  share  in  the  firm  prop- 
erty. 

Should  the  creditor  be  notified  by  the  co-partner  of 
his  dissent  from  the  diversion  of  the  firm  funds  to  the 
payment  of  the  creditor's  separate  claim?  It  was  said 
that  notice  was  superfluous,  because  the  creditor  had 
knowledge  of  the  diversion.  This  is  true,  and  the  co- 
partner need  not  notify  the  creditor  of  the  fa(5l  which 
he  already  knew.  Nor  must  the  co-partner  give  notice 
of  his  dissent.  It  was  held  at  one  time  in  Pennsylvania 
that  unless  a  protest  against  the  diversion  was  made, 
the  inference  would  be  drawn  of  an  assent  by  the  co- 
partner, which  would  charge  the  firm.*  But  this  posi- 
tion is  not  sound;  he  need  not  forbid  the  transa(5lion. 
If  a  partner  gives  firm  paper  for  his  individual  debt, 
the  co-partner  is  not  bound  by  his  unlawful  adl,  which 
is  invalid  without  being  repudiated." 

An  order  drawn  by  a  partner  upon  a  debtor  to  the 
firm,  and  handed  by  the  partner  to  his  individual 
creditor,  would  not  proted  him  in  the  possession  of 
the  asset  against  the  firm.'  The  individual  creditor, 
who  took  possession  under  the  firm  order,  knew  he 
was  getting  firm  assets  in  payment  of  his  private 
debt,  and  he  could  not  retain  them  against  a  reclama- 
tion by  the  firm. 

'•  Partner  on  learning  that  co-partner  has  given  firm  note  to  pay  in- 
dividual debt  must  disavow.  B  &  C  were  partners;  D  was  their 
clerk.     C  was  indebted  to  A,  and,  upon  a  settlement  with  A,  gave 

530 


Pt.  2,  Ch.  II.  The  Relation.  §i68. 

him  a  note  signed  in  the  store,  and  in  the  presence  of  C,  by  D,  in  the 
name  of  the  firm.  B  was  absent,  but  he  afterwards  knew  of  the 
transaction,  and  did  not  dis$ent.  A  sued  B  on  the  note,  as  surviving 
partner,  after  the  death  of  C. — Recovered.  Shippen,  P.  J.,  in  the 
court  below  charged,  inter  alia,  "And  if  the  defendant  knew  of  this 
"  transaction,  as  by  the  books  of  the  firm  he  should  know,  and  did 
"  not  early  disavow  it,  he  may  be  bound  by  it."  Foster  v.  Andrews, 
2  P.  &  W.  i6o,  Pa.  (1830). 

2.  Partner  not  bound,  when  subsequently  informed  of  the  fa^,  to  re- 
pudiate a  firm  note  given,  without  his  knowledge,  by  co-partner  for 
his  individual  debt.  B  &  C,  partners.  C  gave  a  firm  note  to  A,  for 
|i,ooo.  B's  defence  :  Note  given  to  A  for  C's  debt,  contracted  before 
B  «Sc  C  formed  the  partnership.  Court  charged,  that  if  C's  giving  the 
note  was  not  known  to  B  at  the  time,  he  must,  when  afterwards  in- 
formed of  it,  repudiate  the  note  within  a  reasonable  time,  or  be 
bound  by  it. — Error.  If  B  did  not  know  of  the  note  when  it  was 
given,  he  would  not  be  charged,  although  he  was  subsequently  in- 
formed and  did  not  repudiate  it.    Reuben  v.  Cohen,  48  Cal.  543  (1874). 

3.  Partner  having  knowledge  of  co-partner' s  application  of  firm  funds 
to  payment  of  individual  debt  not  bound  to  disavow.  A,  of  the  firm 
A  &  D,  was  separately  indebted  to  the  firm  B  &  C,  and  E  was  in- 
debted to  A  &  D.  A  drew  an  order  in  the  name  of  his  firm,  in  favor 
of  B  &  C,  on  E,  for  bricks,  which  were  delivered.  After  an  imsuc- 
cessful  aClion  against  E  on  his  original  indebtedness,  A  &  D  sued 
B  &  C,  in  order  to  follow  the  property  in  their  hands,  on  the  ground 
that  they  received  it  mala  fide.  Defence :  That  D  was  apprised  of 
the  order  before  the  bricks  were  delivered,  and  did  not  give  notice  to 
the  defendants  that  he  would  not  be  bound  by  it. — Recovered.  Gib- 
son, C.  J.:  "Want  of  notice  not  to  deliver,  might  have  been  ground 
"of  defence  by  [E];  but  why  should  [D]  have  to  give  notice  to  the 
" defendants  of  what  they  already  knew.'*  In  Northouse  v.  Parker, 
"  I  Camp.  82,  it  v/as  held  that  notice  would  be  superfluous  where  the 
"faCt  is  known.  The  defendants  knew  that  [D]  was  not  liable  for 
"  [A's]  debt,  and  they  had  no  reason  to  presume  that  [D]  would  con- 
"sent  to  have  it  paid  out  of  the  partnership  effects,  to  the  prejudice 
"of  himself  and  the  joint  creditors.  They  aCted  at  their  peril,  and 
"with  their  eyes  open.  *  *  *  The  defendants  had  no  ground  to  pre- 
"  sume  that  [D]  had  authorized  [A]  to  draw  in  their  favor,  for  there  is 
"no  circumstance  in  the  case  to  found  a  presumption,  and  it  was  their 
"business  to  inquire.  If  they  took  [A's]  word  for  it,  they  must  take 
"the  consequences.  When  told  of  the  order  before  the  bricks  were 
"delivered,  [D]  told  [E]  that  it  was  wrong.  But  if  the  defendants 
"gave  a  receipt  for  the  separate  debt,  or  delivered  up  the  security 
"  for  it  when  the  order  was  drawn,  notice  would  have  been  too  late  to 
"save  them ;  and  if  they  did  not,  a  recovery  in  this  suit  would  leave 

'their  right  of  recourse  to  [A]  iutaCt,  and  the  parties  would  be  re-  , 
"mitted  to  the  position  which  justice  requires  them  to  occupy.     In 
"any  aspedl,  whatever,  the  defendants  have  no  case."   McKinney  v. 
Brights,  4  Harris  399,  Pa.  (1S51). 


§169.  The  Relation.  Pt.  2,  Ch.  ii. 

§1B9. 

ijlic  joint  title  is  impaired  bij  tl)e  misappropriation,  ant  man 
bf  rc-fstablisl)CL)  bp  ann  rcprcscntatinc  of  tl)e  tirm. 

(Tlic  partners,  Ijouiener,  man  ratitn  tl)e  appropriation  of  a  crebit 
or  asset  bn  a  partner  to  l)is  ini^iniimal  use. 

It"  the  partner  does  not  consent,  although  aware  of 
the  payment  by  a  co-partner  of  his  separate  debt  with 
the  iirm  assets,  suit  can  be  maintained  to  recover  them. 
An  action  lies  to  reclaim  the  assets,  as  the  firm  title 
was  never  devested  by  a  joint  a6l  of  the  partners,  or 
for  their  account.' 

A  firm  note  for  one  partner's  individual  debt,  al- 
though made  by  another  partner,  would  not  bind  the 
firm.  The  note  would  be  a  guarantee,  and,  as  such, 
must  be  made  by  all  the  partners." 

The  partners  may  validate  the  transa(51;ion  by  rela- 
tion, so  that  the  title  passes,  and  subsequent  insolv- 
ency, it  is  said,  will  not  devest  it.^ 

1.  Firm  may  recover  assets  paid  by  partner  for  his  separate  debt, 
although  the  co-partner  had  notice  and  did  not  dissetit.  B,  a  phy- 
sician,  attended  C,  who  was  a  partner  in  the  firm  of  A  &  C.  B 
agreed  with  C  to  buy  firm  goods,  which  were  to  be  set-off,  pro  tanto, 
to  his  bill  for  medical  attendance.  B  bought  goods  accordingly,  and 
the  set-ofT  was  acftually  made.  A  knew  that  B  was  bujing  on  these 
conditions,  but  "was  not,  however,  a  party  to  the  above  agreement, 
and  did  not  consent  thereto,"  After  C's  death,  A  sued  B  for  the 
amount  of  goods  bought. — Recovered.  A  had  not  consented.  GoR- 
DO.N,  J.:  "But  this  consent  is  exactly  what  is  necessary  in  order  to 
"bind  a  firm  to  an  arrangement  by  which  the  partnership  assets  are 
"  to  be  taken  to  pay  an  individiial  debt.  *  *  *  Knowledge  alone 
"would  not  be  sufficient  to  bind  the  other  members  of  the  firm 
"  *  *  *  Every  one  is  bound  to  know  that  a  partner  has  no  right  to 
''appropriate  partnership  property  to  the  payment  of  his  individual 
"debts,  and  if  one  so  deals  with  him,  he  must  run  the  risk  of  the 
"  mterposition  of  partnership  rights."  Todd  v.  Lorah,  25  Smith  155, 
Pa.  (1874). 

2.  Leverson  v.  Lane,  supra  ^  129,  n.  5. 

3-  Partner  may  ratify  co-partner' s payment  of  his  individual  debt  with 
firm  funds.  C,  a  member  of  a  firm,  transferred  to  B,  his  separate 
creditor,  a  note  belonging  to  the  firm.     C  then  filed  a  petition  iu 


Pt.  2,  Ch.  II.  The  Relation.  §170. 

bankruptcy  under  the  United  States  Bankruptcy  Acft  of  igtli  August, 
1841,  which  was  then  in  force,  and  his  partners  afterwards,  but  be- 
fore a  decree,  assented  to  the  transaction  with  B.  Suit  was  brought 
by  the  surviving  partners  and  by  the  assignee  in  bankruptcy  against 
B  for  money  had  and  received. — No  recovery.  BELL,  J.:  "It  is  settled 
"law,  that  a  partner  cannot  pay  his  private  debts  by  an  application  of 
"the  partnership  property  without  the  assent  of  his  companions.  But 
"he  may  do  so  with  their  consent;  and  a  subsequent  ratification  of 
"the  act  is  equivalent  to  a  precedent  authority."  The  provisions  of 
the  Bankruptcy  Act  did  not  interfere  with  the  operation  of  the  rule 
in  this  case.     Anshutz  v.  Fitzsimmons,  9  Barr  180,  Pa.  (1848). 


§170. 

(iilie  iraiiii  must  be  committed  acjainst  tl)c  firm. 

A  preference  made  to  a  separate  creditor  on  an 
assignment  for  firm  creditors  is  void. 

The  preference  does  not  vitiate  the  assignment,  but 
will  be  stricken  out  by  a  creditors'  bill.'  A  pro  rata 
distribution  of  the  surplus  among  the  separate  credit- 
ors would  be  a  fraud  upon  the  separate  creditors  of 
the  partner  who  was  entitled  to  the  larger  share,  but 
the  fraud  would  not  affect  the  assignment  of  the  firm 
for  its  creditors." 

If  the  continuing  firm  assumes  the  debts  of  the  old 
firm,  including  them  among  the  liabilities  would  not 
vitiate  the  assignment  for  creditors.  Any  debts  duly 
assumed  become  the  debts  of  the  firm,  as  if  originally 
contra6led  by  it.^  The  assignment  of  the  firm  assets 
by  a  retiring  partner  to  his  co-partner  for  the  payment 
of  firm  debts  would  not  make  them  the  separate  debts 
of  the  continuing  partner.  Firm  creditors  cannot  by 
such  an  assignment  be  deprived  of  their  priority  on 
the  firm  fund.  The  purport  of  the  decision  is  simply 
that  the  assignment  does  not  enable  the  creditor  to 

533 


gjyo.  The  Relation.  Pt.  2,  Ch.  n. 

elc(5l  the  assignee  as  his  separate  debtor,  and  come  in 
on  their  separate  estate  in  addition  to  the  firm  fund." 

1.  J'rfftrtiur  to  separate  creditor,  though  void,  does  not  vitiate  firm 
assii^nmeut,  which  can  be  attacked  only  by  creditor's  bill.  B  &  C 
assigned  to  D,  with  preferences  for  certain  firm  creditors,  and  for  a 
creditor  of  D  Firm  judgment  creditor,  A,  brought  bill  to  avoid 
assignment,  because  of  a  preference  to  B's  separate  creditor. — Dis- 
missed. I ,  Preference  to  separate  creditor  void,  but  does  not  vitiate 
assignment;  2,  Firm  creditor  cannot  attack  assignment,  except  by 
credilor'.s  bill.  Conversely,  preference  to  firm  creditor  in  assignment 
is  good,  because  separate  property  is  not  a  trust  fund,  though  prima- 
rily liable  for  separate  debts.  Nicholson  v.  Leavitt,  4Sandf.  252,  N.  Y. 
(1850). 

2.  .Issignment  valid  against  firm  creditors,  though  void  against  sepa- 
rate creditors.  B&C  assigned  to  D  all  "their"  real  and  personal 
estate,  for  payment  of:  ist,  firm  debts,  among  them,  rents;  2d,  sepa- 
rate debts  pro  rata.  Their  individual  indebtedness  was  unequal.  C 
had  no  individual  property,  and  B  had  a  leasehold.  A,  who  was 
judgment-creditor  of  the  firm,  sued  B,  C  &  D,  to  set  aside  assignment 
as  fraudulent. — Judgment  for  defendants.  "Their"  limited  assign- 
ment to  firm  assets  and  excluded  leasehold,  which  was  B's  separate 
property.  "Rents"  referred  to  premises  occupied  by  firm.  Equal 
distribution  among  separate  creditors  would  be  a  frai:d  on  them,  but 
did  not  afifedl  firm  creditors.  Morrison  v.  Atwell,  9  Bosw.  503,  N.  Y. 
(1862). 

Assignment  may  bind  firm  creditors,  though  separate  creditors  may 
avoid  it.  B&C  assigned  firm  stock  to  D,  to  pay  firm  debts,  and  out 
of  surplus  separate  debts,  pro  rata.  Their  separate  liabilities  were 
une(jual  in  amount.  Firm  creditor  A  attacked  assignment  as  a  fraud 
on  separate  creditors.^udgment  for  B,  C  &  D.  Assignment  valid, 
except  as  to  separate  creditors.  Scott  v.  Guthrie,  10  Bosw.  408,  N.  Y. 
(1863). 

3.  Turner  v.  Jaycox,  supra  \  106,  n.  9,  b. 

4.  Firm  creditors  cannot  by  notice  cleH  to  become  separate  creditors 
of  continuing  partner,  and  avail  themselves  of  his  indemnity  against 
firm  debts  to  the  retiring  partner.  B  sold  the  firm  assets  to  his  part- 
ner, C,  who,  in  return,  gave  him  a  bond  to  pay  the  firm  debts. 
vShortly  afterwards,  a  warrant  is.sued  against  the  joint  and  separate 
estates  of  B  &  C.  Before  publication,  A,  the  holder  of  firm  paper, 
notified  B  &  C  that  he  eledled  to  take  C  as  his  debtor,  and  avail  him- 
self of  C's  bond  of  indemnity. — vSeparate  proof  against  C  rejecfled. 
C's  bond  did  not  enure  to  A's'benefit.  No  contradl  by  C  to  substitute 
his  separate  liability  for  the  firm  debt ;  nor  any  consideration  for  such 
a  contradl.  Against  C's  separate  creditors  the  contra<5l  would  be 
fraudulent  as  a  preference.    Wild  v.  Dean,  3  Allen  579,  Mass.  (1862). 

As  partner's  assignment  of  firm  assets  to  co-partner  upon  his 
agreetticnt  to  pay  the  firm  debts,  does  not  convert  them  into  his  sepa- 
rate debts,  non-joinder  of  the  assigning  partner  is  a  bar  to  the  firm 
creditor's  bill.  A,  wife  of  B,  brought  a  bill  against  C,  to  recover 
loans  made  to  the  firm  of  B  &  C,  which  was  solvent,  and  averred  B's 
assignment  of  the  assets  to  C  upon  his  agreement  to  pav  the  firm 
debts.  C  demurred,  because  B  was  not  made  a  party.— Demurrer 
sustained.  The  assignment  would  not  convert  the  joint  debt  of  B  & 
C  into  a  separate  debt  of  C.    Fowie  v.  Torrey,  125  Mass.  289  (1881). 

534 


Pt.  2,  Ch.  II.  The  Relation.  §171. 

Contra :  Creditor  of  old  firm  does  not  become  a  creditor  of  new 
firm,  which  takes  the  assets  and  assumes  the  debts  of  the  old.  D  sold 
out  to  his  co-partners,  B  &  C,  who  assumed  the  debts.  They  subse- 
quently assigned  their  joint  and  separate  estates,  to  pay  their  debts. 
A  proved  .'or  li.ooo,  as  creditor  of  B,  C  &  D. — Rejedled.  The  con- 
trail to  p:iy  was  with  D,  and  A  couldn't  sue  on  it.  He  didn't  release 
B,  C  &  D  and  substitute  B  &  C  by  contradl  with  each  firm.  If  a 
separate  creditor  of  each  partner,  he  should  exhaust  the  old  firm's 
assets.    S>;ull  v.  Alter,   i  Harr.  147,  N.J.  (1837). 


§171. 


(ill)c  paftiur  is  tl)e  proprietor  of  l]is  %\\oxt,  anb  \\t  map  ibis- 
pose  of  Ins  interest  in  tl)e  business  as  \\t  pleases.  %t  mag  sell, 
assign,  mortgage  or  plebge  it.' 

If  the  alienation  is  absolute,  the  result  is  a  disso- 
lution of  the  firm.  The  power  is  undoubted,  in  spite 
of  the  consequences  of  its  exercise.  If,  on  the  other 
hand,  the  alienation  is  qualified,  as  in  the  case  of  an 
assignment  of  a  portion  of  the  share,  or  in  the  case 
of  a  pledge  or  mortgage,  a  dissolution  does  not  ensue.^ 
The  alienee  does  not  take  immediate  possession  of  his 
interest,  but  leaves  the  partner  in  temporary  posses- 
sion and  control  of  the  share.  As  soon  as  he  does 
assert  his  right  to  take  possession,  a  dissolution  fol- 
lows. A  partner's  share  is  always  intangible;  no 
manual  possession  can  be  delivered.  The  alienee's 
rights  are  enforceable  only  in  equity,  and  his  stand- 
ing is  equally  good,  whether  at  the  time  of  aliena- 
tion the  partner  held  his  share  in  actual  enjoyment 
or  in  expectancy  only.^ 

The  assignment  must  be  of  his  share  in  the  partner- 
ship, in  whole  or  in  part,  not  his  share  in  a  single 
transa6lion  of  the  firm,  or  in  a  single  piece  of  firm 
property,  whenever  this  is  allowed,  its  assignment  is 

535 


I 


}j,-i  The  Relation.  Tt.  2,  Ch.  n. 

subjecl  to  the  co-partner's  general  equity,  that  is  to 
an  account/  Assignment  carries  future,)  but  not  ac- 
cniL-cl,  profits/  1 

1.  Incoming  partner  not  affefled  by  unrecorded  chattel  mortgage, 
which  binds  only  share  of  mortgagor.  B,  trading  as  the  "Furniture 
Works,"  executed  to  A  for  a  debt  contradled  in  the  business  a  chattel 
mortgage,  which  was  not  recorded  at  the  time.  C  bought  a  half-in- 
terest in  the  works,  agreed  to  pay  half  the  mortgage  debt,  and  car- 
ried on  business  in  partnership  with  B.  C  sold  out  his  share  to  D, 
E  &.  !•',  who  replaced  him  in  the  firm.  A  brought  biH  against  B,  C, 
D,  K  &  F,  to  charge  B  &  C  personally  for  the  debt,,  and  to  subject  the 
machinery  of  the  works  to  A's  mortgage. — ^Judgment  for  all  defend- 
ants, except  B  and  C.  Mortgage  not  a  lien,  and  bound  only  B's  share, 
which,  on  a  settlement,  turned  out  to  be  nothing.  Promise  of  C  to  B 
enured  to  A's  benefit.    Ringov.  Wing,  5  S.  W.  Rep'r  787,  Ark.  (1887). 

2.  Assignment  of  share.  A,  B,  C  &  D  were  partners.  D  sold  portion 
of  his  share  to  defendant,  who  partook  of  profits  with  him.  Judg- 
ment against  firm  paid  by  A,  B  &  C.  C  sued  for  contribution. — De- 
fendant not  liable,  because  not  a  partner.  Had  he  been  a  partner, 
plaintiff  must  have  brought  account.  Murray  v.  Bogert,  \\  Johns 
318,  N.  Y.  (1817). 

3.  Collins'  Appeal,  itfra  \  172,  n.  2. 

4.  I'artfier  cannot  assign  his  interest  in  a  particular  firm  transaElion. 
R  &  C  owed  D  I156,  and  D  owed  C  |;i2o.  C  discharged  the  firm  debt 
by  a  receipt  for  his  individual  claim,  and  by  a  payment  of  the  balance 
in  cash.  C  drew  a  firm  check  for  fisS,  and  after  dissolution  paid,  if 
to  his  individual  creditor.  A,  without  B's  knowledge.  A  sued  B  &  C. 
B  defended. — C's  authority  at  an  end  before  check  issued.  A,  no 
standing  as  assignee  of  C's  claim  against  B  on  the  transaction  with 
D,  because  the  claim  could  not  be  separated  from  the  general  part- 
nership account.     Gale  V.  Miller,  54  N.  Y.  536  (1874). 

Partner  has  the  right  to  sell  his  share  of  firm  real  estate,  stibjeB  to 
co-partner's  equity.  A,  B  &  C,  hotel  proprietors  in  partnership.  C 
sold  his  interest  in  firm  real  estate  to  D.  A  &  B  sued  to  avoid  the 
conveyance,  because  it  injured  firm  credit.  Judgment  for  defend- 
ants. Partners,  unlike  creditors,  have  no  control  over  co-partner's 
disposition,  which  is  always  subject  to  the  partner's  equity.  Tread- 
well  V.  Williams,  9  Bosw.  649,  N.  Y.  (1S62). 

Contra :  /fs// it  proceeds  only  against  serz'ed parhier,  judgtnentdoes 
not  bind  firm  property.  Mortgage  of  separate  paiiner'  s  interest  infirm 
land  good  against  subsequent  judgment  against  firm.  B,  C,  D,  E  & 
F,  mining  partners.  B  and  C  mortgaged  their  interests,  seven-tenths 
to  A.  _  Subsequently  G  sued  the  five  partners  for  supplies  furnished 
the  mine,  served  all  but  P,  and  F,  and  recovered  judgment  against  the 
five.  Execution  dire<5led  against  firm  assets  and  separate  estates  of 
served  partners.  Sale  under  judgment.  G  bought  mortgaged  prop- 
erty. A  foreclosed,  and  having  bought  in  the  property,"  brought 
eje(ftment  against  G.— Recovered.  No  firm  title  passed  under  judg- 
ment, because  all  partners  not  .served,  and  proceedings  not  under 
Code  Civil  Procedure,  ^  ;,S8.  The  title,  had  it  passed,  would  still 
have  been  subjeA  to  the  mortgage.  The  purchaser  could  be  subro- 
gated to  the  judgment  creditor's  right  against  the  firm  only  in  equity 

536 


Pt.  2,  Ch.  II.  The  Relation.  1^172. 

and  b)-  its  process.     Golden  State  &c.  Iron  Works  v.  Imvidsor.,    it; 
Pac.  Rep'r  20,  Cal.  (1S87). 

The  preference  obtained  by  the  mortgagee  over  the 
firm  creditors  in  this  last  case,  results  from  treating  the 
partners  as  tenants  in  common  of  the  firm  property. 
Upon  the  theory  of  joint  tenancy,  the  judgment  would 
have  been  equally  good,  but  it  would  have  been  post- 
poned to  the  claims  of  the  joint  creditors. 

5.  Sale  of  partner's  share  carries  fuitnw  but  not  past,  dividends,  B, 
C,  D  &  E,  partners  in  joint  stock  company.  B  assigned  his  interest 
to  A.  Then  a  dividend  was  declared  on  the  stock.  A  assigned  to  E, 
and  sued  C,  D  &  E  for  the  dividend. — Recovered.  Transfer  of  stock 
to  E  carried  future,  but  not  past,  dividends.  Harper  v.  Raymond,  3 
Bosw.  29,  N.  Y.  (1858). 


i 


§172. 
!2l  partiur  mag  mortgage  or  btsposc  of  l)is  sl)arf  absolutely. 

The  right  of  a  partner  to  dispose  of  his  share,  like 
any  other  property,  is  undisputed.  The  subje6l-mat- 
ter  is  incapable  of  manual  delivery,  but  the  assign- 
ment will  be  sustained  in  equity.^  In  like  manner  a 
mortgage  of  a  partner's  interest  is  valid  in  equity, 
and  gives  the  mortgagee  a  priority  over  the  other  sep- 
arate creditors  of  the  mortgagor.  The  mortgage  may 
be  given  in  anticipation  of  the  partnership,  and  will 
become  a  valid  lien  as  soon  as  the  relation  is  estab- 
lished. A  partner's  assignment  of  his  share  to  his 
creditor  as  security,  operates  as  a  mortgage  rather 
than  a  pledge.  The  mortgagee  has  full  control  of  the 
share  for  his  own  protedlion.^ 

I.  Assignment  to  co-partner  valid,  though  prohibited  to  stranger.  A, 
B  &  C's  coutradl  of  partnership  provided  that  a  partner  should  not 
have  power  to  assign  his  share  to  any  persons,  or  to  let  them  inspe<ft 
the  firm  books,  or  interfere  with  its  business,  and  made  any  such  as- 
signment void  as  to  other  co-partners,  who  might  disregard  it.  B 
secretly  assigned  his  share  to  C,  but  retained  the  title.     Upon  B's 

537 


I172.  The  Relation.  Pt.  2,  Cn.  ri. 

death  A  sued  C,  as  trustee  for  firm. — Decree  for  C.  No  covenant  not 
to  iissigu,  and  restriction  against  assignment  to  strangers.  Cassels  v. 
Stewart,  6App.  Cas.  64  (1881). 
2  PleJ'^e  orassii^nmenl  of  a  share  in  a  projected  partnership  is  valid 
'  in  equity  against  claim  of  other  creditors.  G  was  special  partner  in 
G,  H  li:  Co.  B  and  C  were  general  partners,  D  and  E  clerks,  with  guar- 
anteed salaries  and  a  share  in  profits  above  amounts  guaranteed.  G 
stipulated  for  interest,  at  12  percent.,  in  lieu  of  profits,  and  for  repay- 
ment of  his  capital  in  any  event.  Not  observing  statutory  require- 
ments, he  became  liable  as  a  general  partner.  Firm  paid  its  debts 
in  full.  A  obtained  in  C.  P.  a  decree,  in  settlement  against  B,  C,  D 
and  E,  jointly  and  severally,  for  147,192.70,  coupled  with  adiredlion 
that  among  themselves,  B  and  C  should  pay,  viz.:  B,  $26,411.15,  and 
C,  120,781.65.  E  was  charged  with  118,352.39,  as  his  proportion  of 
firm  debts,  without  reference  to  G's  claim.  E  died,  and  G  claimed 
in  O.  C,  payment  of  147,192.70  out  of  E's  estate.  The  fund  in  O.  C. 
for  distribution  was  the  proceeds  of  E's  share  in  F,  a  partnership 
limited.  A  claimed  the  proceeds  of  E's  share  in  F,  by  a  pledge  or 
assignment  made  before  F  was  formed,  to  secure  a  loan  for  E's  con- 
tribution.— O.  C.  divided  the  fund  between  A  and  G.  Balance  due  G, 
B  &  Co.  by  E,  was  his  separate  debt,  and  A's  joint  and  several  claim 
also  became,  by  his  eledlion,  E's  separate  debt.  Assignment  imper- 
fect, there  being  no  partnership  in  existence  for  it  to  operate  on,  and 
it  being  dependent  on  assignor's  will.  His  executors'  preference  of 
A  would  be  a  fraud  on  G.  Hulse's  Estate,' 12  Phila.  130  (1878).  11 
W.  N.  449  (1882).  A  appealed.  Argument:  i,  Assignment  for  value 
of  a  share  in  a  projedled  partnership  invests  assignee  with  right  to 
specific  performance,  and  loan  for  contribution  converts  assignor  into 
a  trustee.  Assignment  could  not  be  a  fraud  on  G,  because  he  was  an 
antecedent  creditor,  who  stands  in  E's  shoes.  2,  G  not  a  separate  cred- 
itor, because  E's  debt  was  due  in  part  to  himself  and  the  balance  to 
his  partners,  according  to  their  shares.  But  G  is  simply  a  firm  cred- 
itor, who  holds  E  as  surety  for  B,  C  and  D,  and  if  A  is  a  partner,  he  is 
bound  by  the  articles  which  relieved  E  from  all  firm  obligations. 
Defence:  Contemplated  special  partnership  abandoned  for  a  partner- 
ship limited,  and  no  delivery  of  share,  though  feasible,  made  to  A 
by  E.  No  specific  performance  against  E,  if  living,  except  to  per- 
fect pledge  or  assignment,  and  upon  E's  refu.sal.  But  enforcement 
would  destroy  E's  control  of  partnership  limited.  G  claimed  E's 
share,  not  as  collateral  security,  but  as  satisfadlion.  He  becomes  a 
purchaser  for  value  by  the  extin<5lion  of  his  debt  pro  tanto.  After 
E's  death,  the  rights  of  claimants  are  fixed.  3,  C.  P.  decree  made 
debt  of  E  to  G  joint  and  several,  though  not  a  partnership  debt,  and 
A  could  claim  as  a  separate  creditor. — Reversed.  By  the  C.  P.  decree, 
G's  claim  against  E  had  been  made  E's  several  debt,  and  its  origin  has 
become  immaterial.  A  being  a  separate  creditor  can  claim  only  his 
pro  rata  share  with  the  other  unpreferred  creditors.  A  has  a  valid 
lien  in  equity  upon  the  fund  by  virtue  of  his  mortgage,  which  gives 
him  a  priority.    Collins'  Appeal,  ii  Out.  590,  Pa.  (1885). 


IS 


Part  III. 

(^\}t  principles  accorliing  to  rutjici)  tl)e  business  is  mounb  up. 


CHAPTER  I. 

THE   REASONS    FOR  A  DISSOLUTION. 

§173. 

Qi\]t  business  u)ill  not  be  broken  up  mitljout  ai!iequate  tause. 
(l[|)e  fact  of  partnersl]ip  must  be  establisljeb  anb  tl]e  iniscl)ief  be 
irreparable  to  justifn  a  dissolution. 

Dissolution  occurs  as  a  matter  of  course  upon  the 
death  of  a  partner/  upon  the  marriage  of  a  single 
woman,  and  upon  the  sale  of  a  partner's  interest, 
whether  voluntary  or  upon  execution.^ 

The  partnership  relation  is  suspended,  but  not  dis- 
solved, by  the  lunacy  of  a  partner  and  by  war.  "* 

In  the  cases  enumerated,  the  dissolution  occurs 
without  judicial  intervention,  just  as  if  the  partners 
had  dissolved  the  firm  by  agreement.  In  other  cases 
the  Court,  upon  cause  shown,  will  decree  a  dissolu- 
tion.'' Before  the  Court  makes  a  decree,  the  fadl  of 
partnership  must  be  established,^  and  a  sufiicient 
cause  must  be  shown  ;*^  nothing  will  be  done  before 
answer.' 

The  causes  admitted  to  be  sufficient  are:  First ^  A 
failure  of  the  undertaking.  After  the  non-success  of 
the  business  has  been  demonstrated  by  ac^tual  expe- 

539 


5i^^  Dissolution.  Pt.  3,  Ch.  i. 

riciicc,  or  by  any  sound  test,  no  court  will  make  a 
partner  go  on  and  sink  money  in  a  hopeless  venture, 
although  the  agreed  term  of  partnership  has  not  ex- 
pired/ 

Srcond,  Miscondud  which  excludes  the  plaintiff 
from  his  joint  control  over  the  business.  No  mere 
incompatibility  of  temper  will  be  sufficient,  unless  it 
results  in  exclusion."' 

Third,  Insolvency  of  the  partner  defendant  is  a 
sufficient  ground.'"  Insolvency,  or  insufficient  assets 
to  pay  one's  debts,  is  not  a  dissolution  of  a  firm.  There 
ma}'  be  a  tiding  over  of  the  deficiency,  and  a  solvent 
state  be  established.  Until  the  insolvency  ceases  to 
be  latent,  and  becomes  overt,  causing  a  suspension  of 
business,  there  is  no  dissolution  of  the  firm. 

Fourth,  Lunacy:  If  partnership  is  a  relation  at 
will,  why  couldn't  a  partner  put  an  end  to  the  con- 
tract for  the  lunacy  of  his  co-partner?  The  putting 
him  in  a  committee  would  be  a  sort  of  civil  death, 
and  a  finding  of  lunacy  by  a  commission  would  estab- 
lish his  non-existence.  But  without  either,  which, 
would  raise  the  presumption  of  dissolution,  the  lunacy 
would  be  sufficient  ground  to  justify  a  dissolution,  if  j 
desired  b}'  the  sane  partner." 

Fifth,  The  abandonment  of  the  business  by  a  part-i] 
ner  is  a  ground  for  dissolution.'" 

I.  Death  of  a  common  member  dissolves  both  firms,  and  prevents  sur- 
■Ainni;  partners  from  carry  ins;-  out  a  eon/ rafl  between  the  firms.  B! 
&  C,  partners  as  lumber  dealers  in  Chicago,  and  also  with  D  in  a! 
saw-mill,  at  ■Muske.ifoii.  D  and  B  &  C  agreed  that  lumber  should  be 
sent  from  the  mill  to  B  &  C,  who  should  account  for  the  lumber  at: 
market  price,  and  sell  it.  B  died,  ii  July,  1871,  and  D  went  on  send-l 
ing  lumber  to  C,  who  did  not,  as  required  bv  statute,  close  up  the 
business,  but  continued  B  &  C's  name.  9  October,  1871,"  Chicago 
fire  destroyed  contents  of  lumber-yard,  causing  a  loss,  above  insur- 
ance, of  $43,782.19.  A,  B's  executrix,  brought  bill  for  account 
agamst  C's  administrators.— Decree.     C  liable'  for  lumber  which  he 


540 


d 


Pt.  3,  Ch.  I.  Dissolution.  §173. 

had  received  from  D,  or  bought  from  others,  after  B's  death ;  but  not 
for  the  lumber  on  hand  at  B's  death.  OHver  v.  Forrester,  96  111.  315 
(1880). 

2.  The  sale  of  a  share  in  a  partnership  for  a  fixed  term, 
or  at  will,  is  only  prima /ade  evidence  of  dissolution. 

Part}ier's  sale  of  his  share.  A  &  B  were  partners.  B  bought  A  out 
and  assumed  the  debts,  and  subsequently  re-sold  to  C,  who  likewise 
assumetl  the  indebtedness,  and  paid  part  of  it.  A  applied  for  a  re- 
ceiver.— Bill  dismissed.  A  had  no  right  over  the  property  after  a  sale 
of  his  interest.    Weber  v.  Defor,  8  How.  Pr.  502,  N.  Y.  (1853). 

Note  to  Waller  &  Davis,  21  Am.  L.  Reg'r  N.  S.  711  (1882J,  by  Mak- 
SH.A.LI,  B.  El.WELL,  Esq. 

3.  After  dissolution,  notice  of  protest  to  one  partner  still  sitfficiejit. 
War  dissolves  a  firm  as  to  future,  but  not  as  to  past,  transaclions,  but 
docs  not  revoke  an  as:ency  to  complete  a  tra7isa£lion  already  begun.  A 
&  B,  in  New  Orleans,  dissolved.  Notes  of  third  persons  were  taken 
by  B,  as  his  portion  of  the  assets.  He  lent  the  notes  to  C,  who  bought 
A's  share  of  stock,  and  gave  them  in  part  payment.  The  notes  were 
endorsed  A  &  B,  and  C  added  endorsement  of  C  &  D,  a  new  firm,  to 
which  C  contributed  the  stock  purchased  of  A.  Articles  made  part- 
nership between  C  &  D  contingent  upon  B's  joining  the  firm,  but  C 
&  D  carried  on  business  for  a  month,  when  C  returned  to  his  home, 
in  New  York,  having  first  made  E  his  attorney,  inter  alia,  to  receive 
notice  of  protest.  B  never  did  join.  The  war  broke  out  immediately. 
The  notes  were  protested,  and  notice  served  on  D  and  E.  After  the 
war,  A  sued  C.  Defence :  Endorsement  not  binding,  because  no 
partnership;  if  binding,  the  contraA  was  suspended  by  the  war ;  if  a 
partnership,  it  was  dissolved,  and  notice  should  be  served  on  each 
partner.  E's  agencv  revoked  by  the  war. — C's  endorsement  bound 
him,  whether  a  partner  or  not.  A  might  sue,  although  a  prior  en- 
dorser. Dissolution  referred  only  to  the  future.  The  position  of  the 
parties  to  the  endorsement  continued  unchanged,  and  even  after  dis- 
solution notice  to  one  was  notice  to  all.  E's  agency  not  revoked. 
Hubbard  v.  Matthews,  54  N.  Y.  43  (1873). 

4.  Supra  vSloan  v.  Rloore,  ^  114,  n.  i. 

5.  No  decree  for  receiver  until  partnership  established.  A  brought 
bill  against  B  to  recover  firm  property,  and  asked  for  receiver  and 
injun&on.  Evidence  as  to  partnership  was  conflidling  — Dismissed, 
because  the  fa6l  of  partnership  was  in  doubt.  Goulding  v.  Bain,  4 
Sandf  716,  N.  Y.  (1852). 

6.  Court  ivill  not  decree  dissolution  without  cause  shozvn.  Partnership 
for  five  years.  Motion  to  dissolve.  No  cause  proved. — Motion  re- 
fused.    Henn  v.  Walsh,  2  Edw   Ch.  129,  N.  Y.  (1S33). 

7.  The  defendant  partner  has  a  right  to  the  possession 
and  control,  which  will  not  be  taken  away  from  him 
withoiit  sufficient  ground,  and  not  until  after  answer." 
If  the  answer  denies  the  plaintiff's  partnership  in  a 
branch  of  the  business,  the  injun(5lion,  when  justified, 
will  be  restricted  to  the  partnership  l)usine.ss,  which  is 
admitted.^ 

%.     Court  ivill  not  enjoin  managing  parfvrr  before  ansicer.    A  cultivated 
plants,  and  B  sold  them  in  New  York.     .\  asked  for  preliminary  in- 

541 


ji-.  Dissolution.  Ft.  3,  Ch.  i.  ^^ 

junclioii,  alleging  that  B  refused  to  account,  and  would  not  permit 
him  to  iusped:  the  books. — Refused.  B  had,  by  the  arrangement, 
charge  of  .^^ales  and  proceeds.  His  funcflion  would  not  be  disturbed 
before  answer.     Petit  v.  Chevelier,  2  Beas.  i8i,  N.  J.  (i860). 

b.  \o  injnnRion  if  partnership  dissolved.  A  &  B  engaged  in  mining. 
A  who  was  entitled  to  dissolution,  enjoined  B.  He  denied  partner- 
ship in  "separating  works"  for  smelting  the  ore  mined. — Injun<5lion 
dissolved  against  "separating  works,"  and  regulated  as  to  mining, 
so  that  they  mi^ht  take  out  ore.  Wilson  v.  "Fichter,  3  Stock  Ch.  71, 
N.J.  U>S55)'- 

8.  Failure  of  undertaking  ground  for  dissolution.  Three  persons 
owned  an  island  in  the  Carribbean  Sea.  They  sold  half  to  B  for 
|;3c),ocH),  raised  a  working  '^apital  of  |2o,ooo,  and  gave  him  full  man- 
agement and  control  of  the  island,  for  sale  or  lease  on  joint  account. 
B  sold  out  to  A,  who  bought  an  additional  fourth,  the  remaing  fourth 
having  been  bought  by  C.  A  applied  for  dissolution  and  account. 
The  operation  failed  within  a  year  and  a  half,  and  the  concern  lost 
115,000.  C  was  individually  indebted  to  A  for  |2o,ooo.  C  objected 
tliat  the  undertaking  could  not  be  abandoned,  except  by  mutual  con- 
sent, until  the  land  was  sold  or  leased. — Dissolution.  As  no  period 
had  been  fixed  for  its  duration,  the  partnership  was  only  at  will. 
Wood  V.  Warner,  2  McCart.  81,  N.  J.  (1862). 

Losses  hivond  stipulated  contribution  justify  partner  in  dissolzdng 
partnership.  In  1871,  by  articles,  B  agreed  with  A,  to  furnish  capi- 
tal of  ^5,000,  and  improvements  necessary  to  carry  on  a  grist-mill, 
and  to  pay  A  |20o  a  month,  and  enough  more  to  give  him  one-half 
net  profits.  Business  was  to  continue  until  1875,  unless  it  did  not  pay 
expenses  bv  1873.  |5,ooo  sunk  by  1872,  and  B  closed  up  the  busi- 
ness. A  sued  for  salary  to  1873,  and  for  profits. — Verdidl  for  salary 
sustained,  but  set  aside  for  prospective  profits,  as  B  not  bound  to  sink 
more  than  $5,000.     Hill  v.  Smally,  8  Vr.  103,  N.  J.  (1874). 

9.  Failure  of  enterprise  and  partner's  miscondun  ground  for  dissolu- 
tion before  expiration  of  tertn.  A  &  B,  each  contributed  $4,000  to  a 
partnership  for  twenty-five  years,  to  manufadlure  lead-pencils.  Within 
a  year  the  business  proved  a  failure,  although  A  had  advanced  $200, 
000.  B  bought  materials  in  excess,  secretly  carried  off  stock  and 
sold  it,  suffered  judgments  against  the  firm,  and  had  its  assets  taken 
by  execution  without  A's  knowledge.  A  refused  to  advance  more 
capital,  and  B  had  none.  A  obtained  injuncftion,  and  B  moved  to  dis- 
solve it. — Injuncftion  continued,  and  receiver  appointed.  Profits,  the 
object  of  partnership,  couldn't  be  made  without  capital  or  co-opera- 
tion of  partners.  B's  misconducfl  an  independent  ground.  A  also 
entitled.as  a  creditor,  as  he  couldn't  sue  at  law.  Seighortner  v.  Weis- 
senborn,  5  C.  E.  Gr.  172,  N.J.  (1869). 

10.  Insolvency  of  partner  ground  for  appointment  of  receiver.  A  &  B 
dissolved,  and  A  enjoined  B  on  charge  of  fraud  and  of  insolvency, 
and  asked  for  receiver.  B  claimed  to  have  advanced  $20,000,  but 
was  unable  to  show  items,  though  he  kept  books. — Appointed.  B's 
insolvency  sufTicient  ground  for  appointment  of  receiver,  and  his 
.suspicious  claim  additional  reason.  Randell  v.  Morrell,  2  C.  F.  Gr. 
343,  N.J.  fiS66). 

11.  Lunacy  of  one  partner  gives  either  partner  the  right  to  dissolve. 
A  &.  B  went  into  partnership  for  a  term  of  fourteen  years,  either  part- 
ner to  have  the  right  to  dissolve,  on  notice,  at  the  end  of  seven  years, 
viz.,  March  31,  1874.     A  became  insane.     Bgave  notice  of  dissolution 


542 


I 


Pt.  3,  Ch.  I.  Dissolution.  §174- 

September  17,  1873,  but,  on  28  March,  1874,  withdrew  the  notice. 
Subsequently,  A,  by  his  next  friend,  brought  bill  to  dissolve  and  for 
a  receiver,  on  the  ground  of  A's  permanent  insanity.  Defence :  A 
has  not  been  judicially  declared  a  lunatic. — Decree.  B  could  not 
withdraw  his  notice  of  dissolution  ;  but  if  he  could,  Equity  would  still 
decree  dissolution  in  the  interest  of  a  lunatic,  and  appoint  a  receiver 
pending  the  appointment  of  a  committee.  The  sane  partner  has  no 
right  to  sole  control  where  lunacy  of  the  other  intervenes  to  alter  the 
position  of  the  parties.   Jones  v.  Lloyd,  L.  R.  18  Eq.  265  (1874). 

12.  Absconding  partner  not  necessarily  co-defendant.  Attachment  on 
mesne  process  creates  lien.  A  attached  B,  debtor  of  C  &  D,  and 
efFedled  service  upon  C,  who  then  took  benefit  of  insolvent  law.  D 
absconded. — Creditor's  lien  by  attachment  cut  out  assignee.  D's  ab- 
sconding justified  suit  and  judgment  against  C  alone  for  firm  debt. 
Thomas  v.  Brown,  10  Atlantic  Rep'r  713,  Md.  (1887). 


§174. 

<B)t  umc^M  of  a  partner  for  a  Mssolution  tarxBtii  bji  []is  ro- 
partner  before  tl)e  term  l)a3  eipireb  is  an  action  for  tlje  injurg.^ 

He  may  recover  damages  for  the  breach  of  the  con- 
;ra(5l,  and  they  will  be  measured  by  the  profits  made 
luring  the  preceding  months  of  the  partnership,  and 
lot  mitigated  by  the  plaintiff's  profits  made  in  a  new 
)usiness  begun  before  the  term  expired.^ 

I.  But  subject  to  adlion  for  damages,  a  partnership  for 
a  term  may  be  dissolved  at  will.*  Article  entitled: 
"  Power  of  partner  to  withdraw  at  will  from  partnership 
entered  into  for  a  definite  period,"  by  Benjamin  F.  Rex, 
Esq.,  23  Am.  L.  Reg'r  689,  1884. 

a.  Partnership  for  term  may  be  dissolved  at  will.  Local  item  suffi- 
cient notice  for  non-customer.  B  &  C  made  in  July  a  contracfl  for 
partnership  business  as  jewelers,  at  Ishpennig,  for  one  year,  and 
began  business  in  August.  At  end  of  Ocftober,  B  took  possession  of 
stock,  and  had  item  put  in  local  column  of  newspaper  announcing 
dissolution.  C  subsequently  bought  merchandise  in  Chicago  of  A, 
who  had  no  previous  dealings  with  the  firm,  and  gave  him  note  in 
suit  for  price. — ^Judgment  for  B.  Dissolution  at  will,  in  spite  of 
term.    Notice  sufl&cient.    Solomon  v.  Kirkwood,  55  Mich.  256  (1884). 

2.  Damages  for  dissolution.  By  articles,  three  months'  notice  required 
for  dissolution.  B  dissolved  without  notice,  and  A  sued  for  damages. 
— Recovered.     Measure  of  damages  prospedlive  profits  of  past  six 

543 


§175.  Dissolution.  PT.3,  Ch.  2. 

mouths   and  not  mitigated  by  A's  profits  iu  another  business  during 
the  three  months.     Bayley  v.  Smith,  lo  N.  Y.  489  (1853). 


-O- 


CHAPTER  II. 

HOW    DLSSOLUTION  IS   BROUGHT    ABOUT. 

§175.  i 

Notice  of  bissolutiou  must  be  %\vm,  aapt  uiljeu  causcb  bg 
kati),'  in  or  tier  to  terminate  a  partner's  implieb  autlioritt}  to 
binti  Ijis  CO -partner.-  ' 

No  special  form  of  notice  is  fixed  by  law,  but  any 
information  given  for  the  purpose  and  understood  to 
be  intended  for  notice,  will  answer  the  requirement.' 
Need  not  be  by  publication  or  advertisement.'* 

1.  Dissolution  by  death  requires  no  notice.  Prior  to  the  death  of  a 
partner  the  firui  employed  the  plaintiff  to  furnish  iron  work  for  a 
cotton  and  woollen  fa^lorj-.  The  work  w-as  begun  in  his  life-time. — 
A  general  contracfl  for  work  at  a  given  rate  is  excluded,  as  it  might 
be  indefinite  in  amount.  The  deceased  partner's  estate  is  liable  for 
pending  work,  if  specific  in  charadler,  until  the  job  is  completed 
under  a  contract  entered  into  during  his  life-time,  but  not  for  any 
other  contradl  entered  into  by  his  partners  on  behalf  of  the  firm. 
Caldwell  v.  Stileman,  i  Rawle  212,  Pa.  (1S29). 

2.  Note  given  by  partner  to  firm  creditor  without  notice  0/  dissolution, 
binds  a  partner.  After  dissolution,  B  gave  note  in  firm  name  of  B  & 
C  to  A,  who  had  no  notice  of  dissolution.  Defence  by  C :  B's  au- 
thority ceased  at  dissolution. — ^Judgment  for  A.  Note  charged  B, 
because  no  notice  of  dissolution.  Clement  v.  Clement,  35  N.  W. 
Rep'r  17,  Wis.  (1887). 

3.  Notice  of  dissolution  need  not  be  formal.  Judge  charged  that  casual 
conversation  in  the  street  was  not  notice  of  dissolution,  unless  un- 
derstood to  be  intended  for  notice. — Reversed.  Any  adlual  notice  is 
sufficient.     Davis  v.  Keyes,  38  N.  Y.  94  (1868). 

Assifrtiment  for  creditor  by  surviving  partner,  exceeds  his  power, 
but  cannot  be  attacked  collaterally  if  approved  by  court.  B,  partner  of 
C  &  D  died,  making  E  his  executor.  C  &  D  assigned  for  creditors 
in  a  Louisiana  court,  which  accepted  assignment  and  appointed  F 
syndic     A  attached  stock  in  United  States  Marshal's  custody  for 


544 


t 


' 


Pt.  3,  Ch.  2.  Dissolution.  §176. 

firm  debt.  F  applied  to  dissolve  attachment,  and  E  joined  in  oppo- 
sition.— Dissolved.  Surviving  partners  have  no  power  in  Louisiana 
to  dispose  of  firm  property  which  is  held  in  common  by  executor 
and  survivors ;  but  decree  accepting  assignment  a  judgment  which 
could  not  be  collaterally  attacked.  Tua  v.  Carriere,  117  U.  S.  R.  201 
(1886). 

Note  to  Uhl  v.  Harvey,  by  W.  W.  Thornton,  Esq.,  21  Am.  L. 
Reg'r  127  (1882). 


§176. 

Sl)e  kinb  of  notice  mries  tuitl)  t\)t  class  of  persons  to  be  no- 
tifieli. 

They  may  be  classified  as  follows :  First^  The 
new  customers.  Second^  The  old  customers.  Third ^ 
The  customers  of  particular  partners.^ 

An  advertisement  at  the  place  where  the  business 
is  carried  on,  is  sufficient  notice  for  persons  who  have 
I  had  no  dealings  with  the  firm." 

1.  The  lease  by  a  firm  is  not  a  trade  contrail;,  and 
charges  only  the  acftual  occupants. 

Retiring  partner  not  bound  to  notify  lessor.  A  let  premises  for 
three  years  to  B,  C  &  D,  with  option  to  renew.  During  the  term,  D 
sold  out  to  B  &  C.  Then  C  sold  to  F,  who  formed  a  new  partnership 
with  B.  They  held  over  one  year,  and  then  gave  up  the  premises  to 
A,  who  refused  to  accept  the  surrender,  and  sued  B,  C  &  D  for  the 
rent,  as  upon  a  renewal  of  the  term. — ^Judgment  for  C  &  D.  By  dis- 
solution and  departure,  C  &  D  freed  themselves  from  liability  or 
connedlion  with  the  premises  for  more  than  the  expiring  term.  By 
receipt  of  rent  from  B  &  E,  A  acknowledged  a  change  of  tenants. 
James  v.  Pope,  19  N.  Y.  324  (1859). 

2.  As  to  strangers  they  are  not  entitled  to  any  personal 
notice  of  the  dissolution,  but  are  bound  by  the  fa6l. 
They  could  not  rely  upon  information  obtained  by  en- 
quiry, that  the  defendant  was  a  partner.  "^ 

a.  New  customer  can't  hold  retired  partner,  though  dissolution  made 
without  advertisement,  and  business  contiriued  with  an  incoming 
partner  of  the  same  name.  B  &  C  dissolved,  and  notified  all  cus- 
tomers, but  did  not  advertise  the  dissolution.  B"s  son  took  his  place, 
and  the  new  firm  continued  the  business  as  B  &  C,  using  the  bill- 
heads with  B,  Sr.'s,  name  on  them.  A,  who  knew  nothing  of  the 
bill-heads,  inquired  of  neighboring  firms,  and  was  told  that  B,  Sr., 
was  the  partner.     A  sued  B,  Sr. ,  upon  a  firm  note,  taken  from  C,  for 

545 


5i--.  Dissolution.  Pt.  3,  Ch.  2. 

merchandise  sold  to  B  &  C,  in  reliance  upon  this  information  ;  B,  Sr., 
defended.— Not  liable.     Cook  v.    Penrhyn  Slate  Co.,   36  Ohio   135 

Sotice  of  dissolution  published  and  sent  to  customers  sufficient  to  ^ 
tt'nuiuale  partnership.  Dissolution  of  B  &  Co.  was  published  in 
London  Gazette,  and  the  notice  sent  to  all  the  customers  of  the  firm. 
C.  a  partner,  carried  on  business  as  B  &  Co.  A  sued  B  on  draft  of 
new  lirni  of  B  &  Co. — Not  liable.  Publication  gave  sufficient  notice 
of  dissolution.     Newsome  v.  Coles,  2  Camp.  617  (1811). 


§177. 


Custoiiicrs  of  tl)e  firm  must  \)<xm  actual  notice  of  tl)e  bisso- 

lution.' 

The  only  safe  course  would  be  to  send  a  circular  to 
the  customers,  and  get  an  acknowledgement  of  its 
receipt,  as  a(5lual  notice  must  be  brought  home  to 
every  customer  of  the  firm.  Mailing  a  copy  of  the 
advertisement,  announcing  the  dissolution,  would  be 
prima  facie  notice;  but  if  the  receipt  of  the  advertise- 
ment were  denied,  proof  of  adlual  notice  would  be 
necessary,  in  order  to  exonerate  the  partner  for  the 
acis  of  his  co-partners  since  the  dissolution." 

A  customer  is  one  who  deals  diredly  with  the  firm. 
The  purchaser  of  firm  paper  is  not  a  customer,  and 
the  habit  of  discounting  firm  paper  does  not  make 
him  a  customer.'^ 

Customers  dealing  with  the  firm  upon  the  credit 
of  a  person  who  suffered  himself  to  be  held  out  as  a 
partner,  must  be  notified.'  The  other  customers  of 
the  firm  could  not  hold  him,  either  with  or  without 
notice.' 

I.  Xotice  0/ dissolution  must  be  brought  home  to  old  customers.  A  & 
C  were  partners  as  stone-masons.  A  sold  B  quarrying  tools  to  be 
paid  for  with  stone.    B  afterwards  delivered  the  stones  to  A,  who  ac- 

546 


Pt.  3,  Ch.  2.  Dissolution.  §177. 

cepted  them,  and  used  them  for  his  own  purposes.  Before  B  deliv- 
ered the  stones,  the  firm  dissolved,  but  B  never  received  adlual  no- 
tice. A  &  C  brought  assumpsit  against  B,  to  the  use  of  C,  for  the 
price  of  the  tools.  A  letter  was  oftered  in  evidence,  announcing  the 
dissolution,  mailed  to  the  address  of  the  defendant,  a  customer,  who 
had  previously  dealt  with  the  firm,  and  no  return  of  the  letter  from 
the  dead-letter  office.  Notice  by  post  is  restricted  to  commercial 
paper,  and  don't  extend  to  other  business  relations.  With  corrobora- 
tive evidence  it  might  be  sufiicient  for  jury  to  infer  actual  notice,  but 
nothing  short  of  actual  notice  will  exonerate  partners.— Judgment 
reversed.  (Sharswood,  J.,  dissented  from  the  point  as  to  notice  of 
dissolution).    Kenney  v.  Altvater,  27  Smith  34,  Pa.  (1S74). 

Actual  notice  of  the  dissolution  is  required  to  every  custodier  0/  the 
Jinn.  The  father  was  in  a  firm,  and  his  son  was  adting  in  his  place. 
The  father  bought  out  the  other  members,  and  gave  the  business  to 
his  son,  who  a<5led  as  he  had  previously.  Ihe  firm  name  was  changed 
from  Newcomet  &  Co.  to  W.  N.  Newcomet,  but  the  creditors  of  the 
old  firm  relied  upon  its  continuance  and  did  not  observe  the  change 
in  the  checks. — They  were  entitled  to  notice,  though  a  stranger 
would  not  have  been.   Newcomet  v.  Brotzman,  19  Smith  185,  Pa.  (1S71). 

2.  Mailing  advertisement  not  notice  of  dissolution  if  receipt  denied. 
B,  C  &  D,  trading  in  Toledo  as  B,  C  &  Co.,  employed  E  as  purchas- 
ing agent  in  Detroit.  D  retired,  published  dissolution  in  Detroit, 
and  mailed  advertisement  to  F.  B  &  C  continued  to  employ  E,  who 
swore  he  never  received  it,  and  gave  him  a  note  for  services,  subse- 
quent to  dissolution.  He  endorsed  to  A,  who  sued  the  three.  D's 
defence:  Mailing  advertisement  sufficient  notice. — Recovered.  No- 
tice to  old  customers  must  be  actual.  Mailing  affords  presumption 
which  is  rebutted  by  denial.     Austin  v.   Holland,  69  N.  Y.  571  (1877). 

3.  Purchaser  of  firm  paper  from  a  third  person,  is  not  a  custovter  of 
the  firm,  and  is  entitled  to  general,  not  personal,  notice  of  dissolu- 
tion. B  retired  from  the  firm,  B,  C  &  Co.,  without  advertising  disso- 
lution. B  gave  accommodation  note,  in  firm  name,  to  D,  who  knew 
of  the  retirement.  A,  who  had  previously  bought  the  film's  paper, 
discounted  the  note  for  D.  A  sued  B,  C  &  Co. — ^Judgment  for  A. 
Though  prior  dealings  in  firm  paper  did  not  make  A  an  old  customer, 
he  was  entitled  to  general  notice  by  advertisement.  City  Bank  oi 
Brooklyn  v.  McChesney,  20  N.  Y.  240  (1859). 

4.  Notice  of  dissolution  necessary  to  prevent  firm's  incurring  liability. 
B  &  vSons,  who  ran  a  stage  line,  dissolved  in  1825,  but  the  members 
retained  shares  in  the  company,  which  continued  the  business.  B 
requested  gate-keeper  of  A  to  pass   stages  over  turnpike,  and  charge 

.  toll  to  B  &'  Sons.  A  rendered  account  to  B  &  Sons  for  1825  and  1826. 
B  died,  and  A  sued  sons  as  sur\'iving  partners,  and  obtained  verdidl. 
— Sustained.  Plaintiff  had  no  notice  of  dissolution.  Princeton  & 
Kingston  Turnpike  Co.  v.  Gulick,  i  Harr.   161,  N.  J.  (1837). 

The  name  of  a  partner  in  the  firm  designation  is  an 
announcement  which  even,^  customer  of  the  firm  relies 
on  as  a  representation  of  membership. 

Ostensible  partner  must  give  aRual  notice  of  dissolution,  even  to 
CJistomers  who  did  not  knoxv  of  his  connexion  ivith  the  firm.  B  &  C 
signed  certificates,  as  bankers,  in  .State  Department.  In  1S65,  C  sold 
out  to  B.  Dissolution  was  noted  on  the  certificate,  and  advertised. 
A  made  deposits  before  and  after  dissolution,  and  rate  of  interest  was 
increased  on  Vjoth  in  1870.     A,  who  received  no  a(5lual  notice  of  dis- 

547 


ji-g  Dissolution.  Pt.  3,  Ch.  3. 

solution,  hearinij  that  C  had  been  a  partner,  sued  him  for  principal 
and  increased  interest.  Defence:  Publication  equivalent  to  notice. 
Increase  in  rate  of  interest  on  previous  deposit  unauthorized,  and 
subseuuent  deposits  B's  sole  debt. — Recovered.  C  having  been  an 
ostensible  partner,  liable  after  dissolution,  because  he  failed  to  give 
aclual  notice.   Howell  v.  Adams,  68  N.  Y.  315  (1877). 

5.  .  /  nexu  customer  cannot  charge  a  partner  after  dissolution.  B  en- 
tered at  a  Trenton  banking-house,  signatures  of  B  &  C,  to  give  his 
brother,  C,  credit,  in  1S43.  C  kept  a  country  store  on  land  near 
Trenton,  but  broke  up  business,  and  shipped  his  stock  to  Philadel- 
phia. Eleven  years  afterwards,  he  drew  a  note  in  name  of  B  &  Co., 
and  had  it  discounted  by  bank  A,  in  Philadelphia.  A  sued  B.  De- 
fence :  No  partnership. — Had  there  been  a  partnership,  A  was  not  a 
customer,  and  not  entitled  to  notice  of  dissolution.  F.  &  M.  Bank  v. 
Green,  i  Vr.  366,  N.  J.  (1863). 


— O- 


CHAPTER  III. 

THE  EFFECT  OF  DISSOLUTION. 

§178. 

^\)t  Liissolution/^r  se  puts  an  enlt  to  a  |3artner's  autljoritg 
to  binti  l)is  co-fiartncrs.^ 

As  a  partner's  authority  continues  until  dissolution, 
it  is  necessary  to  prove  a  dissolution,  in  order  to  take 
away  the  partner's  right  to  continue  the  business.  If 
the  business  is  broken  up  by  a  sale  of  the  stock  and 
a  removal  from  the  city  of  one  partner,  the  remaining 
partners  can  bind  him  by  commercial  paper.  The 
suspension  might  be  temporary,  although  succeeded 
by  another  firm  at  the  old  stand."  % 

A  partner,  upon  dissolution,  is  fu7i5lus  officio,^  and 
has  no  authority  to  charge  his  co-partners  by  a  con- 
trail.    If  he  made  a  firm  note  in  order  to  raise  money 

548 


I 


Pt.  3,  Ch.  3.  Dissolution.  §178. 

to  pay  firm  debts,  the  other  partners  would  not  be 
liable  on  the  note,  even  if  the  proceeds  were  expended 
in  paying  the  firm  debts.  By  a  dissolution  the  part- 
ners do  not  become  simply  joint  debtors,  or  joint  cred- 
itors, but  remain  partners  as  to  past  transactions,  and 
third  persons  are  entitled  to  treat  them  as  such.^  The 
change  in  their  position  a£fe(5ls  onl}^  future  a(5ls, 
whether  entirely  new  or  modification  of  former  trans- 
aAions."' 

He  could  not  admit  a  firm  debt  already  barred  by 
the  statute  of  limitations,  or  restore  a  firm  obligation 
by  his  acknowledgement.®  Nor  would  part  payment 
by  a  joint  debtor  affeCl  his  co-obligor.' 

1.  .-/  dissolutio?i  by  a  sheriff's  sale  revokes  the  mutual  agency,  and 
neither  partner  can  deprive  his  co-partner  of  the  statutory  proteRion 
by  an  acknoiuledgement  of  the  firm  debt.  B  &  C,  partners,  bought 
flour  of  A,  and  gave  firm  note  for  the  price.  Firm  was  sold  out  by 
sheriff,  in  1S52.  In  1S55,  B  renewed  note  to  A  in  the  firm  name. 
About  i860,  A  sued  B  &  C.  Defence  by  C  :  Statute  of  limitations. — 
Judgment  for  C.  Execution  dissolved  the  firm,  and  no  assets  for 
liquidation.  B's  authoritv  had  expired.  Reppert  v.  Cohnn,  12  Wright, 
248,  Pa.  (1864). 

After  dissolution  appearance  of  partner  for  his  co-partner  is  not 
binding.  After  A  &  B  dissolved.  B  authorized  attorney  to  enter  ap- 
pearance for  firm  in  suit  by  C ;  who  obtained  judgment.  A  &  B 
brought  bill  to  avoid  judgment. — Dismissed  as  to  B.  Judgment 
opened  as  to  A.  who  was  let  into  a  defence.  Templar  v.  Bank,  26 
Fed.  Rep'rsSo  (1886). 

2.  Notice  of  dissolution  not  imputed  to  creditor.  B  &  D,  at  Portland, 
succeeded  B  &  C  in  business,  and  entered  collections  and  payments 
made  for  B  &  C  in  their  books.  A's  bank,  which  had  discounted  B 
&  C's  note  on  loth  May,  1S34,  sued  on  the  last  renewal,  dated  28th 
October,  1836,  which  E  endorsed  for  accommodation,  and  the  bank 
discounted.  At  the  trial,  the  judge  imputed  knowledge  of  the  disso- 
lution to  E,  who  endorsed  the  renewal,  but  not  the  original  note,  and 
to  the  bank.  The  transfer  of  business  would  not  escape  an^-body  in 
Portland.— Error.  The  court  could  not  infer  the  facft  of  dissolution, 
and  the  knowledge  of  it  must  be  brought  home  to  the  taker  of  the 
original  note.  The  business  ir.-rht  be  onlj-  suspended,  and  did  not 
continue  for  liquidation.  B,  as  liquidating  partner,  could  make  the 
note.     Brown  v.  Clark,  2  Harris  469,  Pa.  (1850). 

3.  After  dissolution,  partner  cannot  bind  his  co-partner  by  admission . 
C  sold  out  to  B.  who  gave  note  to  A  in  name  of  B  &  C.  A  sued  on 
the  note.  Defence  by  C  :  Dissolution,  and  notice  to  A.  On  trial  A 
called  B.  who  testified  to  dissolution  and  notice  to  A  before  note  was 
given.     In  rebuttal :  A  read  in  evidence  an  unsigned  paper  in  B's  haud- 

549 


§iy8.  Dissolution.  Pt.  3,  Ch.  3. 

writing,  stating  that  A  had  no  notice  of  dissolution  when  note  was 
given.  Judgment  for  A. — Reversed.  Paper  incompetent  to  bind  C, 
as  an  acimission,  because  B's  authority  ceased  upon  dissolution ; 
incompetent  to  contradi(5l  B's  testimony  in  chief,  because  A  could 
not  impeach  his  own  witness.    Nichols  v.  White,  85  N.  Y.  531  (1881). 

4.  A  partner  may  7iei^otiate  firm  paper  with  stranger's  accommodation 
endorsement  until  dissolution,  ajid  afterwards  if  no  notice.  B  en- 
dorsed blank  form  of  promissory  note  for  C  &  D,  partners  for  term 
of  three  years.  B  brought  bill  for  dissolution,  and  C  answered  that 
he  too  wished  to  dissolve.  Then  C  filled  up  form  as  a  firm  note,  and 
delivered  it  to  A  for  a  firm  debt.  B's  defence:  Firm  dissolved  by 
answer,  and  C  no  authority  to  make  note. — Judgment  for  A.  No 
dissolution  until  decree,  and  B  liable  in  either  event,  unless  A  knew 
that  endorsement  was  made  for  the  benefit  of  C  &  D  as  a  going  firm. 
Smith  V.  Mulock,  i  Roberts  569,  N.  Y.  (1863). 

Creditors  with  notice  of  dissolution  cannot  hold  the  firm  on  a  note 
made  by  an  other  than  a  liquidating  partner.  A  partnership  asso- 
ciation carried  on  a  country  store  as  "The  Farmer's  Union,"  and  A 
sued  the  company  on  a  note  given  by  B,  a  member,  for  money  lent 
and  used  to  pay  its  debts.  Defendants  offered  to  prove  a  dissolution 
with  A's  knowledge  of  it,  and  that  B  was  not  liquidating  partner. 
RejecT:ed  and  verdict  for  A. — Judgment  reversed.  Without  authority 
conferred  by  the  co-partners,  no  member  of  the  dissolved  firm,  ex- 
cept the  liquidating  partner,  can  bind  them  even  for  a  settlement  of 
the  business.     McCowin  v.  Cubbison,  22  Smith  358,  Pa.  (1872). 

5.  After  dissolution  either  partner  may  colleFl  fir^n  claim..  C  retired 
without  selling  his  interest,  and  settled  firm  claim  of  11,525  against 
U  for  I700.  A  became  receiver,  and  sued  D  for  whole  sum,  alleging 
that  D  had  notice  of  C's  retirement. — ^Judgment  for  A  for  11125. — No- 
tice immaterial.  C  not  having  sold  his  interest,  might  collect  firm 
claim.  Jury  found  settlement  fraudulent  to  extent  of  ^125.  Fettretch 
V.  Armstrong,  5  Rob.  339,  N.  Y.  (1868). 

Demand  of  one  partner  on  firm  note  sufficient.  B  &  C  gave  firm 
note  to  A,  with  D  as  endorser.  No  place  of  payment  named.  Firm 
put  in  bankruptcy.  Notary  made  demand  at  last  place  of  business, 
and  of  B  personally.  A  sued  D.  Defence :  Should  have  made  de- 
mand of  C  also. — Recovered.  If  co-makers,  not  partners,  demand 
must  be  made  of  all ;  but  if  partners,  demand  of  one  sufficient.  Gates 
V.  Beecher,  60  N.  Y.  518  (1875). 

Partners  may  divide  claims,  and,  if  debtors  assent  to  severance, ' 
one  partner  may  sue  alone.     On  dissolution,  debtor  to  firm  which 
divided  its  claims  between  the  partners,  A  &  B,  promised  to  pay  A. 
He  sued  for  the  debt.— Entitled  to  recover.    Blair  v.  Snover,  5  Hal. 
15.^,  N.J.  (1828). 

Partners  may  sever  obligation  to  pay  creditors,  and  thev  will  be 
bound  by  the  severance.  B  &  C,  partners.  B  retired,  and  sold  out  for 
$700,  to  C,  wlio  took  the  firm  assets  of  fg.ooo.  Each  agreed  to  pay 
his  half  of  the  firm  debts,  which  were  about  |i,500.  C  believed  him- 
self solvent,  but  it  appears  after  about  five  months  that  he  was  in- 
solvent at  the  time.  A,  appointed  receiver  of  B  &  C,  and  also  of  C, 
applied  to  set  aside  chattel  mortgages  and  assignment  for  his  credit- 
ors.—Judgment  for  defendants.  Sale  in  good  faith  a  severance  of 
assets,  and  agreement  of  each  partner  to  pay  half  the  debts  a  sub- 
stitute for  his  equity.    Stanton  v.  Westover,  loi  N.  Y.  265  (1886). 

^    ,r°-^^^^''^  acknowledgement  of  debt  not  binding  on  co-partner  after 
dissolution.     B  &  C  gave  note  to  A,  in  1816,  and  shortly  after  dis- 

550 


Pt.  3,  Ch.  3.  Dissolution.  §179. 

solved.  In  1824,  A  sued  on  the  note.  B  pleaded  Statute  of  Limita- 
tions. C  let  judgment  go  by  default  against  himself,  and  testified  on 
trial  that  the  note  was  due  and  unpaid. — Judgment  for  B.  Levy  v. 
Cadet,  17  S.  &  R.  126,  Pa.  (1827). 

7.  Partial  payment  by  partner  after  dissolution  and  notice,  does  not 
toll  Statute  of  Limitations  agaitist  co-partner.  B  &  C  gave  note  to 
A  in  1864.  Partnership  dissolved  in  that  year.  A  received  notice  of 
the  dissolution  in  July,  1868.  C  made  payments  on  account  of  the 
note,  in  June,  1868,  July,  1870,  and  November,  1871.  In  1876,  A 
brought  suit  on  the  note.  Defence  by  B :  Statute  of  Limitations. — 
Judgment  for  B.     Mayberry  v.  Willoughby,  5  Neb.  368  (1877). 


§179. 

ISpon  a  Mssolution,  tl)e  ioiut  title  is  iiicibcb  into  separate 
titles. 

But  the  dissolution  must  be  consummated.  When 
a  contra6l  is  made  to  divide  the  assets,  and  it  is  fol- 
lowed by  a  separation  of  them  into  lots,  neither  part- 
ner acquires  title  until  the  contradl  is  executed.  Each 
partner  must  deliver  one  lot  to  the  other.^ 

I.     Konigsburg  v.  Launitz,  supra  'i  loi,  n.  i. 

Firm  title  not  changed  into  separate  ownership  until  agreement  for 
dissolution  executed.  A  &  B,  jewelers,  agreed  to  dissolve  partner- 
ship, and  divided  the  assets  between  them.  B  refused  to  sign  agree- 
ment, and  A  obtained  injundlion,  but  B  sold  assets,  and  refused  to  pay 
proceeds  to  receiver.  On  attachment  for  contempt,  B  claimed  to  have 
sold  only  his  separate  property. — Committed.  Title  to  firm  prop- 
erty not  superceded  until  agreement  executed.  Fitzgerald  v.  Christl, 
5C.  E.  Gr.  90,  N.J.  (1869). 


551 


§i8o.  Receivership.  Pt.  3,  Ch.  4. 

CHAPTER  IV. 

THE  APPOINTMENT  OF  A  RECEIVER. 

§180. 

(Tlic  appointment  of  a  vtttmx  in  not  a  ncassarg  consequence 
of  a  iiissolution  bij  juiiicial  tiecree. 

Unless  cause  is  shown  why  the  business  should  be 
taken  out  of  the  hands  of  a  partner,  he  will  be  al- 
lowed to  wind  up  the  business  on  account  of  his  ex- 
perience and  of  expense  saved  to  the  firm/ 

vSufficient  ground  to  displace  a  partner,  who  is 
entitled  to  administer,  is  a  pre-requisite  for  ^he  ap- 
pointment of  a  receiver.  Unless  he  adls  in  bad  faith, 
violates  his  agreement,  attempts  to  break  up  the  busi- 
ness, or  is  insolvent,  his  right  will  not  betaken  away. 
Bad  faith  or  fraud  will  deprive  him  of  the  right.  A 
partner,  like  any  owner,  may  prevent  waste  by  a  co- 
partner.^ 

If  the  court  cannot  effedl  a  liquidation  by  one  part- 
ner, or  the  business  itself  should  be  continued  in 
order  to  preserve  a  valuable  good- will,  the  partners 
are  given  a  chance  to  compete  for  the  business,  which 
is  sold  to  the  highest  bidder.  The  assets  are  valued 
according  to  what  they  are  worth  to  the  partner  con- 
tinuing the  business  at  the  old  stand.' 

I.  Appoint)nent  of  receiver  not  made,  of  course,  against  zvill  of  capi- 
talist partner.  A  &  B,  partners  at  will.  B  advanced  capital,  and 
business  carried  on  in  his  name.  A  enjoined  B  from  excluding  him,  | 
and  demanded  appointment  of  receiver.  B  denied  exclusion. — In- 
junAion  dissolved,  and  appointment  refused.  No  reason  for  taking 
business  out  of  B's  hands.  He  owned  the  capital  and  stock,  and, 
therefore,  reason  for  appointment  of  receiver,  i.  e.,  equal  rights  of 
partners  don't  apply.     Cox  v.  Peters,  2  Beas.  39.  N.  J.  {1S60). 

^Unprofitableness  of  business  ground  for  dissolution,  but  not  for  a 
receiver.     A  enjoined  B  and  asked  for  appointment  of  receiver.     B 

552 


Pt.  3,  Ch.  4.  Receivership.  U81. 

denied  cause  for  injun(5lion,  aud  claimed  right  to  settle  up  business 
himself.  Injundlion  dissolved,  and  appoinment  refused.  If  business 
unprofitable,  expense  saved  by  partner's  liquidation.  Moiesv.  O'Neill, 
8  C.  E.  Gr.  207,  N.J.  (1873). 

2.     BirdsaP  v.  Cole,  supra  ^  loi,  n.  i. 

iVo  receiver  appointed  unless  partner  has  violated  agreement.  B 
owned  site,  and  sold  half  to  A,  and  they  built  and  furnished  a  paper- 
mill.  A  enjoined  B,  because  he  sold  paper  on  own  account,  refused 
ip formation,  and  carried  off  firm  books.  B  explained  that  A  gave 
him  a  mortgage  for  I400,  but  finding  on  statement  of  account  that 
debt  was  |i,ooo,  agreed  to  let  B  sell  goods  on  own  account,  to  make 
up  balance. — Appointment  of  I'eceiver  refused.  Parkhurst  v.  Muir, 
3  Hal.  Ch.  307  (1848).  On  reference  to  master,  he  is  limited  to  account 
since  settlement,  unless  bill  amended  to  pray  account  from  begin- 
ning.    3  Hal.  Ch.  555,  N.  J.  (1S49). 

3.  Evidence  of  partner' s  intention  to  break  up  business  ground  for  ap- 
pointment of  receiver.  A  enjoined  B,  his  co-partner,  who  transferred 
his  separate  personal  property  to  his  son,  and  gave  notice  of  the  trans- 
fer to  a  commercial  agency,  with  intent,  A  alleged,  of  impairing  firm 
credit,  and  A  asked  for  receiver. — Appointed.  Other  fadls,  not  denied, 
also  showed  B's  intention  to  break  up  the  business.  Sutro  v.  Wag- 
ner, S  C.  E.  Gr.  388,  N.  J.  (1873). 

Conversiojt  of  firm  assets  and  withholding  information,  ground 
for  appointt>ient  of  a  receiver,  if  believed.  A  charged  that  B  con- 
verted assets  to  his  own  use,  while  A  was  insane,  withheld  informa- 
tion, and  did  not  keep  corredl  accounts.  B  denied  A's  insanity,  and 
all  fraud. — Fa<5ls  supported  A's  equity  below,  B's  defence  above. 
Doughty  V.  Doughty,  3  Hal.  Ch.  227,  N.  J.  (1848). 

4.  Injundlion  by  co-owner  to  prevent  waste,  and  security  for  his  share 
of  remits.  A  &  B  owned  a  printing-office.  B  used  it  for  printing  paper. 
A  brought  bill  for  division,  or  sale  of  property,  an  accounts  of  rents 
and  profits,  andinjundlion  against  B's  injuring  premises.— Injun<5lion 
to  prevent  waste  and  security  for  rents  from  B.  Low  v.  Holmes,  2 
C.  E.  Gr.,  N.J.  (1864). 

5.  On  dissolution  court  will  compel  partners  to  bid  for  the  stock  and 
good-will.  Brothers  in  partnership  fell  out,  and  business  couldn't  be 
conducted  with  comfort  or  advantage.  The  court  below  appointed  a 
receiver. — Reversed.  The  Supreme  Court,  in  order  to  preserve  the 
business  established  by  the  joint  enterprise  and  contribution,  gave  it 
to  the  highest  bidder.     Slemmer's  Appeal,  8  Smith  168,  Pa.  (1868). 


§181. 

^\)t  appointment  of  a  receber  is  a  matter  of  course  against  tlje 
,  Dentiee  of  a  partner's  sl]are. 

The  vendee  was  never  sele(5led  by  the  plaintiff,  and 
has  no  claim  to  manage  the  business.^ 

553 


§i82.  Receivership.  Pt.  3,  Ch.  4. 

The  vendee  of  a  partner  has  less  right  than  his 
vendor  to  ask  for  the  appointment  of  a  receiver,  as  he 
bins  only  a  right  to  compel  a  settlement,  and  not  a 
right  of  joint  control;"  but  if  he  made  out  a  sufficient 
jrround  for  the  appointment  the  court  would  put  a 
receiver  in  the  defendant  partner's  place. 

1.  Appointment  of  receiver,  of  course,  against  partner"  s  vendee.  A  & 
W  agreed  to  manufadlure  cotton,  and  to  contribute  equally.  They 
bought  mill  for  |i,ooo.  A  paid  |6oo,  B  I125,  and  agreed  to  make  up 
diiTerence.  B  sold  out  to  C,  who  knew  B  had  not  paid  up  his  quota. 
C  claimed  1-2,  and  took  possession  of  and  manufadlured  shingles.  B 
was  insolvent,  and  C  refused  to  pay  any  debts.  A  enjoined  him,  and 
asked  for  a  receiver. — Appointment.  A  plain  case.  Heathcot  v.  Ra- 
venscroft,  2  Hal.  C.  113,  N.  J.  (1847). 

Van  Reusalaer  v.  Emery,  supra  'i  loi,  n.  i. 

2.  Purchaser  of  a  partner's  interest  no  better  claim,  to  injunBion  or  re- 
ceiver than  a  partner.  A,  B  &  C,  manufacflurers  under  a  patent.  Firm 
property  worth  |2 1,000,  liabilities  |i 6,000.  B  had  put  in  and  drawn 
out  ;f  10,000,  and  C  had  withdrawn  118,000.  Judgment  obtained  against 
C,  and  his  interest  sold  by  sheriff  to  A,  for  I30.  A  asked  injundlion 
and  receiver. — Refused.  Though  sale  dissolved  partnership,  B  might 
settle  up  business.  His  charge,  that  A  was  not  a  bona  fide  purchaser, 
and  that  he  conspired  with  C  to  break  up  business,  to  deprive  B  of 
patent,  would  prevent  aid  to  them  by  chancellor.  Reuton  v.  Chap- 
lain, I  Stock.  62,  N.  J.  (1852). 


§182 


vl  pnrtner  maij  forfeit  1)13  rigl)!  to  tl)e  appointment  of  a  w- 
cciofr  bn  lacljes. 

Unless  the  application  is  made  at  once  upon  the 
happening  of  the  cause,  the  plaintiff  is  deemed  to 
have  waived  his  right  to  insist  upon  it  as  a  ground 
for  the  appointment.* 

I .  Laches  aeprives  comtlainant  of  right  to  appointment  of  receiver.  A 
brought  bill  against  B,  April  9,  and  notified  him  of  application  to  be 
made  for  receiver,  Ajjril  16.  Counsel  agreed  to  let  the  matter  go  over, 
and  A  notified  B,  July  31,  of  renewal  to  be  made  August  i.  B  required 
adequate  notice  —Refused.  Delay  a  ground  for  non-appointment. 
Tibbals  v.  Sargeaut,  1  McCart.  449,  N.  J.  (1862). 

554 


Pt.  3,  Ch.  5.  Liquidation.  §183-4. 

CHAPTER  V. 

LIQUIDATION. 

§183. 

Qi[)t  onln  roari  to  binb  tl)e  partners  after  bissolution  is  bji 
proof  tl)at  tl)e  partner  is  entitleti  to  keep  tl)e  firm  in  eiistence  for 
tlje  purpose  of  settlement. 

This  is  the  fun6lion  of  a  liquidating  partner. 

I.     McCowinv.  Cubbison,  supra  ^  178,  n.  4. 

Soliciting  trade  from  receiver  an  interference.  B  appointed  re- 
ceiver of  A  &  B.  A's  son,  who  had  been  employed  by  firm,  took  list 
of  customers  and  solicited  trade,  announcing  appointment  as  a  break- 
up of  the  firm  business. — -Committed  for  contempt  in  interfering  with 
receiver,  who  kept  the  business  as  a  going  concern.  Heln.ore  v. 
Smith,  25  Ch.  D.  449  (1885). 


§184. 


®l]e  liqnibating  partner  Ijas  tl]e  firm's  capacity  to  l>o  n)l)at  is 
requisite  for  a  settlement  of  tl)e  business. 

He  is  the  firm  for  liquidation.  He  may  sell  on 
credit.^  As  he  continues  the  firm  for  liquidation,  he 
may  exert  the  firm's  discretion.^  Commercial  paper 
is  an  incident  to  the  liquidation.^  He  can  make  a 
chattel  mortgage  where  the  seal  is  treated  as  surplus- 
age." 

In  New  York  the  liquidating  partner  is  denied  the 
capacity  to  make  commercial  paper.  From  the  limita- 
tion of  his  power,  it  resulted  that  his  note  merged  the 
firm  debt  and  precluded  the  creditor's  recovery  against 
the  other  partners."^     Elsewhere  a  note  in  his  name  is 

555 


§184.  Liquidation.  Pt.  3,  Ch.  5. 

simply  ambiguous.  The  form  is  not  notice  by  con- 
struction of  law  of  an  individual  transadlion,  but  the 
character  of  the  paper  is  a  fac1:  for  the  jury."  The 
note  might  be  in  his  capacity  of  liquidating  partner, 
when  the  firm  would  receive  the  proceeds,  or  it  might 
be  his  individual  contrail,  which  both  parties  intended 
;is  a  substitute  for  the  firm  contra6l. 

I.  Liquidating  partner  may  iclt  on  credit.  On  dissolution  of  a  firm, 
composed  of  A,  B,  C  &  D,  carriage  makers,  C  &  D  were  made  liqui- 
datiii}^  partners.  They  sold  a  carriage  to  a  hack-driver  on  credit. 
A  &  B  surcharged  them  with  the  loss  incurred  by  this  sale.  No  cus- 
tom of  the  firm  was  proved  of  making  sales  on  credit,  and  although 
occasional  sales  were  so  made,  a  chattel  mortgage  or  lease  was  ordi- 
narily taken,  where  the  law  permitted  it,  as  security. — Surcharge 
stricken  out.  The  liquidating  partner's  discretion  is  unlimited  in 
making  a  settlement  of  the  business.  Although  an  error  of  judg- 
ment, the  sale  on  credit  was  made  in  good  faith.  Petry's  Appeal,  ii 
W.  N.  512,  Pa.  (1882). 

3.  Surviving  partner  tnay  exert  an  option  to  reneiv  a  lease  to  the  firm. 
A  &  B,  partners,  took  a  lease  for  three  years  from  C,  with  an  option 
to  renew  for  two  years.  B  died,  and  A  exerted  the  option,  but  C  re- 
fused to  extend  the  term,  and  A  sued  for  breach.  Defence :  A  could 
renew  only  as  a  partner,  and  by  so  doing  he  would  be  enabled,  after 
dissolution,  to  charge  the  firm  for  rent. — Judgment  for  A.  He  suc- 
ceeded to  all  firm  rights,  and  his  relations  to  B's  estate  do  not  con- 
cern the  lessor.     Betts  v.  June,  51  N.  Y.  274  (1873). 

3.  Partnership  without  a  term  is  at  will.  A  partner  need  not  con- 
tribute for  stock  taken  bv  his  co-partners  in  a  corporation  projefled 
with  his  concurrence,  to  develop  the  firm's  interest.  After  dissolution 
a  partner  is  not  trustee  for  his  co-partners,  unless  he  makes  profits  by 
transa^ing  the  same  business.  Partner  mav  discount  firm  paper  to 
repay  his  advances.  A,  B  &  C,  partners,  sold  half  a  patent  right  for 
Xew  York  and  New  Jersey,  to  D,  and  agreed  with  him  to  form  a  cor- 
poration for  working  the  territory.  D  arranged  with  B  &  C  to  assess 
theprice  which  he  paid,  upon  each,  according  to  his  share  of  the  corpo- 
rate stock.  The  projecl  fell  through.  A  retired  from  the  firm,  and 
bought  up  D's  half  and  also  the  firm's  half  of  an  independent  claim- 
ant from  the  original  patentees.  A  did  business  in  New  York  and 
New  Jersey,  but  at  a  loss.  To  repay  his  advances  to  the  firm,  he  had 
Its  notes  discounted,  and  charged  it  with  the  discount.  A  brought 
account  against  B  &  C— As  duration  of  the  firm  was  not  fixed,  A  was 
not  liable  for  breaking  it  up.  He  could  not  be  charged  the  price  he 
paid  for  C's  lialf  of  the  patent  right,  nor  could  B  &  C  be  allowed  the 
amounts  which  tl:ey  suljscribed  to  the  proje<fted  corporation.  The 
discount  paid  by  A  was  allowed.  Fletcher  v.  Reed,  125  Mass.  312 
(1881). 

Partner's  denial  of  liability  on  commercial  paper  made  in  firm 
name. puts  burden  on  plaintiff.  B  &  C  dissolved,  and  bv  notice  au- 
thorized either  partner  to  use  the  firm  name  in  liquidation.  B  took 
m  settlement  from  D,  a  firm  debtor,  a  note  payable  to  the  order  of 

556 


Pt.  3,  Ch.  5.  Liquidation.  §185. 

B  &  C,  in  liquidation,  and  endorsed  it  in  like  manner  to  A,  who 
sued  B  &  C,  as  endorsers.  Defence  by  C  :  Endorsement  not  made  in 
liquidation.  Charge:  Burden  of  proof  on  C. — Reversed.  On  denial 
of  liability,  burden  of  proof  on  A.  Woodson  v.  Wood,  37  Alb.  Law 
Journal,  389  Va.  (1888). 

4.  Partner  tnay  bi)id  firtn  by  a  chattel  mortgage  after  dissolution,  if 
mortgagee  has  notice  of  it.  B  made  a  note,  and  executed  a  chattel 
mortgage,  in  B  &  C's  name,  to  E,  for  a  firm  debt,  November,  1877. 
The  firm  dissolved  in  1876.  In  December,  1877,  C  sold  to  D  horses, 
which  had  belonged  to  the  firm.  A,  E's  assignee,  for  value,  replevied 
the  horses.  Defence:  Note  and  mortgage  made  after  dissolution, 
without  C's  knowledge,  and  after  title  to  horses  had  vested  in  C. — 
Recovered.  B  could  bind  firm  by  a  chattel  mortgage,  because  the 
seal  is  surplusage,  and  as  E  had  no  notice  of  the  dissolution,  he  could 
rely  upon  B's  authority.     Woodruff  v.  King,  47  Wis.  261  (1879). 

5.  Satisfaflion  of  firm  debt  by  individual  note  of  liquidating  partner. 
B,  as  liquidating  partner  of  B,  C  &  D,  gave  A  his  individual  note 
for  a  firm  note,  which  B  took  up  and  destroyed.  He  credited  him- 
self on  the  firm  books  with  the  payment  of  the  debt.  B,  not  paying 
in  full,  A  sued  B,  C  &  D  for  the  balance  of  the  original  claim. — 
Judgment  for  C  &  D.  A  took  B's  note  in  satisfa<5lion  of  the  firm 
note,  and  the  change  of  debtors  was  sufficient  consideration  for  the 
substitution.     Waydell  v.  Luer,  3  Denio  410,  N.  Y.  {1846). 

6.  fury  tnust  find  whether  note  of  liquidating  partner  was  given  on 
firm  or  on  separate  account.  B,  C  &  D  dissolved  in  May,  and  ap- 
pointed B  liquidating  partner  He  made  in  August,  but  ante-dated, 
notes  in  his  name,  payable  to  the  firm,  and  endorsed  them  in  its 
name  A,  who  discounted  them,  had  no  previous  transactions  with 
the  firm.  The  evidence  was  confliAing  as  to  the  proceeds.  A  sued 
all,  and  C  and  D  made  defence.  Court  charged  for  defendants,  be- 
cause form  of  commercial  paper  was  notice  to  A  of  an  individual 
transaAion . — Reversed.  The  appointment  of  B  as  a  liquidating  part- 
ner made  his  individual  name  ambiguous,  and  if  used  for  the  firm  and 
proceeds  of  notes  went  in  liquidation,  C  and  D  were  bound.  Court 
could  not  take  the  question  away  from  the  jury.  Lloyd  v.  Thomas, 
29  Smith  68,  Pa.  (1875). 


§185. 


If  no  liquidating  partner  is  appointe^,  anp  partner  roljo  con- 
tinues tl)e  business  cau  binb  l)is  co-partners  for  a  liqui^ation. 

As  the  partners  could  prevent  any  co-partner  from 
continuing  the  business  except  by  their  authority  or 
appointment,  his  a6ling  will  bind  them/  In  Pennsyl- 
vania, giving  commercial  paper  is  an  incident  to  the 
liquidation.^ 

557 


|i86_7.  Liquidation.  Pt.  3,  Ch.  5. 

I  When  no  li<juuialing  partner  appointed,  either  partner  may  ail. 
A  &  B,  partuc-s.  After  dissolution  B  compromised  firm  claim  against 
C  a'&.  B  sued  C.  Defence :  Compromise  and  release.  Reply:  B's 
authority  ceased  with  dissolution.— Judgment  for  C.  There  being  no 
li(iuiilating  partner,  either  might  acT:.  Hawn  v.  Land  &  Water  Co., 
i6  v.  Rep'r  196,  Col.  (1887). 

2.  Unless  partners  prevent  co-partner  from  aFling  as  liquidati^ig  part- 
ner,  t/iey  will  be  bound  by  him,  although  they  did  not  appoint  him. 
B,  C  (S:  f)  sold  their  works,  ceased  business  and  dissolved  in  the  spring 
of  1873,  without  appointing  a  liquidating  partner.  D  was  also  partner, 
managing  direcflor  and  member  of  discount  committee  in  banking 
firm ;  A,  which  discounted  two  notes  for  D,  made  by  and  to  him  in  B, 
C  &  D's  name,  and  endorsed  by  him,  and  a  third  note,  endorsed  by 
D,  in  B,  C  &  D's  name;  all  made  and  discounted  in  1875.  A  sued  B 
and  C.— Recovered.  As  the  charge  denied  A's  right  to  recover,  un- 
less D  was  liquidating  partner,  verdict  settled  that  defendants  knew 
D  acled  as  such,  and  did  not  objedl.  Fulton  v.  Central  Bank  of  Pitts- 
burgh, II  Norris  112,  Pa.  (1879). 


§186. 

Z\)t  riglit  to  liquibatc  tl]c  bushuss  passes  xmi\)  i\\t  ntiring 
partner's  interest. 

The  appointment  of  the  continuing  partner  is  part 
of  the  security  for  his  advance  of  the  retiring  part- 
ner's interest  in  the  firm.^ 

I.  Right  to  liquidate  by  contrail.  A  advanced  to  B,  retiring  partner, 
his  capital,  and  agreed  to  assume  the  debts,  colle(5l  the  credits  and 
make  a  settlement.  B,  for  value  received,  released  C,  a  firm  debtor, 
•who  had  notice  of  the  dissolution.  A  sued  C,  and  he  set  up  the  re- 
lease.— Recovered.  B's  assignment  of  interest  until  settlement,  as 
security  for  advance  and  assumption  of  debts,  carried  his  right  of 
control.     Gram  v.  Caldwell,  5  Cow.  489,  N.  Y.  (1826). 


§187. 


^\\t  power  of  settling  up  tl)e  business,  if  committed  to  o 
stranger,  is  renocable,  ns  it  is  not  rouplcii  toitl)  <x\\  interest,  n)l)ile 
tl)e  potuer  of  a  liquidating  partner  is  irrevocable. 

558 


Pt.  3,  Ch.  5.  Liquidation.  §188. 

The  distin(5lion  between  making  a  partner  and  mak- 
ing a  stranger  the  agent  for  liquidation,  reveals  itself 
in  the  release  of  a  firm  debtor.  If  made  by  a  partner, 
it  revokes,  by  implication,  the  agent's  power  ;^  but  it 
does  not  affe6l  the  liquidating  partner."  On  the  con- 
trary, the  release  itself  is  void,  because  the  co-partner 
usurps  the  prerogative  of  the  liquidating  partner,  who 
is  the  firm,  for  a  settlement  of  its  affairs.^ 

1.  stranger'' s  right  to  liquidate  revocable.  Upon  dissolution  partners 
appointed  A,  a  stranger,  by  an  irrevocable  power  of  attorney,  for 
liquidation.  A  sued  a  firm  debtor,  who  set  up  a  release  by  B.  Debtor 
had  notice  when  he  took  the  release  of  the  dissolution,  and  appoint- 
ment of  A. — No  recovery.  Authority,  though  in  terms  irrevocable, 
was  revoked  by  release,  because  power  not  coupled  with  an  interest. 
Napier  v.  McLeod,  9  Wend.  120,  N.  Y.  (1832). 

2.  Gram  v.  Caldwell,  supra  \  186,  n.  i. 

3.  Appointment  0/  liquidating  partner  irrevocable.  Upon  dissolution, 
B  was  appointed  liquidating  partner.  A,  without  cause  of  complaint, 
sought  to  resume  control,  or  have  a  receiver  appointed. — Bill  dis- 
missed, because  appointment  irrevocable.  Hayes  v.  Heyer,  4  Sandf. 
Ch.  485,  N.  Y.  (1847). 


§188. 

^\]t  liqutbating  partner  is  not  fntitkb  to  compensation  for  l)is 
stxmits. 

He  is  a  partner,  and  no  partner  is  entitled  to  com- 
pensation for  his  services.^  But  he  can  employ  a 
clerk,  and  pay  him  a  salary  for  services.^ 

The  surviving  partner  may  recover  compensation 
for  carrying  on  the  business  for  the  deceased  partner's 
estate;  but  this  is  no  exception  to  the  rule  which  pro- 
hibits compensation  to  the  liquidating  partner.'  Con- 
tinuing the  business  is  not  liquidation. 

I.     Liquidating  partner  not  entitled  to  compensation,  and  charged  in- 
terest on  colleSlions  mingled  ivith  his  own  funds.    A  &  B,  carpenters, 

559 


§189.  Liquidation.  Pt.  3,  Ch.  5. 

erecfled  buildings  in  partnership.  Kacli  agreed  to  devote  his  whole 
time  and  labor  to  the  work,  and  pay  his  own  expenses.  On  a  settle- 
ment, A  claimed  interest  on  coliedtions  made  by  B,  as  liquidating 
partner,  which  he  mingled  with  his  own  funds  and  used  in  his  indi- 
vidual business.  B  demanded  compensation  for  his  services  rendered 
before  the  partnership  began  and  after  it  terminated.  B  had  made 
contracts  for  buildings  and  worked  on  them,  before  forming  the  part- 
nership with  A. — A  recovered  interest,  and  B  not  allowed  compensa- 
tion. The  work  already  done  might  have  been  an  inducement  for  A 
to  enter  into  partnership  with  B,  and  the  firm  continues,  even  after 
dissolution,  until  its  affairs  are  wound  up.  Dunlap  v.  Watson,  124 
Mass.  305  (1878). 

Partners,  -if  appointed  receivers,  are  entitled  to  coinpensation  only 
as  such,  aHhoua^h  the  articles  stipulate  for  compensation  to  the  part- 
ners for  their  services.  Plaintiff's  attorney  in  the  settlement  has  no 
claim  upon  the  joint  fund  for  a  fee.  C  &  D,  partners.  Articles  pro- 
vided a  percentage  to  each  partner  as  compensation  for  his  services. 
C  left  his  share  to  two  children,  A  and  B,  who  acfted  for  all  of  them. 
C's  widow  elected  to  take  against  his  will,  and  this  caused  a  dissolu- 
tion. Court  appointed  A  and  D,  receivers,  at  a  salary  to  be  fixed  by  the 
master.  D  demanded  compensation  according  to  the  articles,  in  ad- 
dition to  his  salary  as  receiver.  A  claimed  a  fee  for  his  attorney  in 
winding  up  the  business. — Extra  compensation  to  D  disallowed,  and 
A's  attorney  no  claim.     Lennig  v.  L,ennig,  11  W.  N.  18,  Pa.  (1S81). 

2.  Liquidating  partner  entitled  to  no  commissions  for  services,  but 
may  pay  clerk  for  his  services.  A  &  B,  upon  dissolution,  made  B  li- 
quidating partner.  A  brought  account,  which  was  refused,  and  mas- 
ter refused  a  compensation,  but  allowed  C  I500  for  services. — A  enti- 
tled to  3  per  cent,  commission  on  colledlions,  and  C  to  nothing. 
Hutchinson  v.  Onderdonk,  2  Hal.  Ch.  277,  N.  J.  (1847).  On  appeal, 
C's  claim  of  I500  allowed.  Onderdonk  v.  Hutchinson,  2  Hal.  Ch.  632 
E.  &  A.  (1849). 

3.  Though  contpensation  not  allowed  surviving  partner  for  winding 
up  business,  he  is  entitled  to  be  paid  for  continuing  business  for  bene- 
fit of  deceased  partner' s  estate,  and  ivith  his  representative" s  concur- 
rence. The  stock  in  trade  of  A  &  B  consisted  of  patents  for  weapons, 
machinery  for  manufaAuring,  and  government  contra6ts  to  supply 
them.  A  died,  and  B  continued  the  business,  in  order,  with  assent 
of  A's  administratrix,  to  fulfill  existing  contradts,  and  made  new  ones 
to  work  up  the  stock  on  hand.  A's  administratrix  brought  account, 
and  B  claimed  compensation.— Allowed.  Though  B  not  entitled  to 
compensation  for  winding  up  the  business,  he  is  for  continuing  it,  if 
advantageous  and  with  the  concurrence  of  the  deceased  partner's 
representative.     Schenkle  v.  Dana,  118  Mass.  237  (1875). 


§189. 


^\\t  general  creditor  l^as  a  stanbing  to  wntrol  tl)e  liquibating 
partner. 


560 


Pt.  3,  Ch.  5-  Liquidation.  §190. 

The  creditor,  though  without  a  judgment,  has  an 
interest  in  the  administration  of  the  assets,  as  they 
constitute  a  trust  fund  for  the  creditors.' 

I.  Firm  creditor  zviihout  judgment  may  restrain  liquidating  partner 
from,  wasting  assets.  B,  after  dissolution,  ousted  C  from  possession 
of  firm  stock.  C  asked  for  account  and  receiver,  but  afterwards  with- 
drew his  bill.  A,  who  was  a  general,  but  not  a  judgment  creditor 
of  firm,  sought  to  enjoin  B  from  wasting  the  assets,  and  to  have  a  re- 
ceiver.— Decree.  Firm  assets  a  trust  fund  for  creditors,  and  undis- 
puted claim  equivalent  to  judgment.  Dillon  v.  Horn,  5  How.  Pr.  35 
N.  Y.  (1850). 


§190 

^\\t  liquidating  partner  mill  be  bisplaceb  onltt  bw  proof  of  tl]e 
necessity  for  a  receiver. 

A  partner  will  naturally  have  more  interest  in  the 
administration  of  the  business  than  a  stranger  would 
have,  and  by  his  services  the  expenses  of  a  receiver 
are  saved  to  the  firm.' 

I.  Liquidating  partner  not  displaced  without  proof  of  necessity  for  a 
receiver.  A  sold  out  to  B  &  C,  who  continued  the  firm  business. 
They  agreed  to  pay  his  share,  and  let  him  have  access  to  the  books, 
and  colleA  debts.  A  asked  for  an  account  and  a  receiver,  because  he 
had  received  no  instalment  of  the  price  or  account  of  the  debts  col- 
le<5led.  His  affidavit  set  forth  that  he  required  possession  of  the 
books,  as  evidence  to  prove  his  case,  and  that  two  policies  on  the 
lives  of  large  debtors  to  the  firm  would  be  forfeited  if  premiums  were 
not  paid  promptly.  Counter  affidavits  of  B  &  C :  That  sufficient  debts 
had  not  been  colle(5led  to  pay  outstanding  claims,  which  had  been 
met  by  B  &  C's  advances;  that  A  had  access  to  the  books,  and  had 
colledled  debts. — Refused,  Defendants  in  possession  under  agree- 
ment with  plaintiff,  and  no  mismanagement  or  denial  of  access  shown. 
Defefldants  had  more  interest  to  keep  policies  alive  than  a  receiver 
would  have.  The  expense  of  a  receivership  would  be  an  extra  bur- 
den.   HoflFman  v.  Steinbeisser,  11  W,  N.  383,  C.  P.  No.  4,  Pa.  (1881). 


561 


^1(^1.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

CHAPTER  VL 

MARSHALLING   THE   ASSETS. 

§191. 

What  constitutes  the  relation,  has  been  the  riddle; 
but  the  stuuibling-block  of  partnership  is  marshalling 
the  assets.  No  principle  being  admitted  which  would 
settle  the  basis  for  distribution,  the  law  could  be  noth- 
ing but  a  chaos.  The  rule  which  has  finally  been 
settled  in  cases  of  insolvenc}^  is  that  the  firm  credit- 
ors take  the  firm  assets  equally,  and  the  separate 
creditors  take  the  separate  assets.  Each  class  is,  of 
course,  entitled  to  its  share  in  an}^  surplus  arising 
from  the  fund  of  the  other.  The  rule  has  its  origin 
at  law,  but  has  received  its  greatest  development  in 
Equit}'. 

The  theories  which  have  been  suggested  to  account 
for  the  course  of  distribution  in  equity,  do  not  go  to 
the  source  of  the  change,  and  explain  the  cause  which, 
brought  about  the  departure  from  the  Common  law 
system.  The  notion  of  credit,  tbat  as  the  joint  cred- 
itors relied  upon  the  firm  assets,  the  separate  creditors 
looked  to  the  separate  estate  for  payment,  is  an  as- 
sumption. It  contradicts  the  experience  which  im- 
putes to  every  man  a  knov/ledge  of  the  law.  The 
credit  would  depend  upon  the  estate  which  the  debtor 
had.  The  partners  have  joint  and  separate  estates, 
which  are  both  subject  to  the  firm  debts.  The  credit 
would,  of  course,  be  given  in  reliance  upon  both 
estates.     The  partner  has  a  resulting  interest  in  the 

.562 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §191. 

firm  after  all  its  debts  are  paid,  and  his  separate  estate, 
which  is  also  subje6l  to  the  firm  debts.  His  creditor 
could  expecft  nothing  from  the  partner's  share,  until 
the  firm  creditors  had  been  satisfied,  and  he  could  only 
share  the  separate  estate  with  them,  unless  insolvency 
supervened,  which  would  give  him  a  paramount  title 
to  the  separate  fund.  The  credit  given  to  a  debtor  is 
not  the  cause  of  his  estate,  but  a  consequence  of  his 
possessing  the  means  to  pay  the  debt. 

The  Civil  law  is  invoked  to  illustrate  the  credit 
theory  according  to  which  each  fund  is  the  inducement 
to  the  credit  given  to  the  debtor  in  his  corresponding 
capacity.  It  is  true  that  at  the  Civil  law  the  creditors 
of  a  particular  business  had  a  prior  claim  to  its  fund, 
but  this  arose  from  the  analogy  to  the  law  of  sale  in 
that  system  (§108).  They  obtained  this  priority  not 
because  they  had  given  credit  on  the  faith  of  the  fund, 
but  because  the  sums  they  had  advanced,  or  the  goods 
they  had  delivered,  had  passed  into,  or  produced,  the 
fund. 

There  were  instances  at  the  Civil  law  of  credit  given 
to  a  particular  fund,  as,  for  example,  to  the  peailium 
the  property  of  a  slave,  or  of  a  son  who  was  not  sni 
juris.  In  these  instances  credit  must  necessarily 
have  been  given  to  the  fund,  and  not  to  the  individual, 
for  the  slave,  or  son,  was  incapable  of  incurring  an 
obligation,  except  in  respe6l  of  his  peculium.  Hence, 
no  reliance  can  be  placed  upon  this  illustration,  and 
the  authorities,  as  might  be  expelled,  are  explicit  in 
making  the  distinction  between  them  and  the  case  of 
a  debtor  who  is  a  freeman.'  The  credit  theory  will 
never  be  true  in  our  law  until,  as  in  the  case  of  the 
peculium.^  the  debtor  is  relieved  from  all  personal  re- 

56.^ 


I 


§i()2.  Marshalling  Assets.  Ft.  3,  Ch.  6. 

sponsibility  to  the  firm  and  separate  creditors,  except 

iu  resped  of  the  different  funds  which  they  respe6l- 

ively  claim. 

I.     lUattbiac:  „ Gontrowerkn  =  iicjriton  bes  jTibmifc^en  Gibilrec^t^/^   171, 
where  the  authorities  are  coUedled.    Supra  \  io8,  n.  4. 


§192 


Jinn  rrcMtors  nmtj  redaim  patimcut  mabe  to  X\\t  separate 
crctiitors  fioiu  tl)e  firm  assets. 

Upon  insolvency,  the  assets  of  a  firm  belong  to  its 
creditors.'  Any  appropriation  of  the  property  to  a 
different  purpose  is  a  fraud  upon  them.  If  the  part- 
ners devote  the  firm  assets  to  the  payment  of  their 
individual  debts,  they  defraud  the  firm  creditors.  The 
separate  creditor  could  not  claim  payment  out  of  the 
firm  assets,"  nor  can  he  retain  firm  property  wrong- 
fully diverted  to  the  payment  of  his  claim.  The  firm 
may  compel  the  restitution  of  all  that  the  separate 
creditor  has  received  from  the  firm  assets.^ 

I.  Surviving  partner  cannot  prefer  fir^n  creditor.  Partner  C  died  and 
B  assigned  whole  stock  and  lease  to  D,  to  manage,  sell,  and  apply 
proceeds  to  his  claim  against  firm,  and  the  choses  in  acflion  to  E  in 
payment  of  his  claim.  Firm  creditor  A  sued  B,  D  &  E,  to  set  aside 
transfers  as  a  fraud  on  creditors. — Judgment  for  A.  B  could  not  give 
preference  of  .stock,  because  not  sole  owner,  and  law  prevents  C's  ex- 
ecutor or  administrator  from  giving  preference  of  choses  in  a(5lion, 
because  though  having  the  legal  title  and  the  sole  right  to  sue,  he  is 
a  trustee  in  equity  for  C's  share.  Loeschick  v.  Addison,  3  Rob.  331, 
N.  Y.  (1S65). 

If  all  the  partners  are  living  and  unite  in  making 
a  payment  or  .skiving  security  to  a  firm  creditor,  the  a6l 
is  good,  although  the  firm  is  insolvent.* 

a.  Partners,  though  insolvent,  can  prefer  creditor,  and  secure  him  by 
chattel  mortgage  of  firm  stock.  B  &  C,  partners,  executed  chattel 
mortgage  on  firm  .stock  for  |2o  to  A.  Firm  insolvent.  Attachments 
issued  against  B  &  C.     A  sued  D,  sheriflF,  for  seizing  stock.     Evi- 

564 


Pt.  3,  Ch.  6.  Marshaixing  Assets.  §192. 

dence  did  not  show  extent  of  A's  claim. — ^Judgment  for  A.  Without 
proof  that  mortgage  for  private  debt,  or  in  excess  of  firm  indebted- 
ness, court  cannot  invalidate  transa<5tion.  Rothell  v.  Grimes,  35  N. 
W.  392  (1887). 

2.  Firtn  creditor,  who  is  a  stranger,  has  priority  over  a  partner-cred- 
itor, unless  stranger  relinquishes  his  privilege.  A  &  B  kept  a  livery- 
stable  in  partnership.  C  advanced  them  |5,ooo,  to  buy  stock,  and 
took  their  joint  and  several  bond.  A  advanced  |;  1,600  to  the  firm, 
and  took  B's  bond.  A  and  C  agreed  that  proceeds  of  execution  issued 
by  either  should  be  divided  rateably.  Both  obtained  judgment,  and 
issued  execution  the  same  day,  though  A  first.  A  claimed  priority. 
— No  right  against  C,  except  by  his  agreement.  Linford  v.  Linford, 
4  Dutch.  113,  N.J.  (1859). 

Blackwell  v.  Rankin,  supra,  'i  106,  n.  5,  c. 
The  priority  will  be  lost  if  judgment  against  firm 
assets  is  given  in  favor  of  a  separate  creditor  and  no 
objedlion  be  made  by  the  partner  in  time/ 

a.  Firm  creditor,  especially  if  a  subsequent  creditor,  cannot  contest  a 
judgment  which  gives  firm  assets  to  a  separate  creditor.  B,  a  cred- 
itor of  D,  attached  C  for  his  debt  to  firm  D  &  E  before  a  justice,  who 
gave  B  judgment  for  half  the  debt.  A,  a  subsequent  creditor  of  D  & 
E,  attached  C,  who  paid  A  the  other  half,  but  he  claimed  the  whole, — 
Judgment  for  garnishee.  Though  justice's  apportionment  of  firm 
asset  illegal,  E  did  not  appeal.  A  could  not  attack  the  judgment  col- 
laterally, even  if  he  had  been  a  creditor  at  the  date  of  B's  attach- 
ment.    Howard  V.  McLaughlin,  2  Outerbridge  440,  Pa.  (1881). 

3.  Smith  V.  Ivoring,  supra,  I  126,  n.  i. 

Where  firm  is  made  liable  on  its  note,  given  by  partner  for  his  debt, 
the  firings  assignee  in  bankruptcy  may  prove  for  the  amount  against 
separate  estate.  B  drew  a  note  in  firm  name  of  B  &  C,  had  it  dis- 
counted, and  used  the  money  for  a  private  purpose.  B  died  and  the 
firm  became  insolvent.  A,  firm's  assignee  in  bankruptcy,  offered  to 
prove  against  B's  separate  estate  for  full  amount  of  note.  Master 
cut  down  claim  to  the  amount  of  dividend  anticipated  from  firm  fund 
on  account  of  the  note.  A  excepted. — Report  of  master  affirmed. 
Baker  v.  Dawbarn,  19  Grant's  Ch.  113  (Up.  Can.),  (1872). 

If  the  withdrawal  of  firm  assets  for  private  use  was 
made  prior  to  insolvency  and  in  good  faith,  restitution 
will  not  be  enforced  in  bankruptcy.^ 

a.  Open  withdrawal  of  firm  funds  by  partner  not  a  fraud  on  firm,.  B 
received  the  proceeds  of  a  firm  sale,  and  after  entering  same  on  firm 
books,  in  due  form,  transferred  the  item  on  the  books  to  his  individ- 
ual account,  without  his  co-partner's  knowledge.  Firm  was  solvent 
at  the  time.  On  insolvency.  A,  the  assignee  in  bankruptcy  of  firm, 
offered  to  prove  against  B's  separate  estate  for  the  amount  withdrawn. 
— Disallowed.  The  withdrawal,  though  unauthorized,  was  not  fraud- 
ulent, because  open  and  not  in  expedlation  of  insolvency.  In  re 
Hamilton,  i  Fed.  Rep 'r  800  (1880). 


565 


T 


§193.  Marshalling  Assets.         Pt.  3,  Ch.  6. 

§193. 

yrquitii  boes  not  intfrtjcne  to  settle  tl)c  basis  of  distribution, 
unless  a  contlict  aists  betmeeu  tl)e  bitferent  classes  of  creditors 
to  sl)ave  in  tl)e  Liiuision  of  tl)e  two  fun^s. 

li'  there  is  but  a  single  fund,  no  confli6^  arises  for  a 
court  of  equity  to  adjust,  and  the  Common  law  pre- 
vails, with  its  theory  of  a  paramount  claim  in  the  firm 
creditors  to  the  firm  fund,  and  a  co-ordinate  right  with 
the  separate  creditors  if  there  be  no  firm  fund.  The 
theory  enables  the  firm  creditors,  if  there  is  nothing 
but  partnership  property,  to  take  it  all;  but  if  there 
is  no  firm  property,  to  participate  in  the  distribution 
of  the  separate  estate  with  the  separate  creditors.^ 

The  right  of  the  joint  creditors  against  the  separate 
estate  subsists  in  chancery,  in  spite  of  the  preference 
which  equity  gives  to  the  separate  creditors.^  No 
thought  is  entertained  of  taking  away  the  joint  cred- 
itor's right  to  hold  the  separate  estate  for  the  satisfac- 
tion of  his  debt.  On  the  contrary,  the  right  is  as  well 
established  in  equity  as  at  law.  Unless  the  exertion 
of  the  right  would  interfere  witb  the  claims  of  the 
separate  creditors,  it  would  prevail,  and  take  the  es- 
tate.' 

I.     In  re  McEwen,  supra  I  105,  n.  3. 

A  partner's  discharp;e  in  bankruptcy  bars  a  firm  debt  if  no  firm 
estate.  B  &  C  gave  their  firm  note  to  A.  B  was  adjudged  a  bank- 
rupt on  petition  of  his  separate  creditors.  B  filed  a  schedule  of  his 
debts,  including  the  note  to  A,  who  had  not  claimed  a  dividend,  but 
resisted  the  discharge  on  grounds  not  stated.  A's  objections  were 
overruled,  and  B  was  discharged.  There  was  no  firm  estate.  A  re- 
leased C  from  his  liability  on  the  note  for  a  payment  of  less  than  one- 
half,  and  sued  B  for  one-half.  Defence:  A's  claim  was  barred  by  the 
discharge.— Judgment  for  B.  There  being  no  firm  estate,  A  might 
have  proved  against  B's  separate  estate ;  hence,  his  claim  is  barred 
by  the  discharge.     Curtis  v.  Woodward,  58  Wis.  499  (1883). 

Firm  creditors  share  in  separate  estate  when  there  are  no  firm  as- 
sets.   B  &  C  were  insolvent.    The  firm  estate  amounted  to  |i.  19,  which 

.566 


Ft.  3,  Ch.  6.  Marshalling  Assets.  §194. 

was  subsequently  absorbed  in  costs.  C  had  no  estate.  B's  estate 
amounted  to  11,177.36.  Claims  proved  against  the  firm  amounted  to 
|2,20o ;  against  B's  estate  to  11,133.67.  The  firm  creditors  offered  to 
prove  against  B's  estate. — Allowed.  The  rule  for  marshalling  assets 
between  the  separate  and  firm  creditors  applies  only  when  there  are 
two  funds.     Harris  v.  Peabody,  73  Me.  262  (1881). 

Fivin  creditors  may  share  in  estate  of  deceased  partner  when  there 
is  no  firm  fund.  On  death  of  B,  A,  who  was  a  creditor  of  B  &  C, 
offered  to  prove  against  B's  separate  estate  in  the  hands  of  his  admin- 
istrator. Neither  the  firm  nor  C  had  any  assets, — Allowed.  Hio^- 
gins  V.  Rector,  47  Texas  361  (1877). 

2.  Equity  will  not  disturb  the  prior  lien  of  a  judgment  against  the 
firm  upon  separate  real  estate  in  favor  of  separate  judgment-creditor. 

D  sued  B  &  C  for  a  firm  debt.  C  died  pending  suit,  and  D  recovered 
judgment  against  B.  A  obtained  judgment  against  B  for  a  separate 
debt,  and  on  the  ground  that  B's  real  estate  could  not  pay  both  judg- 
ments, asked  that  D  should  be  compelled  to  resort  to  the  real  estate 
of  C,  deceased. — Judgment  for  D.  Securities  are  marshalled  in  equity, 
only  where  claims  are  against  a  common  debtor;  or,  perhaps,  where 
the  co-debtor  has  a  claim,  for  his  own  sake,  that  his  associate  pay  the 
joint  debt.  Not  the  case  with  partners,  even  as  to  half  the  debt  (as 
might  be  the  rule  between  co-debtors),  because  the  accounts  are 
undetermined.  Only  equitable  assets  are  marshalled  in  chancery. 
Equity  never  disregards  a  legal  priority,  and  D's  judgment  against 
the  firm  is  a  prior  lien  on  B's  separate  estate.  Meech  v.  Allen,  17 
N.  Y.  300  (1858). 

3.  Randolph  v.  Daly,  supra  \  105,  n.  2. 


§194. 


^\\t  fquitp  of  \\\t  firm  crcbitors  rests  upon  tf)e  partners'  rec- 
ognneb  liabilitn  at  laiu. 

The  personal  liabilit}^  of  a  partner  for  tlie  firm  debts 
is  the  foundation  of  his  equity,  which  enables  him  to 
control  the  application  of  the  firm  assets  for  the  relief 
of  his  separate  estate.  This  equity  is  not  a  contrac- 
tual right,  but  is  an  incident  of  the  relation,  and 
continues  after  the  contrail  of  partnership  has  been 
superceded  by  a  dissolution  of  the  firm.  The  equit}^ 
of  the  firm  creditors  has  been  described  as  a  derivative 
right,  a  mere  application  of  the  partners'  equity.'  But 
if  the  partner's  equity  is  founded  upon  the  partner- 

567 


t;n^.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

ship  contracl,  and  the  firm  creditors'  equity  is  a  mere 
derivative  right,  then  the  firm  creditor's  equity  is  de- 
rived from  the  contract  between  the  partners,  a  conclu- 
sion ^vhich  cannot  be  admitted  at  law.^  Both  premises, 
however,  are  untrue.  The  partner's  equity,  as  has 
been  shown  (§  106),  is  not  founded  on  contrac^t,  but 
on  liabilit3\  The  firm  creditors'  equity  is  not  de- 
rivative through  the  partners,  but  is  original,  by  vir- 
tue of  the  position  given  by  the  law  to  the  joint  fund 
as  the  primary  debtor.^ 

The  destination  given  by  the  partners  to  the  stock 
wliicli  they  contribute  to  the  firm,  and  employ  in  the 
business,  has  been  called  the  foundation  of  the  firm 
creditors'  equity.  The  statement  is  true  as  an  ab- 
stra(5lion.  The  destination  is  the  ultimate  cause  of 
the  privilege.  The  dodlrine  of  destination,  however^ 
is  an  equitable  principle  of  modern  origin,  and  can 
not  consistently  be  made  the  basis  of  an  ancient  and 
acknowledged  legal  right.  Unless  the  equity  had  a 
support  at  law,  the  legal  rights  of  the  separate  cred- 
itors would  override  and  destroy  it  (§  107).  The  part- 
ners cannot  by  a  contrail  withdraw  property  from 
their  creditors.  A  contraA  does  not  bind  anybody 
but  the  parties  to  it. 

It  is  the  Common  law  theory  of  estates,  which  ena- 
bles the  partners  to  segregate  property  and  deal  with 
it  as  a  distin^l:  mass,  apart  from  the  residue  of  their 
possessions.  The  traditional  method  is  to  create  a 
joint  estate,  in  analogy  to  the  joint  tenancy  of  land/ 
It  is  by  virtue  of  the  joint  estate  that  the  partners 
trade  in  a  distindl  capacity."  Apart  from  the  estate, 
the  Common  law  does  not  permit  a  person  to  a6l  in  a 
single  capacity  (§  108). 

568 


I 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §194. 

1.  Transfer  by  firm  of  its  assets  to  partner  bars  creditors'  equity,  and 
partner's  transfer  for  past  debt  a  valuabte  consideration.  B  &  Co., 
indebted  to  A  &  Co.,  and  to  others,  transferred  all  the  firm  stock  and 
credits  to  B,  who  had  advanced  money  to  B  &  Co.,  and  he  agreed  to 
pay  its  debts.  B  assigned  most  of  the  assets  to  C,  his  lather,  lor  a 
past  debt.  A  &  Co.,  who  recovered  judgment  against  B  &  Co.,  but 
obtained  no  satisfadtion  by  execution,  brought  bill  for  payment  out 
of  assets  in  C's  hands. — Dismissed.  Creditors'  equity  lost  with  firm's 
equity,  by  transfer  to  B,  and  his  assignment  for  past  debt  a  valuable 
consideration.     Wilcox  v.  Kellogg,  ii  Ohio  394  (1842). 

2.  Partner's  equity  not  subjefi  to  execution.  E  attached  the  stock  of 
B,  C  &  D  as  non-residents.  Attachment  set  aside  against  D,  because 
resident.  Pending  attachment,  D,  with  consent  of  B  &  C,  sold  all 
firm  property  to  A,  and  distributed  proceeds  among  creditors  of  the 
firm,  excluding  E.  Sheriff,  F,  took  bond  of  indemnity  from  E,  and 
sold  the  entire  property  attached.  A  sued  E  and  F  for  conversion. — 
Recovered  one-third  of  price.  Attachment  covered  only  interests  of 
B  &  C,  and  sheriff  could  not  sell  their  right,  to  have  D's  applied  to 
payment  of  firm  debts.     Berry  v.  Kelley,  4  Rob.  ic6,  N.  Y.  (1866). 

Belknap  v.  Abbott,  supra  \  106,  n.  3. 

3.  Firm  creditors^  priority  not  lost  ivhere  one  partner  takes  the  assets 
and  assumes  the  debts.  B  &  C  disagreed,  and  the  arbitrators  awarded 
the  firm  assets  to  B,  who  was  to  pay  the  firm  debts.  D,  who  was  a 
separate  creditor  of  B,  levied  on  the  funds,  then  A,  who  was  a  firm 
creditor,  did  the  same.  The  sheriff  paid  the  money  to  D,  as  the 
prior  execution.  A  sued  the  sheriff  for  a  misapplication. — ^Judgment 
for  A.  The  firm  creditors'  legal  and  independent  right  was  not  de- 
stroyed by  the  award  and  consequent  transfer  to  B.  His  right  does 
not  rest  on  any  lien  or  equity  of  the  partners  between  themselves. 
Tenney  v.  Johnson,  43  N.  H.  144  (1864). 

Sale  of  firm  assets  by  partners  to  pay  a  separate  debt  passes  no  title 
against  firm  creditors,  where  buyer  k7iows  the  purpose  of  the  sale.  B 
&  C  were  indebted  to  D.  B  was  indebted  to  E  for  his  contribution 
to  firm.  B  &  C  sold  all  the  stock  to  A,  and  took  a  note,  which  was 
indorsed  to  E  for  payment  of  B's  debt.  A  knew  the  purpose  of  the 
sale.  Under  writ  of  F,  a  firm  creditor,  G,  the  sheriff,  levied  on  the 
goods  in  A's  hands,  and  sold  the  same.  A  sued  G  for  trespass. — 
Judgment  for  G.  The  sale  was  a  fraud  on  firm  creditors,  who  have 
an  original  and  independent  right  to  the  firm  fund.  Person  v.  Mon- 
roe, 21  N.  H.  462  (1850). 

See  another  statement  of  this  case,  supra  \  106,  n.  \,  c. 

4.  Firm  title  good,  though  partner  insolvent  when  he  entered  into  part- 
nership in  his  zvife's  name,  and  her  title  a  fraud  on  creditors.  A,  in- 
solvent hotelkeeper,  acfted  as  his  wife's  agent,  and  did  business  with 
B,  under  firm  of  A  &  B,  the  wife  being  A.  Bill  by  his  creditors  to 
take  hotel  property  at  Long  Branch. — Not  entitled.  Real  estate  be- 
longed to  firm,  though  title  in  partners  as  tenants  in  common.  Bulk 
of  indebtedness  contracted  in  improving  premises.  Mortgage  by  part- 
ners for  individual  debt  good,  if  firm  solvent.  National  Bank  Metro- 
polis v.  Sprague,  5  C.  E.  Gr.  13,  N.  J.  (1869). 

5.  If  sheriff  takes  a  bailment  receipt  for  surrender  of  firm  goods,  seized 
on  separate  execution,  bailee  is  exonerated  by  showing  nothing  left 

for  separate  creditors.  A,  the  sheriff,  seized  goods  of  B  &  Co.,  on  a 
separate  execution  against  B,  but  surrendered  them  to  C,  upon  his 
declaration  in  the  receipt  that  they  were  free  from  encumbrances, 

569 


§1(^5.  Marshalling  Assets.         Pt.  3,  Ch.  6. 

that  he  wouhl  keep  them  safely,  return  them  to  A  on  demand,  and 
save  him  harmless.  C  returned  them  to  B  &  Co.,  who  were  insolvent 
at  the  time,  but  did  not  go  into  bankruptcy  until  more  than  four 
months  afterwards  They  were  discharged  in  bankruptcy.  A  sued 
C  upon  his  receipt.— Judgment  for  C.  The  goods  did  not  belong  to 
B,  and  C  was  exonerated  in  surrendering  them  to  B  &  Co.  The  re- 
ceipt was  not  an  indenmity  which  would  estop  C,  but  a  bailment, 
and  A  had  no  right  to  take  the  goods,  or  to  retain  them.  Lewis  v. 
Webber,  ii6  Mass.  450  (1875). 


§195. 


(fquihi  i)ocs  not  kstron,  but  controls,  t\)t  firm  cretiitor's 
rights  against  tl)c  separate  estate. 

The  several  liability  of  the  partners  is  no  less  a 
constituent  of  the  partnership  obligation  than  is  their 
joint  liability.  Both  spring  from  the  root  of  partner- 
ship.' The  enforcement  of  the  several  liability  to  its 
legal  extent  might  exclude  the  creditors  of  the  indi- 
vidual partner  from  any  share  in  the  distribution. 
The  joint  creditors  could  exhaust  the  separate  estate 
first.  Equity  interfered  to  prevent  this  result,  and 
limited  the  joint  creditors  to  the  joint  fund  in  the  first 
instance  (§108).^ 

The  joint  creditors  retained,  after  the  equitable  re- 
peal of  their  privilege  to  resort  to  both  funds,  an  in- 
dependent right  to  the  firm  assets,  but  they  lost  the 
right,  which  they  had  previously  enjoyed  in  addition, 
to  resort  to  the  separate  fund  on  equal  terms  with  the 
individual  creditors.''  Before  this  rule  was  established 
they  were  allowed  to  come  in  upon  the  separate  fund 
only  upon  C(mdition  that  they  surrendered  an  equiva- 
lent for  what  they  had  received  from  the  joint  estate.'* 

570 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §196. 

1.  In  re  Webb,  supra  'i  105,  n.  2. 

One  who  lends  partners  their  entire  capital  is  a  firm  creditor.  B  & 
C  borrowed  money  to  begin  business  of  Cs  sister,  A,  and  both  signed 
the  note.  A  subsequently  lent  them  additional  funds,  and  they  exe- 
cuted notes  and  a  mortgage  for  the  entire  loan.  Firm  creditors  con- 
tested A's  right  to  firm  assets. — A  entitled.  If  loan  a  joint  adl  for 
firm,  superadding  partners'  several  liability  does  not  change  it.  Car- 
son V.  Byers,  21  Reporter  232,  Iowa,  (1885). 

2.  Bardwell  v.  Perry,  supra  \  108,  n.  6. 

3.  After  receiving  a  dividend  from  the  firm  assets,  creditor  of  partners 
by  a  joint  and  several  bond  is  excluded  from  their  separate  estates. 
Joint  commission  issued  against  B  &  C,  partners,  and  a  separate  com- 
mission against  B.  A  obtained  a  dividend  on  his  joint  and  several 
bond  out  of  the  joint  estate,  and  then  claimed  against  B's  separate 
estate,  with  his  individual  creditors. — Disallowed.  At  law,  creditor 
might  proceed  against  each  debtor's  estate  until  satisfaclion,  but  not 
in  bankruptcy,  because  there  distribution  must  be  equal.  Ex  parte 
Bond,  I  Atk.  98  (1745). 

4.  Bell  V.  Newman,  supra  I  105,  n.  i. 

Firm  creditors  -may  not  share  in  separate  estate  until  separate  cred- 
itors have  received  a  dividend  equal  to  that  received  from  firm  assets. 
B,  C  &  D  gave  their  note  with  the  separate  endorsements  of  B  &  C 
to  A.  The  firm  and  all  the  partners  became  insolvent.  A  obtained 
a  dividend  of  31  per  cent,  from  firm  estate,  and  proved  for  remainder 
against  the  separate  estate  of  B,  and  claimed  a  dividend.  This  fund 
would  not  pay  B's  separate  creditors  more  than  30  per  cent. — Disal- 
lowed. The  separate  creditors  of  B  must  first  receive  31  percent., 
and  then  A  may  come  in  on  an  equal  footing  with  them.  B's  indi- 
vidual endorsement  on  the  firm  note  gives  A  no  standing  as  a  sepa- 
rate creditor  after  eledling  to  treat  themselves  as  firm  creditors,  in 
taking  a  dividend  from  firm  fund.  Fayette  Nat.  Bank  of  Lexington 
V.  Keuney,  49  Ky.  133  (1880). 


§196. 

^qtiTtji  bo£0  not  restrict  tl)e  firin  crcbitors,  txiv^i  tul)£n  X\\v^ 
l)ttDC  a  joint  funit. 

The  restri6lion  was  heralded  as  the  establishment 
of  a  principle  which  remanded  each  class  of  creditors 
to  its  distin6live  fund. 

There  is  no  such  principle.  The  rule  of  conveni- 
ence (§105),  which  was  adopted  in  bankruptcy  pro- 
ceedings, does,  in  e£fe(5l,  limit  each  class  of  creditors 

571 


5it)7.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

to  its  particular  fund,  when  there  are  two  funds  to  be 
apportioned  between  them  (§108),  but  the  rule  does 
not  come  into  operation  until  the  firm  creditors  pos- 
sess a  joint  fund.  The  right  of  the  firm  creditors  is 
general  against  all  the  property  of  the  partners,  and 
the  claim,  even  in  bankruptcy,  corresponds  to  the 
right.'  The  exertion  of  the  right  is  controlled  only 
when,  and  because,  it  would  deprive  the  separate  cred- 
itors of  any  fund.^ 

I.  The  several  liability  exists  as  a  constituent  of  a  joint 
debt,  and,  therefore,  proof  is  allowed  by  a  joint  creditor 
against  the  separate  partner,  though  no  participation 
is  permitted  until  the  separate  creditors  are  satisfied. 
In  re  Webb,  supra  §  105,  n.  2. 

2.  Finn's  assignee  in  bankruptcy  cannot  prove  against  separate  estate 
for  partner' s  debt  to  firm,  if  no  fraud,  ivhere  separate  creditors  will 
not  be  paid  in  full.  B  &  C  were  declared  bankrupts  on  their  own 
petition,  and  B  on  petition  of  his  separate  creditors.  A,  assignee  for 
firm,  offered  to  prove  against  B's  separate  estate  for  B's  debt  to  firm. 
There  was  no  proof  of  fraudulent  misapplication  of  firm  funds  by- 
partner,  and  there  had  been  no  settlement  of  account  between  the 
partners.  B's  separate  estate  would  not  pay  his  separate  creditors  in 
full. — Proof  disallowed  ;  because  debt  not  fraudulent  and  separate 
assets  insufficient  to  pay  separate  creditors.  In  re  Lloyd,  22  Fed.  Rep. 
90(1884). 


II 


I 


§197. 
^\]t  restriction  protects  noticing  but  \\)t  separate  estate. 

The  bankruptcy  rule  which  has  adopted  this  equit-F 
able  restridion,  says  the  separate  partner  is  not  liable 
for  firm  debts  out  of  his  separate  estate  until  the  sepa- 
rate debts  are  paid.^  Does  that  mean :  No  firm  creditor's 
claim  shall  compete  with  a  separate  creditor's  claim?: 
If  a  partner's  debt  to  his  firm  is  a  firm  asset,  then  the 
firm  creditor  could  take  it  without  competing,  because 

572 


„  Pt.  3,  Ch.  6.  Marshalling  Assets.  §197. 

tlie  debt,  not  being  part  of  the  separate  estate,  would 
not  belong  to  the  separate  creditor."  Does  the  sepa- 
rate debt  of  a  partner  to  his  co-partner  come  within 
the  prohibition  ?  It  seems  not.  The  liability  of  each 
partner  exists  for  the  firm  debts.  Any  shifting  of 
the  separate  assets  from  one  partner  to  another  after 
insolvency,  is  an  interference  with  the  firm  creditors' 
rights.^  But  the  change  can  prejudice  them  only 
when  but  for  this  payment  there  would  have  been 
a  surplus,  over  and  above  the  separate  debts  in  the 
estate  of  the  debtor  partner.  If  the  plaintiff  part- 
ner recovers  as  a  separate  creditor  of  his  co-partner, 
and  the  debtor  partner  has  not  more  than  enough  to 
pay  his  own  separate  creditors,  the  firm  creditors  are 
not  damnified,  and  might  be  benefited.  For  if  the 
plaintiff  had  no  separate  creditors,  the  increase  of  his 
separate  estate  would  then  give  the  firm  creditors  an 
additional  fund  for  the  payment  of  their  debts.  If  he 
had  separate  creditors,  they  might  be  paid,  and  a  sur- 
plus created,  by  means  of  the  separate  credit  thus  col- 
le6led.  There  is  no  difficulty  in  a  firm  creditor  get- 
ting the  surplus,  after  the  separate  creditors  are  paid, 
without  availing  himself  of  the  rule  of  convenience. 

I.  Between  firm  creditor  and  separate  creditor,  both  subsequent  to  a 
joint  creditor  ivith  mortgages  against  joint  and  separate  estate,  equity 
will  marshal  the  separate  assets  in  fa  vor  of  the  separate  creditor.  Pay- 
ment by  the  firm  creditor  of  the  joint  creditor's  claim.,  prevents  en- 
forcement of  his  -mortgage  against  the  separate  estate.  B  &  C  mort- 
gaged firm  property,  and  B  mortgaged  his  separate  estate  to  D,  for  a 
loan  made  by  him  to  the  firm.  B  made  a  second  mortgage  of  his  in- 
dividual property  to  his  separate  creditor,  E.  E  attached  C's  inter- 
est in  the  firm  property  for  a  separate  claim  against  him.  B  con- 
veyed his  moiety  of  the  firm  property  to  C.  A  issued  attachment 
against  B  &  C  for  a  firm  debt,  obtained  service  on  B,  and  judgment 
against  him.  E  obtained  judgment  in  his  attachment,  and  levied 
upon  C's  undivided  interest.  E  bought  D's  claim,  took  an  assign- 
mient  of  his  mortgages,  and  brought  bill  to  foreclose.  A  levied  under 
his  attachment  upon  the  firm  property  not  covered  by  E's  attach- 
ment. A  paid  amount  due  E  by  decree  in  foreclosure  of  firm  mort- 
gage, and  brought  bill  to  be  subrogated  to  D's  rights  as  mortgagee 

573 


§i^y.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

against  the  firm  property,  and  against  the  separate  estate  of  B.  The 
firm's  eiiuitv  of  redemption  possessed  no  value  to  satisfy  A's  attach- 
ment, unless  U's  claim  was  apportioned  between  the  mortgages  and 
a  part  collected  from  B's  separate  estate. — Dismissed.  Firm  mort- 
gage principal,  and  B's  mortgage  surety  for  D's  claim.  Equity  would 
not  enforce  payment  of  B's  first  mortgage  until  the  firm  property  was 
exhausted,  and  enable  A  to  colledl  his  attachment  debt  out  of  the 
firm  assets  in  opposition  to  B's  second  mortgagee,  E,  who  claimed 
that  B's  separate  estate  should  be  reserved  for  his  separate  debts. 
But  .\'s  payment  of  D's  claim  to  his  assignee,  E,  extinguished  the 
debt,  and  if  A  were  subrogated  to  D's  rights,  he  could  not  enforce  B's 
first  mortgage,  since  it  was  merely  surety  for  D's  debt,  which  was 
extinguished.     National  Bank  v.  Gushing,  53  Vt.  321  (1881). 

Joint  and  several  creditor,  by  bond  of  partners,  may  eleH  in  bank- 
ruptcv  the  Jinn  or  ike  separate  estate.  B  &  C,  partners,  were  liable 
on  a  joint  and  several  bond  to  A,  who  issued  a  joint  commission 
against  them  in  bankruptcy. — He  could  not  issue  a  separate  commis- 
sion, as  he  was  bound  by  his  eledlion.  Ex  parte  Banks,  i  Atk.  106 
{1740J. 

2.  Fir)n  creditors  may  Jollow  Jinn  assets  mortgaffed  by  partner  Jor  his 
separate  debt.  B  &  C  dissolved,  and  B  took  the  assets  and  agreed  to 
pay  debts.  B  exchanged  the  assets  for  a  tradl  of  land,  taking  title  in 
his  wife's  name,  and  subsequently  mortgaging  the  tradl  for  protedlion 
of  his  separate  creditor,  D,  who  had  notice.  Firm  creditor.  A,  brought 
bill  to  subject  the  land  to  payment  of  firm  debts. — Decree.  B's  course 
a  fraud  on  firm  creditors.     Renfrow  v.  Pearce,  68  111.  125  (1878). 

Firm  creditors  may  prove  against  estate  oj partner  who  has  Jraudu- 
lently  overdrawn  his  account.  B  was  manager  for  B  &  C.  He  drew 
out  2r6oo,ooo  for  his  own  purposes,  and  concealed  the  faA  by  false 
entries.  A,  and  other  firm  creditors,  offered  to  prove  in  bankruptcy 
against  B's  separate  estate,  for  this  overdraft. — Allowed,  on  the  ground 
of  the  fraud.     Read  v.  Bailey,  L.  R.  3  App,  Cas.  94  (1877). 

3.  For  this  reason  separate  creditors  can  not  compete 
with  the  firm  creditors  in  the  distribution  of  the  firm 
fund. 

Separate  creditors  can  not  prove  against  Jinn  assets  Jor  partner's 
loan  to  firni.  Separate  creditor  of  B  offered  to  prove  against  assets 
of  B  &  C  for  amount  of  a  loan  from  B  to  firm.  B's  estate  insufficient 
to  pay  his  creditors  in  full. — Disallowed,  because  no  fraudulent  trans- 
fer of  assets  after  insolvency.    Rogers  v,  Meranda,  7  O.  St.  179  (1857). 


§198. 


3  partner's  claim  against  l)is  co-partner,  tl]OU(jl)  tn^epen^ent 
of  tl)c  funi,  can  not  be  enforccb  bn  separate  crei)itors  of  cwbitor 
partner  wljile  tirm  ^ebta  are  unpaii). 


574 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §198. 

The  separate  estate  is  not  recognized  as  having  any 
right,  except  what  the  rule  of  convenience  or  of  bank- 
ruptcy gives  it.  If  the  separate  estate  belongs  to  its 
creditors,  certainly  a  debt  from  the  co-partners  is  an 
individual  asset,  and  should  be  included  in  the  sepa- 
rate estate.  If  the  separate  estate  had  an  independent 
right  of  its  own,  the  claim  could  not  be  ignored,  and 
would  be  enforced.  But  the  claim  is  met  by  a  firm 
creditor's  claim,  also,  against  the  co-partners,  which 
competes  for  their  separate  estate.  Though  the  part- 
ner's creditors  have  a  preference  over  the  firm  credit- 
ors upon  his  separate  estate,  the  firm  creditors  have 
a  priority  upon  the  separate  estate  of  his  co-partners. 
The  rule  does  not  exonerate  anything  from  the  im- 
mediate liability  for  the  firm  debts,  but  the  debtor's 
own  estate.  If  he  took  part  of  his  co-debtor's  estate, 
he  would  have  a  preference  over  the  firm  creditors 
upon  another's  estate.  This  the  rule  does  not  give 
him.^  It  makes  no  difference  that  he  is  a  separate 
creditor  of  his  co-debtor.  The  firm  creditor  holds  him 
as  a  debtor,  and  excludes  him  as  a  claimant  from  any 
fund,  except  his  separate  estate,  which  the  rule  ex- 
empts in  the  first  instance,  by  a  demand  for  satisfac- 
tion. If  he  does  not  pay  the  firm  debt,  he  cannot  cut 
out  the  firm  creditor  by  taking  the  funds  of  a  co-debtor, 
who  would  pay  the  debt.  He  shall  not  be  a  dog  in  the 
manger.  The  reason  why  he  cannot  colled;  his  debt 
for  his  separate  creditors,  to  the  prejudice  of  the  firm 
creditors,  is  that  he  owes  it  himself,  out  of  his  separate 
estate.  The  reason  for  the  prohibition  ceases  when 
the  separate  estates  of  both  partners  are  insolvent; 
then  the  firm  creditor  does  not  compete  with  either 
class  of  separate  creditors,  and  has  no  right  or  interest 

575 


§nj9.  Marshalling  Assets.         Pt.  3,  Ch.  6. 

to  prevent  the  shifting  of   separate  assets  from  the 
estate  of  one  partner  to  that  of  another.' 

1,  Mthough  separate  creditors  may  not  enforce  their 
ch\iins  a<,^ainst  the  estate  of  a  co-partner  in  competition 
with  the  firm  creditors  for  an  indebtedness  prior  to  in- 
solvency, they  may  recover  from  the  firm  estate  any 
amount  drawn  by  the  firm  creditors  from  their  own 
separate  fund,  in  contravention  of  the  rule  of  conveni- 
ence.'' 

a.  Separate  creditors  have  a  Hen  on  joint  estate  for  amount  diverted 
from  separate  estate  after  insolvency,  to  pay  joint  creditors.  Firm 
creditors  of  B  &  C  ele<5led  to  be  separate  creditors  of  dormant  partner 
B,  and  took  so  much  from  separate  estate  of  B  that  there  was  a  surplus 
on  joint  estate.  A,  creditor  of  B,  claimed  a  lien  on  that  surplus  to 
extent  of  separate  estate  of  B  taken  for  joint  debts.  Creditors  of  C 
demanded  an  equal  di^^sion. — Decree  for  A.  Ex  parte  Reid,  2  Rose 
84(1814). 

2.  Partner  may  prove  against  separate  estate  of  co-partner  if  no  firm 
creditors.  C,  fraudulently,  gave  notes  in  firm  name  of  A,  B  &  C,  for 
his  private  use,  and,  without  authority,  A  and  B  paid  the  notes  in 
hands  of  bona  fide  purchaser,  and  all  other  firm  debts,  and  then  of- 
fered to  prove  against  C's  estate  in  bankruptcy  for  the  amount  of  the 
notes. — Allowed,  because  no  competition  with  firm  creditors.  Ex 
parte  Young,  2  Rose  40  (1814). 


§199. 


if  \\]txt  tuoulb  be  no  surplus  for  tl)e  firm  crcbitors  out  of  i\\t 
co-partner's  separate  estate,  tl)e  partner  m%\)i  recouer  on  a  con- 
tract intiepeniient  of  tl)e  firm. 

The  several  liability  of  each  partner  is  a  firm  asset. 
Hence,  no  partner  can  sue  his  co-partner  and  with- 
draw part  of  the  firm's  resources.  He  would  compete 
with  his  own  creditors  and  take  away  their  fund. 
But  if  there  would  be  no  surplus  after  the  separate 
creditors  were  paid,  the  partner  would  be  merely  a 
separate  creditor  of  his  co-partner,  and,  like  the  sepa- 

576 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §200. 

rate  creditors,  would  be  entitled  to  the  co-partners 
separate  estate/ 

If  a  partner  has  a  separate  claim,  which  he  can 
enforce  against  his  co-partner,  can  the  joint  creditors 
attach,  or  be  subrogated  to  the  right?  If  he  colledled 
the  debt,  it  could  be  seized  by  them  to  satisfy  their 
debt,  and  on  an  execution,  any  right,  however  remote 
or  contingent,  may  be  sold.  The  debt,  when  collected, 
is  not  exempted  from  execution  by  the  joint  creditors. 
The  money  belongs  to  the  partner  as  his  property, 
and  is  subje(5l  to  all  claims  against  him.  His  sepa- 
rate creditors  alone  are  entitled  to  dispute  the  joint 
creditors'  right,  and  if  they  do  not  exist,  or  intervene, 
no  reason  prevents  the  joint  creditors  from  seizing 
the  money. 

I.  Two  partners  become  bankrupt.  One  is  indebted 
to  the  other  on  a  contra6l,  independent  of  firm.  He 
may  prove  against  the  separate  estate  of  the  other,  if  it 
is  clear  that  there  will  be  no  surplus  of  his  separate 
estate  for  firm  creditors.  The  liability  of  a  partner 
prevents  his  proceeding  against  his  co-debtor  and  ex- 
hausting him  while  the  creditors  of  both  are  unsatis- 
fied.    Ex.  p.  Topping  4  D.  J.  &  S.  551  (1865). 


§200. 


tDI)erc  one  partner  lias  boiicil)t  out  l]is  co-partner,  tl^e  firm 
crebitora  ma^,  bg  substitution,  become  l)is  separate  creditors 
upon  tl)e  agreement  of  purcl]ase. 

A  sells  out  to  B,  who  gives  his  bond  for  the  price 
and  covenants  to  pay  the  firm  debts,  B  fails,  and  A 
assigns  his  separate  estate  to  pay  the  firm  debts.  The 
assignee  cannot  sue  on  the  bond,  unless  the  firm  cred- 

577 


§203.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

itors  give  up  the  joint  estate.  The  assignee  repre- 
sents the  joint  creditors.  They  cannot  come  on  the 
separate  estate  of  B.  They  are  entitled  to  the  firm 
assets  in  the  first  instance,  but  they  cannot  have  both 
the  firm  assets  and  the  price.  The  firm  creditors  are 
excluded  from  the  separate  estate,  unless  they  are  con- 
verted into  separate  creditors  by  accepting  the  assign- 
ment of  A,  as  a  substitute  for,  or  in  satisfadlion  of  the 
firm  liabilit}'.  They  might  make  such  a  novation, 
and  then  they  would  be  separate  creditors  of  B  upon 
the  contradl  of  purchase,  and  might,  like  any  other 
separate  creditors,  come  in  on  the  separate  estate  of 
the  purchaser,  B,  whose  indemnity  and  obligation  to 
pay  the  price  are  part  of  A's  separate  estate.^  The 
creditors  could  not  ele6l  to  be  separate  creditors,  and 
not  joint.  It  is  not  a  matter  of  ele<5lion;  but  the  as- 
signment might  be  accepted  as  a  substitute,  and  in 
the  assignment  was  the  claim  against  B.  The  sub- 
rogation is  to  this  separate  claim  of  A  against  B  and 
his  separate  estate. 

The  firm  creditors  can  enforce  by  subrogation  the 
covenant  of  indemnity  in  addition  to  the  obligation 
to  pay  the  price."  In  the  covenant  of  indemnity  is 
B's  original  liability  to  pay  the  firm  debts  in  another 
fiyrm,  but  the  change  of  form  corresponds  to  a  change 
in  substance.  B's  obligation  to  pay  the  firm  debts  has 
become  his  separate  liability  to  A,  which  the  firm  cred- 
itors may  enforce  by  virtue  of  their  substitution  to  A's 
rights.  Take  a  case  for  illustration :  The  firm  liabili- 
ties amount  to  $50,000,  the  firm  assets  to  $5 ,000.  The 
price  for  which  B  gives  with  covenant  of  indemnity 
is  $10,000.  The  amount  of  A's  separate  property, 
exclusive  of  his  claim  on  the  fund,  is  $10,000,  making 

578 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §200. 

a  nominal  total  of  $20,000  as  the  amount  of  his  sepa- 
rate estate,  which  he  assigned  to  the  firm  creditors. 
B's  separate  debts  amount  to  $20,000.  His  separate 
assets  amount  to  $25,000.  As  the  firm  creditors  have 
adopted  the  contra6l  between  A  &  B,  the  firm  fund 
of  $5,000  becomes  a  part  of  B's  separate  estate  and 
must  be  added,  making  a  total  of  $30,000.  All  claim- 
ants are  now  separate  creditors  of  B,  and  the  claims 
against  his  estate  are  as  follows:  i,  His  original  sep- 
arate creditors,  $20,000.  2,  The  claims  of  A,  which 
are  now  enforced  by  the  firm  creditors,  and  are  classi- 
fied under  two  heads:  <2,  $10,000,  the  price  of  A's 
interest  in  the  firm.  ^,  His  claim  for  indemnity, 
^20,000,  making  a  total  indebtedness  of  $50,000, 
which  would  give  a  dividend  of  60  per  cent,  to  both 
sets  of  separate  creditors,  giving  to  B's  original  sepa- 
rate creditors  $12,000,  and  to  the  firm  creditors, 
$18,000.  The  dividend  to  the  firm  creditors  is  in 
addition  to  the  $10,000  cash  which  they  received 
under  A's  assignment,  and  makes  a  total  dividend 
upon  their  special  claim  of  $28,000,  or  56  per  cent. 
The  firm  creditors  have  not  proved  for  the  full  amount 
of  the  firm  against  the  estate  of  B,  but  only  for  the 
amount  of  A's  claim  against  B.  If  they  had  claimed 
the  firm  fund  and  repudiated  the  contrail  between  A 
&  B,  they  would  have  been  excluded  from  B's  sepa- 
rate estate,  and  have  received  but  $15,000. 

I.  Transfer  by  the  firm  of  its  assets  to  partner,  bars  creditors'  equity, 
ana  partner's  transfer  for  past  debt  a  vatuable  consideration.  B  & 
Co.,  indebted  to  A  &  Co.,  and  to  others,  transferred  all  the  firm  stock 
and  credits  to  B,  who  had  advanced  money  to  B  &  Co.,  and  he  agreed 
to  pay  its  debts.  B  assigned  most  of  the  assets  to  C,  his  father,  for 
a  past  debt.  A  &  Co.,  who  recovered  judgment  against  B  &  Co.,  but 
obtained  no  satisfaction  by  execution,  brought  bill  for  payment  out 
of  assets  in  C's  hands. — Dismissed.    Creditor's  equity  lost  with  firm's 


579 


§2()i.  Marshalling  Assets.  Pt.  3,  Ch.  6, 

equity,  by  transfer  to  ]},  and  bis  assignment  for  past  debt  a  valuable 
consiilera'tion.     Wilcox  v.  Kellogg,  il  Ohio  394  (1842). 
Buffalo  City  Bank  v.  Howard,  supra  ^69,  n.  19. 

2.  Where  a  continuing  partner  assumes  the  debts,  his  assignee  /or 
'  creditors  must  apply  the  assets  to  the  discharge  of  the  firm  liabilities 
in  preference  to  the  separate  claims  against  the  continuing parttier, 
A  was  B's  son  and  agent.  He  lent  B's  money  in  his  own  name  to 
firm  C,  D  .S:  E.  D  and  E  sold  out  to  C,  who  agreed  to  pay  the  firm 
debts.  A,  with  knowledge  of  the  arrangement,  took  C's  note,  and 
also  lent  C  other  moneys  of  his  own.  C  made  payments  on  account. 
He  assigned  to  1',  for  creditors.  The  deed  made  no  discrimination 
between  the  debts  of  C  and  the  debts  of  the  firm,  but  made  certain 
preferred  debts,  including  the  note  and  A's  private  advances  to  C 
In  consideration  of  F's  assigning  to  A,  and  of  C's  satisfying  the  gen 
eral  creditors,  A  re-established  C  in  business,  and  bought  up  all  the 
preferred  claims.  A  assigned  to  D,  as  security,  an  undivided  inter- 
est in  the  claim  thus  consolidated  against  C.  I)  &  E  were  also  in- 
cluded among  the  preferred  creditors.  A  purchased  their  claim,  and 
in  consideration  of  a  discount,  released  them  from  all  the  firm  debts, 
B  was  unknown,  and  A  was  considered  principal  in  all  these  trans- 
actions. B  applied  the  assets  to  payment  in  full,  of  all  his  expendi- 
tures in  the  purchase  of  claims  under  agreement,  and  applied  C's 
partial  payments  in  discharge,  not  of  the  note,  but  of  his  total  loan 
prior  to  C's  failure.  A  sued  D  &  E,  as  B's  executor,  on  her  claim. 
Defence :  D  and  E,  by  the  sale  to  C,  became  sureties  to  the  fund  which 
A  was  bound  to  apply  in  discharge  of  their  liabilities.  The  release 
by  A  included  D  and  E's  debt  to  B. — ^Judgment  for  D  and  E.  C's  par- 
tial payments  should  have  been  applied  to  the  earliest  of  the  claims 
which  A  represented,  thus  reducing  the  note.  A,  as  holder  of  the 
fund,  was  bound  to  apply  it  in  discharge  of  debts  for  which  D  and  E 
remained  liable  in  preference  to  A's  original  or  purchased  claims 
against  C  alone.     Chapman  v.  Thomas,  4  Keyes  210,  N.  Y.  (1868) 


§201. 


Partners  ran  not  compete  niitl]  firm  crebitors  in  enforcinj 
flainis  betiuccn  tl)emsel»es;  but  mail  compete  u)itl)  otl)er  eeparati 
erebitors. 

The  equity  of  a  partner,  on  a  balance  of  account,  tc 
be  reimbursed  his  over-advances  to  a  co-partner  is  not 
an  independent  claim,  and,  as  against  firm  creditors 
gives  the  creditor  partner  no  standing  as  a  separate 
creditor.*  He  could  rank  as  a  separate  creditor  onl} 
when  all  the  firm  debts  were  paid.     Until  they  wen 

I 


[Pt.  3,  Ch.  6.  Marshallincx  Assets.  §2oi. 

satisfied,  he  would  have  no  equity  or  claim  against 
his  debtor  co-partner.  The  right  of  the  partner  comes 
jminto  existence  only  upon  the  satisfa(5lion  of  all  the  firm 
creditors ;  it  springs  out  of  their  ashes.^  But  when  the 
firm  creditors  are  satisfied,  then  the  partner  has  a  lien 
upon  the  firm  fund  for  his  advances,  and  may  enforce 
his  right  against  the  separate  creditors  of  the  co- 
partner.' If  the  firm  fund  will  not  satisfy  the  part- 
ners' claim,  they  may  prove  against  the  separate 
estate  of  their  co-partner.* 

1.  Partner  cannot  prove  against  co-partner's  separate  estate  for  over- 
advances until  finn  creditors  are  paid.  B  &  C,  partners,  failed,  and 
A  was  made  assignee  in  bankruptcy  for  firm  and  separate  estates.  B 
had  advanced  to  the  firm  f  20,000  in  excess  of  C's  contributions.  C's 
separate  estate  was  sufficient  to  pay  his  creditors  in  full.  The  firm 
estate  would  pay  40  cents  on  the  dollar.  Thereupon  A  asked  per- 
mission to  prove  against  C's  separate  estate  for  the  amount  of  this 
claim,  on  an  equal  footing  with  the  separate  creditors,  and  to  distrib- 
ute the  dividend  thus  obtained  amongthejoint  creditors. — Disallowed. 
B  could  not  be  a  creditor  on  firm  account  until  all  firm  creditors  were 
paid.     In  re  McLean,  15  Nat.  B'kr'cy  Reg.  341  (1876). 

2.  Pariftcr  ivho  has  paid  all  firm  creditors  may  prove  against  co-part- 
ner's separate  estate.  B  having  paid  all  the  debts  of  B  &  C,  offered 
to  prove  for  balance  of  partnership  accounts  against  C's  estate,  in 
competition  with  separate  creditors. — Proof  allowed.  Ex  parte  Tay- 
lor, 2  Rose  175  (1814). 

But  there  is  no  rule  of  law  which  prevents  the  wife 
of  a  partner  competing  with  other  firm  creditors,  if  the 
firm  is  indebted  to  her  separate  estate. 

Wife  may  compete  with  husband's  firm  creditors.  A  advanced 
^500  from  her  separate  estate  to  her  husband,  B.  Firm  B  &  C  used 
and  gave  promissory  notes  for  it.  A  proved  against  firm. — Allowed. 
Statute  45  &  46  Vidl.,  c.  75,  s.  3,  which  excluded  wife's  proof,  if  loan 
to  husband  for  trade,  or  business  carried  on  by  him,  or  otherwise,  did 
not  applv,  if  husband  used  the  monev  as  a  partner.     In  re  Neff,  19  Q. 

B.  D.  88'(iS87). 

3.  Security  to  a  partner  for  firm  debt  not  a  fraud  on  subsequent  individ- 
ual creditors.  B  coutradled  to  build  a  culvert,  but  couldn't  raise  the 
money.  He  applied  to  C,  who  refused  a  chattel  mortgage  as  security, 
but  went  into  partnership,  contributing  cash  against  B's  implements 
and  tools,  which  he  promised  to  mortgage  as  additional  security  to 

C.  B  misappropriated  C's  contribution,  and  C,  being  unable  to  ob- 
tain security,  abandoned  the  contract.  B  then  undertook  the  work 
alone.  A  obtained  judgment,  and  attached  B's  commission  under 
the  contracft,  and  also  brought  bill  to  avoid  assignment  by  B  to  C. — 
Dismissed.  B  indebted  to  A  on  firm  account.  Stamets  v.  Quinn,  1 1 
C.  E.  Gr.  383,  N.  J.  (1876). 

581 


\ 


§202.  MaRvSHALLING  ASSETS.  Pt.  3,  Ch.  6. 

4.  J^arttiers  have  a  lien  on  firm  fund  for  the  balance  due  on  settlement, 
and  are  also  separate  creditors  of  debtor  partner  for  the  amount.  A, 
B  ^:  C,  partners.  On  settlement  of  the  accounts,  C  was  indebted  to 
A  andB.  C,  who  had  possession  of  all  partnership  funds,  became 
bankrupt  on  petition  of  his  separate  creditors.  An  order  was  made 
to  kcej)  separate  estate  of  C  distindl  iroin  estate  of  A,  B  &  C.  The 
firm  fund  yielded  a  surplus,  which  A  and  B  claimed. — Decree  for  A 
and  B,  and  if  the  surplus  does  not  discharge  C's  balance  of  indebted- 
ness, A  and  B  may  prove  against  his  separate  estate.  Ex  parte  Ter- 
rell, Buck  345  (1819). 


§202. 

^\]t  bf  bt  of  a  partner  to  \\]t  tirm  is  not  an  asset  of  \\\t  ftrm. 

What  are  the  assets  ?  The  answer  varies  according 
to  the  different  conceptions  which  prevail  of  partner- 
ship. In  the  commercial  aspe^l  the  firm  is  a  distindl 
person,  who  exists  apart  from  the  members  composing 
the  union.  The  accounts  are  kept  with  the  firm, 
which  deals  as  a  person  with  the  partners.  All  debts 
are  charged  up  on  the  firm  books,  and  the  separate 
accounts  of  the  partners  show  the  balance  which 
would  be  colle(5led  upon  a  settlement  by  the  partner 
in  whose  favor  the  account  stood.  The  commercial 
method  of  liquidation  is  the  simplest,  but  it  ignores 
the  law  which  governs  the  relation.  The  person  by 
whom  a  settlement  of  the  accounts  is  effedled  is  a 
myth  of  trade,  and  does  not  exist  at  law.  The  ac- 
counts vanish  in  the  presence  of  a  court,  with  the  per- 
sonality in  which  they  centred.  A  partner  cannot,  at 
law,  contrail  an  indebtedness  to  his  firm,  for  part  of  the 
debt  would  be  due  to  himself  and  the  balance  would  be 
due  to  his  co-partners.  The  claim  of  the  firm  is  re- 
solved into  separate  claims  of  the  partners,  which  are 
subjedl  to  the  paramount  rights  of  creditors. 

582 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §202. 

The  Scotch  plan  lets  the  firm  colledl  a  debt  due  it 
by  a  partner,  subjedl  to  a  set-off  of  his  share  of  the 
claim,  but  does  not  let  a  partner  colledl  a  debt  due 
him  by  the  firm.' 

Why  is  the  right  all  on  one  side?  and  why  have 
the  partners  no  right  against  the  firm  ?  The  explana- 
tion of  the  anomaly  lies  in  the  several  liability  of  the 
partners.  Liable  to  the  extent  of  their  individual  re- 
sources for  the  debts  of  the  firm,  they  can  recover 
nothing  from  it,  and  must  contribute  to  pay  its  debts. 
This  is  the  legal  theory  of  partnership.  The  partner 
who  seeks  to  collect  his  debt  from  the  firm  is  met  by 
the  joint  creditors'  right  to  collect  their  debts  out  of 
his  separate  estate.  The  debt  which  he  reclaims  for 
his  separate  estate  is  in  their  possession.  He  cannot 
take  the  fund  away  from  them,  and  it  will  be  appro- 
priated according  to  their  legal  right.  The  right  and 
possession  coincide.  He  has  an  equal  right,  but  the 
title  is  vested  in  them." 

If  the  amount  which  a  partner  owes  a  firm  may  be 
colle6led  by  it,  in  order  to  marshal  its  assets,  the 
right  of  set-off  by  him  of  a  co-partner's  debt  does  not 
affe6l  the  firm  creditors.  They  are  paramount  claim- 
ants, and  override  the  domestic  claims  of  the  partners 
between  themselves.  The  right  of  the  firm  to  collect 
a  debt  from  a  member,  if  once  recognized,  establishes 
the  firm  creditor's  right,  and  he  may  disregard  the  set- 
offs between  the  partners,  and  colle61:  the  full  indebt- 
edness from  each  partner,  though  the  firm  itself  is 
entitled  only  to  the  balance  after  dedu6ling  the  coun- 
ter-claim. The  asset  is  firm  property,  and  not  sepa- 
rate estate,  however  much  the  prospe(ft  of  realizing 
separate  estate  out  of  the  partner's  interest,  is  dimin- 

5£3 


k 


'■202.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

ished  by  excluding  a  set-off.  The  interest  of  a  partner 
is  his  share  after  all  firm  debts  are  paid.  He  could 
not  acquire  separate  estate  by  virtue  of  his  interest 
while  any  firm  debt  remained  unpaid.  The  partner's 
equity  does  not  refer  to  an  adjustment  of  accounts  by 
the  members,  but  applies  to  a  diversion,  by  either 
partner,  of  firm  assets.  The  members  can  restrain 
the  misapplication  of  joint  funds  to  any  purpose  which 
is  foreign  to  the  firm  business.  But  the  joint  creditor 
needs  no  equity  to  resort  to  firm  assets,  as  they  con- 
stitute the  normal  funds  to  satisfy  his  debt.  He  may 
even  exhaust  the  partners'  separate  estates,  and  it  is 
only  the  independent  right  of  a  separate  creditor 
which  can  prevent  his  recourse  to  them.  It  is  only 
separate  assets,  which  have  not  come  into  the  firm, 
that  the  separate  creditor  can  claim.  As  to  property 
belonging  to  the  firm,  the  separate  creditor  has  no 
standing,  either  to  claim  or  interfere  with  it. 

Take  an  illustration :  A  &  B  are  succeeded  by  B 
&  C  upon  A's  death.  A  was  indebted  to  A  &  B 
$12,000;  B  was  indebted  to  A  &  B  $36,000.  B  &  C 
reclaimed  money  lent  to  A  &  B.  If  the  claimants 
sought  to  treat  A's  debt  of  $12,000  as  an  asset  of  his 
firm,  could  it  enforce  its  collection  until  B  had  paid 
his  debt  of  $36,000?  Could  not  A's  representative 
set  off  this  debt  against  $12,000  of  B's  debt,  and  claim  j 
that  A  owed  his  firm  nothing?  If  the  common  mem- 
bership of  B  in  both  firms  would  prevent  any  recovery 
against  his  separate  estate,  the  answer  is,  that,  under 
McCormick's  Appeal,  what  he  owes  his  firm  is  joint^ 
or  partnership,  assets,  and  not  his  separate  estate.  It 
is  not  the  balance  after  deducing  w^hat  A  owes  the 
firm  ($12,000),  that  is  $24,000,  but  both  debts  of  the 

584 


I 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §203. 

partners,  or  $48,000,  which  is  the  firm  asset.  If  B's 
debt  could  not  be  colle6led,  then  A's  debt,  which  in- 
volves the  same  adjustment  of  accounts,  could  not  be 
collected  by  the  firm  to  repay  its  debt.  Although 
McCormick's  Appeal  makes  the  debt  of  each  partner 
to  his  firm  partnership  assets,  yet  that  notion  con- 
flicts with  the  refusal  of  the  courts  to  settle  the  part- 
nership accounts  in  suits  between  firms  with  a  common 
member.  The  Scotch  plan  is  inconsistent  with  the 
exclusion  of  the  separate  estate,  which  was  based  upon 
the  impossibility  of  settling  the  partners'  accounts 
without  a  dissolution  of  the  firm. 

1.  McCormick's  Appeal,  supra  I  io6,  n.  7,  a. 

This  was  originally  the  English  plan,  but  was  aban- 
doned, without  any  explanation,  probably,  as  most 
changes  in  the  law  occur,  by  the  unconsciousness  of  the 
judge  who  decided  the  point,  of  the  previous  course  of 
decision.  Lord  Blackburn  :  Read  v.  Bailey,  supra 
§  197,  n.  2. 

2.  Separate  creditors  can  not  prove  against  firm  fund  for  over  advances 
by  their  debtor  partner  to  the  firin.  B  &  C  were  indebted  to  B  in  the 
sum  of  |i  7,000.  Firm  assigned  to  D  for  benefit  of  creditors ;  likewise 
B  and  C  each  made  separate  assignments  to  D.  A,  and  other  separate 
creditors  of  B,  claimed  a  right  to  prove  against  the  firm  estate  for  the 
debt  to  B. — Disallowed,  because  B  could  not  compete  with  firm  cred- 
itors, and  his  separate  creditors  could  have  no  higher  right.  The 
privilege  extended  to  firms  with  a  common  member  does  not  apply  to 
an  individual  partner.    Houseal's  Appeal,  9  Wr.  484,  Pa.  (1863). 


§203. 


If  tl)c  surT)it)ing  partner  toas  in^cbte^  to  l]is  firm,  tl)£  nreb- 
itors  tuouli)  not  be  pre^enteii  bij  tl)is  iuiiebtebness  from  rollccting 
%i\x  iJebts  out  of  tl)e  beceaseb  partner's  estate. 

They  ignore  the  state  of  accounts  between  the  part- 
ners, and  come  in  upon  either  partner's  estate  by  a 

585 


1 


§203.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

title  paramouut,  which  cuts  out  any  mere  partnership 
or  domestic  claims.  Take  the  fadls  of  Laughlin  v. 
Lorenz  (§71,  n.  2) :  The  surviving  partner  was  also 
a  member  of  the  succeeding  firm,  which,  at  request, 
paid  the  prior  firm's  debts,  and  was  subrogated  to  the 
place  of  the  creditors  whom  it  paid.  The  surviving 
partner  being  a  common  member  of  both  firms,  noth- 
iug  but  the  first  firm's  assets  could  be  taken  to  satisfy 
the  debts,  if  the  second  firm  claimed  payment.  But  the 
creditors  were,  pradlically,  the  claimants,  and  they  are 
not  limited  to  the  firm  assets,  but  may  exhaust  the 
separate  estates.  The  surviving  partner's  debt  to  the 
first  firm  was  an  asset  of  that  firm,  which  it  alone 
could  collect.  The  surviving  partner,  who  repre- 
sented the  firm,  did  not  pay,  or  make  himself  pay  it, 
and  his  executors  did  not  pay  it  either.  The  execu- 
tors of  the  first  deceased  partner  might  probably  have 
an  account  against  them,  and  enforce  the  payment, 
but  no  one  else  could.  If  the  suit  had  been  by  the 
second  firm,  no  recourse  could  have  been  had  to  this 
asset,  because  it  depends  upon  the  domestic  account 
of  the  original  firm.  A  final  settlement  was  neces- 
sary to  ascertain  the  amount  due.  Nor  could  the  de- 
ceased partner's  estate  have  been  compelled  to  pay  the 
debt,  for  the  decedent's  estate  was  not  less  separate 
than  the  debt  due  to  the  firm  by  the  surviving  part- 
ner. This  difficulty  was  overcome  by  subrogation, 
which  put  the  second  firm  in  the  shoes  of  the  credit- 
ors whom  it  paid,  and  gave  it  diredl  recourse  to  the 
separate  estates  of  the  partners. 


586 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §204. 

§204. 

Qll]e  exemption  at  lato  of  a  bccmsei)  partner's  estate  roonlli  not 
entitle  Ijis  representative  to  recover  Ijis  sl)are  from  tl)e  surniving 
partner  in  competition  toitl)  creditors. 

To  put  a  case:  When  a  partner  died,  his  separate 
estate  was  formerly  exempt,  at  law,  from  liability 
for  firm  debts.  Could  his  executor  recover  on  a  con- 
trail that  on  the  death  of  a  partner  his  share  should 
be  paid  him?  No;  the  deceased  partner's  estate  is 
liable  in  equity,  and  while  it  continues  liable  no  re- 
covery can  be  had  against  his  co-partners.  The  lia- 
bility for  firm  debts  estops  him  from  taking  away, 
or  diminishing,  the  joint  fund  devoted  to  their  pay- 
ment. The  creditors  have  the  deceased  partner's 
estate,  in  addition  to  the  joint  fund,  but  their  pri- 
ority is  limited  to  the  firm  assets.  They  are  deprived 
of  a  preference  by  the  amount  which  the  separate  part- 
ner's estate  gets.^  How  if  the  recovery  is  obtained  out 
of  the  other  partner's  separate  estate?  Then  his  sep- 
arate creditors  are  deprived,  to  that  extent,  of  their 
priority.  The  deceased  partner's  share  is  a  right 
limited  to  the  joint  assets.  If  they  were,  at  his  death, 
worth  $15,000,  he  would,  as  one  of  them,  be  entitled 
to  $5,000.  Would  he  be  anything  but  a  deferred  joint 
creditor?  After  all  the  joint  creditors  were  paid,  he 
would  be  entitled  to  recover,  out  of  the  surplus  joint 
assets,  his  share."  Suppose  there  were  no  joint  assets 
left;  could  he  proceed  against  the  separate  partner's 
estate?  Not  on  the  ground  that  the  absence  of  joint 
assets  entitles  a  joint  creditor  to  come  in  on  equal 
terms  with  the  separate  creditors  on  the  separate  es- 
tates, because  there  was  a  joint  estate,  though  it  had 

587 


§204.  Marshalling  Assets.         Pt.  3,  Ch.  6. 

been  exhausted  in  paying  the  other  joint  creditors. 
Perhaps  the  payment  of  those  firm  debts  before  bank- 
ruptcy supervened  might  be  considered  as  leaving  no 
joint  funds,  and,  therefore,  letting  the  deceased  part- 
ner's estate  come  in  on  the  separate  estates  of  his  co- 
partners with  their  separate  creditors.  If  the  deceased 
partner's  share  was  what  he  was  entitled  to  at  the 
time  of  his  death,  then  that  amount  was  due  from  his 
co-partners,  and  if  by  their  mismanagement  the  firm 
funds  were  wasted,  they  ought  to  make  it  up,  indi- 
vidually, and  they  would  be  liable  to  pay  out  of  their 
separate  estate.  The  deceased  partner  would  thus  be 
a  separate  creditor,  and  entitled  to  come  in  with  sepa- 
rate creditors.  If  the  share  were  estimated  in  advance 
and  valued  at,  say,  $5,000,  then  if  at  the  partner's 
death  there  was  nothing  after  the  debts  were  paid,  the 
co-partners  would,  nevertheless,  be  liable  in  their  sepa- 
rate estates,  because  they  guaranteed  that  amount, 
and,  consequently,  were  liable  for  it,  and  if  there  was 
no  joint  estate  out  of  which  they  could  pay  the  amount 
the}^  must  make  it  up  out  of  their  separate  estates. 
The  bankruptcy  rule,  being  a  creature  of  statute,  is 
superceded  by  the  enadlment  of  any  lien  inconsistent 
with  it.' 

1 .  Ai^ree^ncnt  between  partners  is  subordinate  to  firm  creditors'  claim. 
I{,  C  &  D,  partners,  agreed  that  on  death  of  one  his  share  should  be 
paid  his  estate  in  instalments.  B  died,  but  before  payment  co-part- 
ners became  bankrupt.  A,  executor  of  B,  offered  to"  prove  against 
firm  fund.— Disallowed.  The  separate  assets  in  hand  may  be  kept 
from  the  firm  creditors,  Imt  no  claims  against  the  firm  or  a  co-partner 
can  be  enforced.  The  liability  of  a  partner  for  the  firm  debts  con- 
tmues.  although  his  separate  estate  is  exonerated  in  the  first  instance. 
Nanson  v.  Gordan,  L.  R.  i  App.  Cas.  195  (1876). 

2.  Retiring  partner  may  prove  for  price  of  his  interest,  in  competition 
with  ne-M  firm's  creditors.  B,  C  &  D,  partners,  agreed,  by  articles, 
^°^*^  o"  K's  death  a  part  of  his  capital  should  remain  in  the  business, 
and  be  secured  by  bond  of  surviving  partners,  to  B's  executor.  After 
B  s  death,  C  and  D  executed  a  bond  to  A,  executor  of  B,  to  secure  the 

588 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §205. 

said  sum,  and  A  executed  to  C  and  D  an  assignment  of  all  B's  inter- 
est, on  condition  that  they  should  assume  and  pay  the  joint  debts. 
C  &  D  paid  all  the  joint  debts  of  B,  C  &  D,  and  became  bankrupt 
A  offered  to  prove  against  the  firm  estates  of  C  &  D.  The  joint 
creditors  of  C  &  D  resisted. — Decree  for  A,  who  was  entitled  to  a 
dividend  pari  passu  with  the  other  creditors  of  C  &  D.  Ex  parte 
Edmonds,  4  D.  F.  &  J.  488  (1862). 

3.  The  United  States,  zvhen  a  firm  creditor,  may  demand  payment  out 
of  partners^  separate  estates,  without  resorting  to  firm  fund.  B,  C, 
D,  E,  F,  G  and  H,  residents  of  the  United  States,  composed  the  firm 
of  B  &  Co.,  and,  together  with  I,  J  and  K,  residents  of  England,  com- 
posed the  firm  B,  I  &  Co.  The  latter  firm  owed  the  United  States 
^132,610.  B  &  Co.  were  adjudged  bankrupts,  and  L,  was  made  as- 
signee of  the  firm  and  separate  estates.  The  United  States,  without 
first  proving  its  claim,  filed  a  bill  against  L  and  the  members  of  B  & 
Co.,  to  subjedl  the  separate  estates  of  the  seven  partners  to  the  pay- 
ment of  its  claim  as  a  preferred  debt.  The  bill  did  not  aver  that  B, 
I  &  Co.  were  insolvent ;  the  answer  averred  that  such  was  not  the 
case,  and,  furthermore,  that  the  United  States  was  amply  secured  by 
collateral. — Decree  for  the  United  States.  The  government  has  no 
claim  on  the  joint  fund  of  B  &  Co.,  but  may  enforce  its  priority 
against  the  separate  estates  of  the  resident  partners,  who,  being  prin- 
cipal debtors  upon  the  liability  of  B,  I  &  Co.,  can  not  require  the 
United  States  to  resort  to  its  collateral,  or  to  the  solvent  estates  of 
non-resident  partners.  United  States  v.  Lewis,  13  Nat.  B'kr'tcy  Reg. 
33  (1876). 


§205. 


^  common  member  furnisl]es  no  basia  for  marsl)QUmg  X\\t 
assets  of  different  firms. 

At  Common  law,  when  two  firms  with  a  common 
member  became  liable  for  the  same  debt  upon  inde- 
pendent contrails,  for  example,  as  drawers  and  ac- 
ceptors of  commercial  paper,  or  as  principals  and 
guarantors,  the  creditor  has  a  separate  a(?tion  against 
each  firm,  and  might  have  judgments  successively 
against  both,  notwithstanding  the  fa(5l  that  by  this 
procedure  judgment  was  a(51:ually  entered  twice  against 
the  common  member  for  the  same  debt.'  The  reason 
of  this  rule  is  founded  on  the  notion  of  a  joint  con- 
tradl,  which  was  regarded  as  something  impersonal 

589 


5205.  Marshalling  Assets.  Pt.  3,  Ch.  6, 

distindl  from  the  individual  promises  of  the  co-debtors 
(§91).  The  promise  of  the  common  member,  to- 
gether with  his  co-partners  in  one  firm,  was  the  basis 
of  an  independent  obligation,  distin(5l  from  his  prom- 
ise to  pay  the  same  debt  made  in  conjunction  with 
his  co-partners  in  the  other  firm.  Although  by  this 
means  two  judgments  might  be  obtained  against  the 
common  member  for  the  same  debt,  and  execution 
might  issue  against  the  property  of  both  firms,  or 
either  of  them,  there  could  be  but  one  satisfaction. 
The  same  rule  applied  where  there  was  a  promise  by 
a  firm,  and  the  additional  and  subsidiary  promise  by 
one,  or  more,  individual  members  of  the  firm,  or  vice 
versa. 

The  question  arose  in  bankruptcy,  in  the  form  of 
an  attempt  to  make  double  proof.  Although  double 
proof  was  allowed  in  conformity  to  the  creditor's  legal 
status,  equity  controlled  the  exercise  of  the  legal 
right,  and  compelled  the  creditor  to  eleCl,  and  gave 
him  a  dividend  only  out  of  a  single  fund.^ ,  This  is 
but  a  different  application  of  the  rule  of  marshalling 
assets  between  the  joint  and  separate  creditors  of  a 
firm.  The  only  difference  is  in  the  matter  of  eleClion. 
The  joint  creditor,  who  is  nothing  else,  has  no  elec- 
tion, and  is  confined  to  the  firm  fund,  although  the 
individual  partner  is  ultimately  liable  in  his  separate 
estate  for  the  joint  debt.  But  in  the  case  under  dis- 
cussion the  joint  creditor,  in  addition  to  the  firm  obli- 
gation, has  a  formal  independent  promise  of  the  part- 
ner, either  alone  or  in  conjundion  with  a  third  person. 

Yet  the  common  partner  was  the  controlling  faClor 
m  the  reasoning  by  which  Courts  of  Equity  arrived 
at  the  dodlrine  of  eledion.     If  double  proof  were  ad- 

590 


PT.  3,  Ch,  6.  Marshalling  Assets.  §205. 

mitted,  Equity,  it  was  supposed,  could  not  disregard 
the  fa(5l  that  the  creditor  held  two  funds  of  the  same 
debtor  as  security  for  his  claim,  and  that  there  were 
different  sets  of  creditors  respectively  claiming  these 
funds.  Equity,  therefore,  it  was  thought,  would  be 
compelled  to  marshal  both  funds  with  respe6l  to  this 
common  claim.  If  this  were  not  done,  it  would  be 
impossible  to  ascertain  the  equitable  portion  which 
each  fund  should  contribute  to  pay  the  common  claim, 
and  the  common  creditor  might,  by  proving  against 
both  funds,  have  his  claim  paid  in  full,  while  the 
creditors  of  the  different  funds  received  only  a  divi- 
dend, although  creditors  of  the  common  partner 
equally  with  himself.  This  marshalling  of  the  as- 
sets was  impossible,  because  the  creditors  of  the  dif- 
ferent funds  stood  upon  no  common  basis.  An 
equitable  division  of  the  common  creditor's  claim  be- 
tween the  two  funds  was  impossible  without  a  uniform 
rate  of  dividend,  and  a  uniform  rate  was  impossible, 
because  there  was  no  single  fund  to  distribute  among 
all  the  creditors. 

When  courts  of  Equity  found  that  there  could  be 
no  marshalling  of  the  two  funds,  with  respe6l  to  the 
common  claim,  they  compelled  the  common  creditor 
to  ele6l  which  fund  he  would  pursue.^  The  ele(5lion 
was  not  the  consequence  of  any  equitable  principle. 
It  was  an  arbitrary  rule,  which  deprived  the  common 
creditor  of  his  legal  right.  The  creditor  of  one  fund 
was  enriched  at  his  expense,  without  any  correspond- 
ing relief  to  the  creditor  of  the  other  fund. 

The  Bankrupt  A(fts  of  England*  and  of  the  United 
States^  have  changed  the  pra(5lice,  by  giving  promi- 
nence to  the  presence  of  the  other  partner,  who  is  not 

591 


§205.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

a  common  debtor.  These  statutes  allow  double  proof 
in  the  cases  under  discussion.  The  statutes  do  not 
apply  where  the  double  obligation  is  purely  nominal, 
that  is  to  say,  where  the  same  persons  are  trading 
under  different  firm  names,  and  although  the  contradl 
seems  to  express  the  promise  of  two  distin6l  firms,  it 
is,  in  reality,  nothing  but  the  double  promise  of  the 
same  individuals/' 

At  the  present  day,  in  America  it  is  unnecessary  to 
recur  to  the  notion  of  a  joint  contrail  in  order  to 
make  available  the  creditor's  right  against  the  funds 
of  both  firms  in  an  a6lion  at  law.  He  might  get 
judgment  against  the  partners  in  one  firm,  and  then 
bring  an  adlion  against  those  partners  of  the  second 
firm  whom  he  had  not  sued  as  members  of  the  first 
firm.  His  judgment  against  them  would  enable  him 
to  take  the  assets  of  the  second  firm  in  execution. 

I.  "At  Common  Law,  where  no  bankruptcy  intervened, 
"  if  a  man  had  a  claim  for  ^100  arising  out  of  a  contradi 
"in  which  two  firms  or  two  sets  of  persons  were  con- 
"cerned,  one  individual  being  common  to  both  firms, 
"as,  for  instance,  if  a  firm  consisting  of  A  &  B  drew 
"  on  a  firm  consisting  of  B  &  C,  there  is  no  doubt  what- 
"ever  that  the  man  would  have  had  his  adlion  against 
"  A  &  B  as  drawers,  to  recover  his  ;^ioo,  and  his  adlion 
"against  B  &  C  as  acceptors  ;  and  if  he  recovered  judg- 
"  ment  upon  either  one  or  other  of  those,  he  could  have 
"levied  his  execution  against  the  estates  of  both  the 
"contracting  parties,  and  the  faCt  that  one  of  the  con- 
"tra6lin<(  parties  who  had  contradled,  say  as  acceptor 
"of  the  bill,  was  also  a  person  who  had  contracted  as 
"drawer  for  the  same  sum  of  money,  would  have  had 
"no  effecl  upon  his  right  to  issue  execution  against  the 
"estate  and  property  of  the  firm  B  &  C,  who  had  ac- 
"  cepted  the  bill."  Lord  Blackburn,  Read  v.  Bailey, 
supra  §  197,  n.  2. 


592 


_ffi 


Pt.  3,  Ch.  6.  Marshalling  Assets.  §205. 

2.  In  bankruptcy,  ' '  Though  there  might  be  proof 
"against  each  of  the  estates,  yet  there  was  not  to  be 
"a  dividend  received  from  each  of  those  estates;  the 
"creditor  must  eleS:  which  he  would  go  against.  '■ 
"Where  there  are  not  two  separate  firms  (made  distin6l 
' '  persons  by  the  bankruptcy  a(5ls)  the  old  (bankruptcy) 
"rule  would  remain  untouched  that  the  creditor  must 
"eledl  which  estate  he  would  go  against."  Ready. 
Bailey,  supra  §  197,  n.  2. 

3.  Deceased  partner''  s  executor  may  prove  against  firm,  if  firm  cred- 
itors disclaim  proof  against  his  separate  estate.  A,  in  partnership 
with  executor  of  his  brother  B,  trading  as  A  &  B,  dissolved  in  1875, 
and  died  in  1S78.  B's  executor  coutiuued  under  old  name.  No 
debts  of  the  firm  of  which  A  was  a  member  were  presented,  except 
beneficiaries  of  B,  who  proved  against  executor,  who  continued  busi- 
ness, aud  disclaimed  proof  against  A's  estate.  A's  executor  proved 
for  his  contribution,  which  he  left  as  a  loan.  ObjecSlion,  because  co- 
debtor  with  B's  executor  for  the  debt  to  B's  beneficiaries. — Allowed. 
Proof  would  clearly  stand  until  beneficiaries  proved  against  A's  estate. 
Andrews  v.  Wilcoxon,  25  Ch.  D.  505  (1884). 

4.  The  Bankrupt  Adls  of  1861,  §  152,  and  of  1869,  §37, 
provide  for  contradls  by  two  firms  or  by  an  individual 
and  a  firm.  The  language  is  :  "  Firms  ^  in  whole  or 
"in  part  composed  of  the  same  individuals  "  or  a  '  sole 
"contractor'  who  is  also  one  of  the  joint  contractors." 

-  "One firm,"  said  Lord  Blackburn,  "  is  A,  B  &  Cand 
"  the  other  is  A  &  B.  There  *  you  may  say  that  firm 
"  A  &  B  'in  the  whole '  formed  part  of  the  firm  A,  B  & 
"C." 

Lord  Cairns  :  "Whereas  formerly  there  would  have 
"been  a  right  on  the  part  of  a  creditor  to  come  and 
"say — I  will  prove  against  C  for  the  debt  which  he  has 
"contracted,  and  I  will  come  upon  C's  estate,  and  I  will 
"prove  against  A's  estate  for  the  contraCl  which  A  en- 
"  tered  into — and  where  the  rule  of  bankruptcy  to  which 
"  I  have  referred  said,  Though  it  chances  that  B  is  com- 
"mon  to  each  of  these  contraCts,  though  B  is  a  con- 
"  tra(5lor  with  A  in  one  contraCl,  and  B  is  a  contractor 
"with  C  in  the  other  contraCl,  yet  you  shall  not  come 
"upon  the  estate  of  both  A  and  C,  you  must  eleCl 
"which  you  will  take,  the  Legislature  by  these  enaCt- 
"ments  said,  The  faCt  that  the  firms  with  whom  you 
"have  contracted  have  a  partner  in  common,  or  are  in 
"whole  or  in  part  in  common,  shall  no  longer  prevent 
"your  proving  against  both."  Read  v.  Bailey,  supra 
%  197,  n.  2. 

593 


|2u5.  Marshalling  Assets.  Pt.  3,  Ch.  6. 

' '  There  may  be  another  case  :  A,  B  &  C  may  be  trad- 
"inj^  as  one  firm,  and  the  whole  of  those  may  not  be 
"  fonnd  in  the  other  firm,  only  two  of  them  or  only  one 
•'of  them  may  be  fonnd  in  the  other  firm,  that  wonld 
"come  nnder  the  words  'in  part.'  There  may  be, 
"thirdly,  the  case  of  a  sole  trader,  who  is  found  also 
"  trading;  in  a  firm  with  other  persons. "  Read  v.  Bailey, 
supra  %  ic^-j,  n.  2. 

If  tlie  common  member  of  two,  or  more,  firms  is  him- 
self the  only  connedling  link  between  them,  he  cannot 
join  their  respedlive  transactions  in  a  single  account. 

A  common  member  cannot  include  the  transa^ions  of  successive 
finns  in  a  single  account.  A,  partner  in  A  &  Co.,  composed  succes- 
sively (i)  of  himself,  and  sub-firm,  B  &  Co.,  composed  of  B,  C,  D  & 
E;  (2)  of  himself  and  sub-firm,  B  &  Co.,  late  B,  C,  D  &  F;  (3)  of 
himself  and  sub-firm  C  &  Co.,  composed  of  C,  D  &  F.  A  brought 
bill  against  all  his  present  and  past  co-partners,  alleging  that  each 
sub-firm  had  defrauded  him,  and  that  the  accounts  had  been  kept 
continuously.  Defendants  demurred,  because  bill  multifarious.— 
Denmrrer  sustained.  Each  combination  formed  a  new  firm,  and  the 
business  of  each  firm  was  a  distincfl  transacflion.  Sanborn  v.  Dwinell, 
135  Mass.  236  (1883). 

5.  "  When  the  bankrupt  at  the  time  of  the  adjudication  is  liable  upon 
"any  bill  of  exchange,  promissory  note  or  other  obligation  in  respe(5l 
"  of  distinct  contracts  as  a  member  of  two  or  more  firms,  and  carrying 
"on  separate  and  distin(5l  trades  and  having  distinct  estates  to  be 
"wound  up  in  bankruptcy,  or  as  a  sole  trader  and  also  as  a  member 
"of  a  firm,  the  circumstance  that  such,  firms  are  in  whole  or  in  part 
"  comjjosed  of  the  same  individuals  or  that  the  sole  contraAor  is  also 
"  one  of  the  joint  *  contra6lors  shall  not  prevent  proof  and  receipt 
"of  dividend  in  respect  of  such  distindl  contra6ls  against  the  estates 
"  rtspecftively  liable  upon  such  contradts."  U.  S.  Rev.  Stat.  ^5074; 
Adl  of  March  2,  1867,  ch.  176,  I  21. 

6.  Partner' s  firm  canH  prove  against  agent  doing  business  for  part- 
ner or  undiscovered  principal.  A  &  B  traded  as  A  &  Co.  A  trans- 
adled  the  business  in  England,  and  B  in  Canada.  A  established  E  in 
business  as  E}  &  Co  ,  advancing  him  money  and  selling  him  goods. 
B  ascertained  relation  and  ratified  it.  Upon  bankruptcy  of  both 
firms,  A  &  Co.  proved  for  ^7,490  115.  "jd.  against  E  &  Co. — Disal- 
lowed. A  undisclosed  principal  of  E,  and  could  not  prove  against 
himself.     In  re  Wakeham,  13  Ch.  D.  43  (1884). 

Firm  creditors  0/ bankrupt  share  his  English  estate  only  after  de- 
dueling  dividend  received  abroad.  B  traded  in  England  as  B  &  Co., 
and  in  Brazil,  as  B,  C  cSc  Co.  A,  holder  of  B,  C  &  Co.  's  drafts,  accepted 
by  B  &  Co.  upon  the  bankruptcy  of  B,  proved  against  B,  C  &  Co.  in 
Brazil,  and  received  a  dividend.  lie  then  proved  in  England. — Enti- 
tled to  share  with  English  creditors,  only  after  deducing  dividend 
received  from  debtor  in  Brazil.  Ex  parte  Wilson,  L.  R.,  7  Ch.  490 
(1872). 

Double  proof  inadmissible  where  all  the  partners  of  one  firm  are 
members  of  another.  B  &  C,  partners  in  England,  and  B,  C  &  D, 
partners  in  Brazil,  dealt  with  each  other.  B,  C  &  D,  drew  on  B  &  C, 
in  favor  of  A,  who  thought  the  firms  were  distincfl.     B  &  C  accepted 

.594 


Pt.  3,  Ch.  7.  Account.  §206. 

draft.  Both  firms  became  bankrupt.  A  proved  in  Brazil  against  B, 
C  &  D,  and  received  a  dividend.  He  claimed  the  right  to  sue  B  & 
C  in  England,  on  the  ground  that  after  paying  the  debts  the  surplus 
of  neither  fund  would  go  to  the  other. — Rejedted.  Goldsmid  v.  Cos- 
grove,  7  H.  L.  785  (1859). 

Lord  Cairns'  argument,  based  upon  the  Bankrupt 
Adls,  was  this  :  The  surplus  would  go  to  the  individual 
partners,  B,  C  &  D.  The  shares  of  C  and  D  would  not 
belong  to  them  as  partners  in  the  firm  of  C  &  D,  but  as 
individuals,  and  would  be  the  separate  estate  of  B  and 
of  C.  The  creditors  of  B,  C  &  D  would  not  take  both 
the  joint  and  separate  estates  of  their  debtors  within  the 
bankruptcy  rule.  They  would  not  even  take  the  joint 
and  separate  estates  as  independent  securities  under  the 
practice  which  allows  both  to  be  pledged  to  a  creditor 
by  express  engagement,  apart  from  the  implied  liability 
incurred  by  partners  on  a  contra(5l  made  in  the  trans- 
adlion  of  firm  business.  They  would  simply  take  two 
joint,  but  diflFerent,  estates  in  satisfadlion  of  their  claims. 
The  result  would  be  the  same  if  the  order  of  proof  had 
been  reversed,  and  a  dividend  had  been  received  from 
B  &  C.  The  surplus  would  not  go  to  the  firm  of  B,  C 
&  D,  but  be  divided  between  B  and  C  as  individuals. 
It  would  become  the  separate  estate  of  B  and  of  C. 


-O 


CHAPTER  VII. 

ACCOUNT. 

§20(5. 
®l)e  account  is  an  epitome  of  tlje  partncrsl^ip. 

The  nature  of  the  account  corresponds  with  the 
business  undertaken  by  the  partners.  The  account 
involves  a  settlement  of  all  the  transactions  of  the 
firm  from  its  commencement.     The  principles  which 

595 


§2o6.  Account.  Pt.  3,  Ch.  7. 

govern  the  partnership  relation  are  summed  up  in 
the  account,  and  furnish  the  rules  for  adjusting  the 
differences  between  the  partners.  The  account,  there- 
fore, is  nothing  but  the  application  of  the  principles 
already  laid  down  under  the  different  heads  of  this 
work. 

All  the  transadlions  of  the  firm  are  upon  joint  ac- 
count, and  present  no  clear  line  of  cleavage  by  which 
can  be  ascertained  the  rights  or  liabilities  of  a  partner 
as  against  his  co-partners  in  each  case.  Moreover,  no 
single  adl  stands  alone,  but  each  is  bound  up  with  all 
the  preceding  and  subsequent  transadlions  of  the  firm. 
Before  a  partner's  standing  as  a  creditor,  or  debtor,  of 
his  co-partners  can  be  ascertained,  it  is  necessary  to 
resolve  ever}'-  transadlion  into  its  constituent  parts, 
and  establish  the  position  of  each  partner  as  debtor, 
or  creditor,  in  respe(?t  to  that  transaction,  and  the 
amount  of  his  debit,  or  credit.  A  balance  taken  of 
the  aggregate  of  these  debits  and  credits  will  fix  the 
standing  of  each  partner  as  debtor,  or  creditor,  of 
each  of  his  co-partners,  and  the  amount  to  which  he 
is  entitled  upon  distribution  of  the  common  fund,  if 
there  is  any.'  The  necessity  for  resolving  the  firm 
transa6lions  into  their  constituent  parts  is  due  to  the 
fa(51:  that  the  form  of  the  transa6lion  between  the  part- 
ner and  his  firm  does  not  correspond  to  its  charader. 
For  example,  a  partner  in  a  firm  of  three  nominally 
borrows  $1,500  from  his  firm,  but,  in  fad,  he  borrows 
from  his  co-partners  $1,000,  or  $500  apiece.  A  loan 
to  the  firm  would  be  subjed  to  a  like  analysis.  A 
summary  of  these  analyses  is  the  firm  account.  The 
necessity  for  the  account  arises  from  the  fad  that  it 
IS  the  only  process  which  can  be  made  co-extensive 

596 


Pt.  3,  Ch.  7.  Account.  §207. 

with  the  business,  and  can  e£fe6l  a  full  settlement  of 
all  its  transa6lions." 

1.  Account  gives  defendant-partjier  every  advantage  he  could  obtain  by 
a  cross-bill.  A  brought  partner's  bill  for  account.  B  filed  cross-bill, 
charging  false  entries  by  A;  his  conversion  of  firm  funds  to  his  own 
use,  and  his  buying  up  claims  against  firm  at  50  per  cent,  since  re- 
ceiver had  been  appointed.  A  demurred. — Sustained,  and  cross-bill 
dismissed.  B  could  set  up,  by  way  of  defence  to  the  original  bill,  all 
he  seeks  by  cross-bill.     Johnson  v.  Butler,  4  Stew.  35,  N.  J.  (1879). 

2.  Partner  cannot  me  co-partners  on  a  firm  transaRion  without  account. 
A  sued  his  co-partners,  B  and  C,  for  collusive  settlement  of  firm  claim 
for  less  than  its  amount.  Defence :  Account  necessary  to  show  A's 
interest.  A  obtained  judgment  for  his  aliquot  share  of  the  loss. — Re- 
versed.    Sweet  V.  Morrison,  7  E.  Rep'r  389,  N.  Y.  (18S6), 

Murra}'  v.  Bogert,  supra  ^  171,  n.  2. 

Purchase  of  partner's  share  may  get  his  advance  by  settlement,  but 
can't  carry  on  business.  A  enjoined  B,  who,  at  first,  advanced  A's 
co-partner,  C,  and  tlicn  bought  him  out,  and  excluded  A  from  busi- 
ness. B  claimed  stock  at  valuation  and  right  to  carry  on  business  at 
mill. — Stock  delivered  to  him  and  business  closed  up,  receiver  stating 
account.     Wolbert  v.  Harris,  3  Hal.  Ch.  605,  N.J.  (1849). 


§207* 


^\\z  basis  for  \\\t  acrount  is  tl)c  ^oint  propcrtri  or  estate  of  \\\t 
partners,  tl)eir  responsibilitp  for  tl]c  obligations  of  t[)e  firm,  anb 
tl]e  c|oob  faiti)  required  m  its  transactions. 

The  contribution,  with  its  inherent  increment,  re- 
verts to  the  contributing  partner.  The  property  of 
the  firm  starts  with  the  contributions  of  the  partners. 
The  theory  which  fixes  the  character  of  the  contribu- 
tion determines  the  questions  arising  in  reference  to 
the  reimbursement  of  the  capital,  and  to  the  payment 
of  interest  upon  it.^  If  the  contribution  remains  the 
separate  property  of  the  contributing  partner,  in  spite 
of  the  fa6l  that  the  firm  holds  the  legal  title  during 
the  continuance  of  the  partnership,  his  co-partners 
incur  no  liability  to  make  good  the  firm  capital  in 

597 


§207.  Account.  Pt.  3,  Ch.  7. 

case  it  is  lost  or  impaired.  The  contribution  was  at 
his  own  risk.  He  cannot  claim  interest,  since  he  looks 
to  the  profits  for  a  return  upon  his  capital.  Under  any 
theory  the  contribution  is  always  returned  before 
there  can  be  a  distribution  of  the  assets. 

The  partner  contributing  fungible  property  can  re- 
claim only  a  like  amount.  A  partner  contributing 
specific  property  recovers  it  in  specie,  together  with 
any  enhancement  which  has  not  resulted  from  the 
intervention  of  the  firm,  subjedl  to  a  deduction  for  any 
improvements  made,  or  value  conferred  through  the 
agency  of  the  firm. 

The  profits  are  a  part  of  the  joint  property,  and 
must  be  included  in  the  account.^  Of  course,  no 
partner  is  deemed  to  guarantee  the  earning  of  profits 
to  his  co-partners ;  nor  is  he,  in  general,  to  be  charged 
for  not  producing  them.  But  the  managing  partner 
is  bound  to  show  why  no  profits  have  accrued.  If  he 
refuses  to  do  this,  there  arises  a  doubt  as  to  whether 
the  want  of  success  was  not  due  to  his  own  culpable 
mismanagement  or  neglect,  which  would  form  the 
basis  of  a  debit  against  him.''  On  the  other  hand,  one 
partner  may  guarantee  to  his  co-partner  a  certain 
share  in  the  profits.  These  agreements  will  be  sus- 
tained and  enforced  in  the  account.'^ 

I.  Creditors  may  compel  payment  of  contribution  by  special  partner. 
B  was  special  partuer,  and  C  &  D  general  partners.  B  never  paid  in 
his  capital.  Firm  failed,  and  C  &  D  assigned  to  A  for  creditors.  A 
brought  hill  against  B  to  compel  payment  of  capital.— Decree.  Un- 
P^ijl  contribution  a  common  fund,  which  partners  or  creditors  may 
colledt,  especially  as  it  would  be  exhausted  in  payment  of  debts. 
Robinson  v.  Mcintosh,  3  E.  D.  Smith  221,  N.  Y.  C1854). 

Partners'  quotas  preliminary  to  account,  and  one's  answer  to  co- 
partner's bill  stating  them  prima  facie  evide?ice.  A  brought  bill  for 
settlement  against  B  &  C,  alleging  that  the  three  were  equal  partners. 
B  admitted  partnership,  but  denied  equal  shares,  claiming  4-9  and 
conceding  A  2-9. — Answer  responsive,  and  fixed  quotas.  Eaton's  Ap- 
peal, 16  Sm.  483,  Pa.  (1870). 

Hartman  v.  Woehr,  supra  'i  19,  n.  8. 
598 


Pt.  3,  Ch.  7.  Account.  §208. 

2.  Whether  vioney  piil  in  a  concern  is  a  loa?i  or  a  contribution  is  settled 
by  mortgage  subsequently  created  for  the  sum.  B,  proprietor  of  a 
patent,  applied  to  A,  who  advanced  ^1,000  to  develope  it.  No  se- 
curity for  loan,  nor  any  arrangement  for  payment  of  principal  or  in- 
terest. They  took  a  joint  lease  of  premises,  and  B  transacfted  business 
as  B  &.  Co.  A  made  additional  advances,  and  B  &  Co.  received  £(i  a 
week  out  of  the  proceeds  of  the  business.  Subsequently,  B  mort- 
gaged his  patent  to  A,  to  secure  his  advances.  He  took  a  new  lease 
in  place  of  the  original,  which  they  surrendered,  and  sublet  to  B.  He 
became  bankrupt,  and  A  proved  for  his  mortgage  debt. — Allowed,  as 
A  was,  apparently,  B's  surety,  and  not  his  principal.  Ex  parte  Mac- 
millan,  24  L.  T.  143  (1871). 

Contribution  a  debt  of  firm,  and  each  partner  liable  for  his  quota. 
A  agreed  to  furnish  the  capital,  and  B  his  services,  for  the  business, 
and  share  the  profits  equally.  A's  administrator  sued  B  for  the  ad- 
vances, but  obtained  judgment  for  only  half,  less  firm  assets. — Af- 
firmed. Debt  primarily  of  firm,  and  each  partner  liable  only  for 
half.    Turner  v.  Turner,  5  S.  W.  Rep'r457  (1887). 

3.  Continuing  business  after  expiration  of  term  a  renewal.  A  was 
dormant  partner,  for  a  specified  term,  with  B,  who  carried  on  busi- 
ness in  his  individual  name.  A's  capital  was  not  refunded  at  expira- 
tion of  term,  and  B  continued  the  business.  A  brought  account  for 
profits  made  after  expiration  of  term. — Entitled,  because  continuing 
the  business  was  a  renewal.  Parsons  v.  Hayward,  4  De  G.  F.  &  J. 
474  (1862). 

4.  Managing  partner  bound  to  prove  why  he  didn't  make  profits.  A 
was  partner  with  B,  her  brother-in-law.  A  furnished  fixed  capital ; 
the  floating  capital  was  raised  on  joint  credit.  The  losses  were  to  be 
shared  equally.  B  had  exclusive  management  of  business,  and  agreed 
to  devote  his  utmost  exertions  to  make  it  profitable.  Business  was 
apparently  successful,  and  ended  by  mutual  consent.  A  brought  bill 
for  account,  and  claimed  profits,  or  proof  that  profits  could  not  be 
made. — Maintained.  B  not  exonerated  by  showing  amount  received, 
amount  on  hand,  and  expenditures,  with  proof  of  general  integrity, 
but  bound  to  show  why  he  had  not  made  profits.  Stidger  v.  Rey- 
nolds, 19  Ohio  351  (1841). 

5.  Grant  v.  Bryant,  supra  I  35,  n.  2. 


§208. 

|3rioritp  upon  bistribution  is  gicm  to  abBances  anb  improDc- 
mcitts. 

An  advance  made  by  a  partner  to  his  firm  is  assimi- 
lated to  a  loan,  but,  as  it  is  impossible  to  isolate  the 
a6l  from  the  other  transactions  of  the  firm,  and 
hence  there  is  no  legal  process  to  recover  the  loan, 

599 


I 


§2o8.  Account.  Pt.  3,  Cii.  7, 

the  advance  must  remain  in  the  firm  until  dissolution, 
and  be  included  in  the  account.  By  reason  of  its 
charadler  as  a  loan,  the  advance  is  repaid  before  any 
distribution  of  profits  or  of  capital/  This  priority  of 
an  advance  over  profits  and  capital  is  called  tlie  lien 
of  the  lending  partner  in  reference  to  the  claims  of 
his  co-partners  and  their  separate  creditors."  The 
advance  carries  interest  at  any  rate  agreed  upon,  and 
is  not  obnoxious  to  the  penalty  of  usury,  because  his 
quota  of  the  sum  advanced,  and  interest,  is  necessarily 
at  the  risk  of  the  business.^ 

.V  withdrawal  is  the  converse  of  an  advance.  Any 
property  of  the  firm  in  the  hands  of  one  partner, 
either  by  way  of  detention  of  profits  or  of  withdrawal 
of  capital,  is  an  item  of  debit  against  h.im.^  The  with- 
drawal may  occur  with  the  knowledge  and  consent  of 
the  co-partners,  or  it  may  be  an  unauthorized  conver- 
sion of  firm  property.'^'  If  a  partner  is  entitled  to  with- 
draw his  annual  living  expenses,  but  fails  to  do  so 
during  any  year,  he  can  not  claim  a  credit  for  the 
amount  in  the  account.''  The  firm  has  no  lien  on  the 
separate  estate  of  a  partner  for  sums  unlawfully  with- 
drawn by  him,  but  such  sums  are  a  preferred  charge 
on  his  interest  in  firm  property.'^  If  one  partner  with- 
draws his  whole  share,  the  other  partner  may  claim 
interest  on  his  capital  and  profits  left  in  the  business.** 

I,  Partner's  advances  payable  out  of  firm  assets  at  aHual  value.  A, 
for  1-3  interest,  contributed  land,  and  B  money,  for  2-3  interest,  and 
subsequently  made  advances.  B,  who  held  title  to  land,  conveyed 
whole  property  of  firm  to  a  corporation,  organized  to  carry  on  busi- 
ness, for  6,000  shares  of  its  capital  stock.  A  claimed  1-3,  subjedl  to 
an  account.— Entitled  to  1-3,  less  his  proportion  of  advances,  esti- 
mated in  stock  at  acSlual,  not  nominal,  value.  Cheeseman  v.  vSturges, 
6  Bosw.  520,  N.  Y.  (i860). 

Partner's  lien  for  advances.  B  &  C,  partners,  in  1876,  for  3  years. 
B  contributed  the  use  of  his  ])lates  and  option  to  buy  them  at  valuation 
of  ^92,769. 17,  for  a  2-3  interest,  C  contributed  the  stock  of  a  publishing 

600 


1 


Pt.  3,  Ch.  7.  Account.  §208. 

business,  31129,519.87,  for  1-3  interest.  C  indebted  at  the  time,  in  the 
aggregate  1:62,750.82,  to  20  different  creditors,  among  them  P.,  ^15,050. 
Articles  provided,  less  current  expenses,  for  payment  at  dissoluticn  of 
C's  debts,  and  for  equal  division  of  the  surplus  assets  between  B  <S:  C. 
Profits,  129,990.87,  divided  during  the  term.  At  expiration,  assets 
available  for  creditors  were  |i8,i  10.61.  But  B  had  advanced  ;5^6,556.6i 
to  C,  for  his  creditor,  and  claimed  a  preference  for  this  advance,  with 
interest.  He  also  retained  assets  to  pay  his  debt  of  |i5,05o  in  full. 
Ketal.,  creditors  of  C,  brought  bill  to  enforce  the  articles. — Decree.  A 
/>;'ora/'a distribution  awarded  amongC's  creditors,  B  included,  afterE's 
lien  for  advances  had  been  satisfied.  Zell's  Appeal,  i  Am.  532  (1886). 
Wood  V.  Scoles,  supra  ^35,  n.  i 

2.  Partner  may  folloiv  stock  diverted  by  co-partner.  B,  without  A's 
knowledge,  sold  out  their  joint  stock  in  Mo.,  and  took  the  proceeds  to 
Cal.,  where  he  carried  on  business.  A  went  after  B  to  recover  his 
share,  took  a  note  for  part,  and  attached  B's  stock  for  the  balance.  C, 
who  sold  merchandise  to  B,  knowing  nothing  of  A,  intervened,  and 
denied  A's  right. — Judgment  for  A.  B's  a(5t  a  dissolution  of  Mo.  part- 
nership at  A's  eledlion.  C,  therefore,  B's  separate  creditor,  and  A  en- 
titled, if  not  to  a  preference,  at  least  to  a  claim  as  a  creditor.  Strong 
V.  Stapp,   15  Pac.  835  (1887). 

Hill  V  Beach,  supra  \  165,  n.  i. 

3.  If  partnership  deed  is  alleged  to  be  part  of  usurious  scheme,  thefaH 
must  be  proved  by  verdiH.  A  &  B  agreed,  by  deed,  to  be  partners  for 
10  years.  A  advanced  ^20,000,  and  B  covenanted  to  provide  an  equal 
amount,  to  pay  A  ^2,000  a  year  out  of  profits,  or  capital,  indemnify 
him  against  loss,  and  repay  ^"20,000  at  end  of  term.  B  had  exclusive 
management  of  business.  At  expiration  of  period,  A  sued  B  for 
^20,000,  and  interest.  Plea,  that  deed  was  executed  as  part  of  a 
usurious  agreement. — Usurious  scheme,  though  averred,  was  not 
found  as  a  fa6l  by  jury,  and  was,  therefore,  ignored.  A  was  liable, 
as  a  partner,  to  third  persons,  under  the  deed,  and  was  also  a  partner 
with  B,  though  not  liable  to  him  for  contribution  to  pay  firm  debts. 
Gilpin  V.  Enderby,  5  B.  &  Aid.  955  (1822). 

4.  Buckingham  v.  Ludlam,  supra  </  165,  n.  3. 

Partner,  if  stakeholder  for  co-partners,  must  pay  interest  if  he  uses 
the  joint  funds.  A  held  firm  money  pending  account  between  his 
co-partners,  B  and  C;  each  notified  him  not  to  pay  over  to  the  other. 
Master  charged  him  interest  on  this  balance. — Sustained.  If  money 
held  in  readiness  to  pay  B  and  C  as  soon  as  they  settled  the  account, 
no  interest ;  but  A  used  it,  and  must  pay  interest  for  use.  Coddington 
V.  Idell,  3  Stew.  540,  N.  J.  (1879). 

5.  Fraudulent  vendee  of  co-partner  proper  party  iji  account.  A  sued 
B  for  injunction  and  receiver,  and  fraudulent  sale  of  firm  property  to 
C,  and  made  C  co-defendant,  who  denied  fraud  and  objecfted  that  his 
joinder  introduced  new  cause  of  action  and  made  complaint  multifari- 
ous.— Decree:  If  sale  set  aside,  must  account  with  the  partners. 
Webb  v.  Helion,  3  Rob't  625,  N.  Y.  (1864). 

6.  Living  expenses.  Articles  permitted  A  to  withdraw  from  firm  what 
was  necessarv  for  his  private  expenses.  In  settlement,  A  sought  to 
charge  firm  with  rent  of  a  house  owned  and  occupied  by  himself  dur- 
ing continuance  of  partnership,  and  with  the  cost  of  furnishing  it. — 
Disallowed.  Question  not  what  is  required  for  A's  maintenance,  ac- 
cording to  his  station.  His  claim  limited  to  current  expenses,  so  far 
as  his  private  means  were  insufficient.     Failure  to  withdraw  in  any 

601 


§209.  Account.  Pt.  3,  Ch.  7. 

year  proof  of  ability  to  maintain  himself.  Stoughton  v.  Lynch,  6 
Johns.  Ch.  467,  N.  Y.  (  1815). 

7.  If  partnership  denied,  no  ifijunnion  to  7-estrain  alienation  of  land 
'  bought  -with  alleged  Jinn  funds  ;    Partner  no  lien  for  a  withdrawal. 

A  &  n  nianufadlured  j^as  in  partnership.  B,  who  had  no  means,  and 
was,  in  fact,  insolvent,  bought  lands,  and  put  the  title  in  C,  his  wife's 
naTiic.  He  died,  and  A  enjoined  C  from  disposing  of  the  lands.  C 
denied  purchase  with  firm  funds,  and  moved  to  dissolve. — Dissolved ; 
because  the  facl  of  purchase  with  firm  funds  denied.  Query  :  Has  A 
a  lien,  as  partner,  on  l?'s  individual  land,  conveyed  in  fraud  of  cred- 
itors?' General  creditor  has  not,  until  he  obtains  judgment,  and  part- 
ner who  paid  him  would  stand  in  his  shoes.  Holdredge  v.  Gwynne, 
3  C.  E.  Or.  26,  N.  J.  (1S66). 

Land  bought  with  firm  funds,  and  used  exclusively  for  firm  pur- 
poses, not  liable  to  doiver  by  widow  of  partner  indebted  to  firm.  B 
and  his  co-partner,  who  had  agreed  that  at  dissolution  firm  property 
should  be  sold  for  firm  debts,  bought  land  and  eredled  buildings  upon 
it  for  their  brass  and  iron  foundry.  Creditors  recovered  judgments 
against  them,  and  took  the  premises  in  execution.  B,  who  had  1-5 
of  the  profits,  died,  indebted  to  the  firm.  A,  B's  widow,  brought  bill 
for  dower. — Dismissed.  B's  beneficial  interest  subjecft  to  firm  debts, 
and  his  possession  a  technical  seizin,  which  gave  wife  no  right  to 
dower.  Agreement  converted  land  into  personal  estate.  Greene  v. 
Greene,  i  Ohio  535  (1853). 

8.  ftidgment  against part?ier  who  has  assigried  his  interest  to  co-part- 
ner. A  enjoined  B.  A  had  contributed  |6,ooo,  and  B  $2,000,  and  B 
claimed  subsequent  advance  of  |3,ooo.  On  settlement,  balance  due  A 
$30,000,  and  deficiency  of  assets  to  pay  him  f8,ooo.  B  promised  to 
make  up  deficit,  and,  as  he  did  not,  firm  dissolved.  B  assigned  his 
interest  to  A,  in  payment,  but  subsequently  refused  to  deliver  up 
assets,  on  ground  that  statement,  made  by  him  as  basis  of  settlement, 
showed  A  received  interest  on  profits  and  on  interest. — Maintained. 
B's  interest  gone,  and  allowance  of  interest  on  what  left  in  business. 
Large  v.  Ditmars,  12  C.  E.  Gr.  283,  N.  J.  (1876). 


§209, 


Z\)t  goob-tuill  is  property  anb  an  asset  of  \.\)t  partnersl]ip. 

The  good-will  of  a  business  is  the  property  of  the 
firm,  since  it  is  the  result  of  the  joint  labors  of  the 
partners.'  If  the  good-will  is  sold  by  a  partner,  he 
must  account  to  the  firm  for  the  proceeds.  If  he  has 
secured  to  himself,  after  dissolution,  the  exclusive 
enjoyment  of  the  good-will,  he  is  charged  with  its 
value  in  the  account."     This  might  arise  in  various 

602 


Pt.  3,  Ch.  7.  Account.  §209. 

ways ;  for  instance :  When  a  partner  continues  the 
business  of  the  firm,  or  where  the  firm  carried  on 
business  upon  the  premises  belonging  to  one  partner, 
of  which  he  has  become  repossessed  at  dissolution, 
he  must  capitalize  the  good-will,  and  account  for  its 
value.  This  is  the  condition  upon  which  he  may  re- 
sume the  possession  of  his  property.  The  good-will, 
in  this  respe(5l,  resembles  the  improvements  made  by 
the  firm  upon  the  property  of  a  partner. 

The  Courts  will  not  permit  the  good-will  to  be  sac- 
rificed upon  dissolution,  and,  in  order  to  preserve  it, 
will,  if  necessary,  compel  the  partners  to  bid  against 
each  other  for  its  exclusive  enjoyment.* 

I.  The  reputation  of  the  firm  remains  the  common 
property  of  the  partners  after  dissolution.  No  single 
partner  has  the  right  to  style  himself  successor  to  the 
late  firm.  This  reputation  is  not  part  of  the  good-will, 
and  does  not  pass  with  it  without  special  agreement.* 

a.  Partner  who  has  purchased  the  good-will  cannot  style  himself  suc- 
cessor to  the  fir  in.  Dentists,  who  pradliced  as  A  &  B,  dissolved  part- 
nership, B  buying  the  fixtures  and  unexpired  lease  of  premises.  He 
put  up  a  sign:  "successor  to  A  &  B."  A  applied  to  enjoin  the  ap- 
propriation of  firm  name. — Injun<5lion  granted.  Good-will  of  stand 
passed,  but  reputation  of  firm  remained  property  of  both  members. 
Morgan  v.  Schuyler,   79  N.  Y.  490  (1879). 

On  the  other  hand,  the  partner  who  has  sold  out  to 
his  co-partner,  including  the  good-will,  may  compete 
with  his  former  co-partner  in  the  same  business,  pro- 
vided he  does  not  use  the  late  firm  name,  or  style  him- 
self its  successor.^ 

b.  Part?ier  selling  good-will  may  compete  with  firm.  B  sold  out  to 
his  co-partner,  A,  including  good-will,  receiving  some  firm  claims  in 
settlement,  and  then  set  up  a  rival  establishment  near  by,  in  his  own 
name.  A  sent  him  decov  orders,  addressed  to  firm,  and  enquiring 
whether  B  succeeded  them.  He  filled  orders,  enclosing  his  individual 
card,  but  never  answered  the  question. — A's  injuniftion  refused.  B 
entitled  to  compete  if  he  did  not  use  firm  name,  or  style  himself  suc- 
cessor. He  might  open  letters  addressed  to  firm,  as  he  was  interested 
in  firm  claims.  '  White  v.  Jones,  i  Rob't  321,  N.  Y.  (1863). 

Parltier  selling  good-will  forfeits  price  if  he  tries  to  destroy  the 
business.  Use  of  firm  name  a  trade-mark,  -vhich  passes  by  sale  of  good- 
will and  covenant  of  seller  not  to  tise  rm  name.     B  sold  out  to  A  aU 

603 


§jo9.  Account.  Pt.  3,  Ch.  7. 

the  assets  and  the  j^ood-will  of  the  firm  B  &  Co.,  covenanting  not  to 
use  the  firm  name.  B  took  mortgages  and  notes  in  part  payment. 
He  started  business  for  himself,  imitated  the  firm  names,  brands, 
bill-heads,  cards;  held  himself  out  as  successor  of  the  firm,  and  en- 
ticed away  firm  customers  and  employees,  A  brought  bill  to  restrain 
B's  assignment  of  notes  and  mortgages,  and  to  have  his  damages 
declared  a  payment. — Decree.  Although  the  assets  and  good-will 
were  sold  in  the  lump,  evidence  admissible  to  show  value  of  good- 
will and  the  damages  resulting  from  B's  condudl.  The  right  to  old 
firm  name  as  a  trade-mark  passed  by  the  assignment.  Burkhardt  v. 
Burkhardt,  42  Ohio  vSt.  474  ( 18H5). 

If  the  <^ood-will  is  assigned  to  one  of  the  partners,  it 
inchides  the  right  to  vise  a  trade-mark,  even  though  the 
trade-mark  be  the  name  of  the  selling  partner  f  but  if 
no  disposition  is  made  of  the  good-will,  both  partners 
retain  the  right  to  use  the  firm  trade-mark  and  to  manu- 
facture and  sell  under  a  firm  patent,"^ 

c.  If  partner's  name  a  trade-mark,  it  passes  with  the  good-will.  Soap 
manufaclurer,  C,  who  used  his  name  as  a  trade-mark  for  'Mineral' 
and  for  'Pumice'  soap,  formed  a  partnership  with  A,  contributing, 
with  the  implements  of  manufacture  and  the  fixtures,  the  good-will 
of  the  business.  Upon  dissolution,  C  sold  out  all  his  interest  in  firm 
property  and  assets  to  A  &  B,  who  enjoined  him  from  trading  as  suc- 
cessor to  the  firm, — Decree.  C's  name  conne<fted  with  soap  indicated 
a  formula  for  its  manufacflure,  and  passed  with  the  good-will  of  the 
business.  C  might  use  his  name,  but  not  to  interfere  w  ith  customers 
of  A  &  B.    Hoxie  v.  Clianey,  143  Mass.  592  (1887). 

d.  Trade-mark  or  patent  for  firm  business  part  0/  good-will,  which 
each  partner  may  use  if  undisposed  of  on  dissolution.  A  &  B,  who 
had  manufactured  fanning  mills  at  X  for  ten  years,  dissolved,  each 
taking  part  of  the  stock  and  implements  of  manufaclure.  A  enjoined 
B  from  manufacfluring  and  selling  the  mills  with  an  improvement 
which  lie  had  {)atented  during  the  continuance  of  the  firm,  and  the 
name  of  which  he  called  his  trade-mark.- — Dismissed.  Improvement 
a  part  of  good-will,  and,  being  undisposed  of,  each  might  manufacfture 
and  sell  it.  provided  he  did  not  charge  the  other  by  his  transacflions. 
Smith  V.  Walker,  57  Mich.  459  (1885). 

2.  Continuing  partner  must  account  to  the  firm  for  full  value  of  good- 
will. B  excluded  A  from  firm,  and  continued  the  business  himself 
A  brought  bill  for  account  of  profits  and  good-will. — Decree.  A  re- 
covered his  share  of  the  profits  and  one-half  the  value  of  the  good- 
will, which  was  appraised  at  fgoo.  Sheppard  v.  Boggs,  9  Neb.  257 
(1879)- 

3.  vSlemmer's  Appeal,  supra  \  180,  n.  5. 

I^etiring  partner  has  no  right  to  appropriate  the  good-will.  A  was 
publisher  and  B  the  editor  of  a  journal,  styled  'Household  Words.' 
B  dissolved,  and  announced,  by  advertisement,  that  Household 
Words  would  be  discontinued,  and  that  he  had  transferred  himself 
and  all  the  editorial  staff  to  a  new  journal,  the  publication  of  which 
he  was  about  to  begin,  entitled  All'  the  Year  Round.  A  enjoined  B 
from  announcing  the  discontinuance  of  Household  Words. — Injunc- 
tion continued.  B  was  ordered  to  limit  the  announcement  to  his  own 
retirement.  Right  to  use  the  name  Household  Words  was  ordered  to 
be  sold  on  firm  account,  and  brought  ^3,550.  Bradburv  v.  Dickens, 
27  Beav.  53  (1859). 

604 


. 


Pt.  3,  Ch.  7.  Account.  §210. 

§210 

^11  payments  mabt  in  Mscljarine  of  firm  obligations  are  items 
of  trciiit,  citept  obligations  r.r  delicto^  in  u)l)icl)  tl)e  partner 
ilainiing  tl)c  crc^it  luas  an  accomplice. 

The  obligations  of  the  partners  for  a6ls  done  in  the 
course  of  the  business  may  arise  either  from  contrails 
or  from  torts.  The  liability  incurred  by  a  partner  on 
the  contrails  of  the  firm  is  not  necessarily  an  item  of 
credit  in  the  account,  unless  he  assumes  the  obliga- 
tion to  pay  the  entire  debt.'  The  account  implies  the 
previous  discharge  of  firm  obligations.'  An  outstand- 
ing debt,  unless  assumed  by  one  partner,  is  no  part 
of  the  account  between  them,  because,  while  each  is 
liable  for  his  quota,  no  partner  has  paid  his  part  of 
the  debt.  If,  however,  a  partner  has  subje(51;ed  the 
firm  to  contra(5lual  liability  by  an  unauthorized  a6l, 
and  the  obligation  has  been  discharged  with  firm 
funds,  the  item  is  properly  a  debit  against  the  part- 
ner's share.  The  same  thing  is  true  where  the  firm 
has  been  made  responsible  for  the  tort  of  a  partner, 
and  has  paid  the  damages.  If  the  co-partners  were 
accomplices  in  the  tort,  no  partner  will  be  debited  with 
any  portion  of  that  outlay. 

If  one  partner  has  been  compelled  to  pay  a  debt  of 
the  firm,  whether  arising  ex  contractu  or  ex  delicto^ 
his  disbursement  is  an  item  of  credit  to  him  in  the 
account,  and  is,  in  facft,  an  advance.'  Compensation 
for  services  is,  of  course,  not  allowed  as  a  credit,  with- 
out an  express  agreement,^ 

If,  however,  the  partner  who  paid  out  of  his  separate 
estate  the  damages  recovered  against  the  firm  in  an 
acftion  ex  delicto  was  himself  privy  to  the  tort,  he 

605 


§2io.  Account.  Pt.  3,  Ch.  6. 

cannot  claim  credit  for  the  disbursements,  because  the 
law  will  not  allow  a  co-tortfeasor  to  enforce  contribu- 
tion, either  dire6lly  or  indirectly. 

I  Administrator  of  partner  may  recover  his  share,  giving  indemnity 
at^ainst  contingent  liabilities.  B.  C  &  D,  partners.  B  died,  and  A, 
his  administrator,  sued  C  for  admitted  balance  in  his  hands.  Defence: 
I,  Contested  claims  outstanding  against  the  firm;  2,  bad  debts;  3, 
suit  against  city  for  a  firm  claim. — Recovered,  less  a  sufficient  sum 
retained  to  cover  B's  share  of  bad  debts,  upon  giving  a  refunding  re- 
ceipt against  claim  and  costs  of  litigation.  Roberts  v.  Law,  4  Sandf. 
642,  N.  Y.  (1S51). 

2.  Retiring  partner  liable  for  his  share  of  bad  debts.  A,  B  &  C  bought 
out  D,  and  indemnified  him  against  all  except  his  proportion  of  the 
bad  deljts.  They  sued  him  for  his  share  of  such  debts. —Liable.  Bu- 
chanan V.  Cheeseborough,  2  Duer  238,  N.  Y.  (1856J. 

3.  Partner  may  claim  credit  in  account  for  amounts  advanced  in  pay- 
ment of  firin  debts,  together  with  interest.  Profits  earned  after  dis- 
solution by  death  on  pending  contra  fls,  no  part  of  the  account  when 
executors  of  deceased  partner  have  sold  out  to  survivor.  Executors 
of  deceased  partner,  B,  sold  out  to  surviving  partner,  A,  the  stock, 
fixtures,  patent  rights  and  lease  of  warehouse,  A  assuming  the  rent 
and  wages  of  employees  which  accrued  after  testator's  death.  In  a 
bill  by  A,  for  account,  he  claimed  credit  for  amounts  advanced  in 
payment  of  firm  debts,  with  interest  on  advances.  B's  executors 
claimed  the  profits  made  on  pending  contracfls  under  the  patents. — 
Claim  of  A  allowed ;  of  B's  executors  rejected.  Sale  carried  out- 
standing contrails.    Collender  v.  Phelan,  79  N.  Y.  366  (1879). 

If  notes  for  partner' s  share  of  firm  indebtedness  are  endorsed  by  firm 
after  dissolution  without  a  co-partner' s  k?iowledge,  ail:  does  not  release 
him.  A  et  al.,  B  et  al.,  and  C  et  at.,  went  into  partnership  in  pork- 
packing  for  the  season.  After  dissolution,  as  the  bank  refused  B  et. 
al.'s  notes  for  their  share  of  firm  indebtedness  without  security,  the 
firm  endorsed  them  in  C  et  al.'s  absence.  A  et  al.  and  B  et  al.,  who 
paid  the  notes,  demanded  account  and  contribution  from  C  et  al. — 
Recovered.  Although  there  could  be  no  recovery  on  the  notes 
against  the  firm,  payment  by  plaintiffs  was  of  original  firm  debt. 
Gardiner  v.  Conn,  34  Ohio  St.  187  (1877). 

4.  y1  partner  may  recover  costs  of  litigation  for  firm,  but  not  compen- 
sation for  his  services  in  condufling  litigation,  unless  bv  express 
agreement.  D  joined  A,  B  &  C,  engaged  in  furnishing  volunteers  for 
arrny,  and  each  party  took  1-2.  They  furnished  24  soldiers,  and  re- 
ceived a  city  bond  of  I400  and  $2,50  scrip  for  each  man.  D  converted 
certificates  into  bonds,  and  paid  over  |8,ooo  to  A,  B  &  C.  City  repu- 
diated contract,  and  holders  sued.  D,  adling  for  firm,  joined  plaintiffs 
in  test  suits,  and  paid  over  |4,7oo  on  account  of  money  colledted  by 
him  to  A  and  B,  having  bought  out  C's  share.  A  and  B  brought  ac- 
count, p  claimed  (i)  compensation  for  services  in  litigation  and  (2) 
costs  of  litigation.— Without  express  agreement,  no  right  to  compen- 
sation for  services  rendered  the  firm,  but  entitled  to  be  reimbursed 
costs  of  litigation.    Coddington  v.  Idell,  2  Stew.  504,  N.  J.  (1878). 

A  surviving  partner  has,  in  general,  no  better  claim 
to  compensation  than  any  other ;  but  his  claim  has  been 

606 


Pt.  3,  Ch.  7.  Account.  §211. 

allowed  when  he  has  been  compelled  to  continue  the 
business  at  his  own  risk  in  order  to  preserve  the  joint 
property/' 

a.  Surviving  who  continues  business  in  the  joint  ititerest  of  hiviscif  and 
deceased  partner's  estate  entitled  to  compensation.  A,  surviving 
partner  of  B,  continued  business  to  protecft  good-will,  with  a  view  to 
sell  the  establishment  as  a  going  concern.  After  a  sale  of  the  estab- 
lishment, B's  executor  brought  account,  and  claimed  a  share  of  the 
proceeds  of  the  good-will.  A  demanded  compensation  for  his  ser- 
vices as  manager  since  B's  death. — Allowed.  A  continued  business 
at  his  own  risk,  for  the  joint  benefit  in  which  the  executors  claimed 
their  share.    Cameron  v.  Francisco,  26  Ohio  St.  190  (1875). 


§211. 


^\\t  profitB^  or  lasses,  of  an  illegal  transaction,  or  business, 
forms  no  part  of  tl)e  account. 

No  partner  can  demand  an  account  of  an  illegal 
transa6lion,  whether  it  constitutes  a  part^  or  the  entire 
business  of  the  firm.^  The  fa(5l  that  the  transaction 
is  closed,  the  profits  capitalized,  and  transmuted  into 
a  different  kind  of  property,  as,  for  example,  the  in- 
vestment of  money  in  mortgages,  does  not  alter  the 
situation.'  The  property,  in  whatever  form,  remains 
the  product  of  the  illegal  business.  But  a  distinc- 
tion may  properly  be  taken,  when  the  partners  invest 
their  illegal  profits  in  a  new  and  lawful  enterprise 
which  they  conduA  on  joint  account.  The  account 
which  might  be  demanded  of  this  new  business  will 
involve  nothing  but  lawful  a(5ls,  and  will  not  include 
the  division  of  the  proceeds  of  the  illegal  business, 
because  that  was  accomplished  when  the  partners  set- 
tled their  respedlive  interests  in  the  new  venture. 

Where  a  partner  has  paid  his  contribution  with 
trust  funds,   and  the  cestuy  que  trust  has  reclaimed 

607 


§211.  Account.  Pt.  3,  Ch.  7. 

them  from  the  firm  assets,  the  contributing  partner 
is  debited  with  this  amount,  as  in  the  case  of  a  with- 
drawal. If  the  innocent  partner  has  been  compelled 
to  pa}'  the  ccstuy  que  trusty  he  may  claim  credit  for  his 
disbursement.  But  if  privy  to  the  embezzlement,  he 
could  not  claim  credit  for  his  payment,  because  that 
would  be  asking  contribution  from  his  co-tortfeasor. 

1.  Xo  account  can  be  demanded  where  the  business  was  in  part  illegal. 
A  it  \\  were  partners  in  business  as  merchants,  and  traded  largely, 
though  not  exclusively,  in  contraband  cotton  ;  all  the  business  was 
done  with  Confederate  money.  After  the  war,  A  brought  bill  for  an 
account. — Dismissed.  The  business  was  partly  illegal,  and  a  separa- 
tion of  the  lawful  items  from  the  unlawful  was  impossible.  P'urther- 
more,  as  the  balance,  if  any,  must  have  been  expressed  in  Confederate 
mouev  at  the  time  of  dissolution,  and  as  that  currency  has  been 
blotted  out,  there  could  be  no  recovery.  Lane  v.  Thomas,  37  Tex. 
157  (1872), 

2.  Illegal  partnership  a  defence  to  purifier'' s  bill  for  account.  B,  an 
attorney,  agreed  to  give  A,  his  clerk,  1-3  of  profits,  in  lieu  of  salary, 
but  A  was  not  to  be  a  partner.  A  brought  bill  for  account.  B  de- 
murred, on  ground  that  an  answer  might  criminate  him,  under  22 
CtCO.  2  C.  46,  s.  II,  by  showing  a  partnership  with  C,  who  was  not  an 
attorney. — Sustained.    Tench  v    Roberts,  6  Madd.  Ch.  145  (1S19). 

Lotteries,  though  lawful  in  State  granting  the  franchise,  not  lawful 
in  a  different  State  by  comity.  A  brought  bill,  as  partner,  for  dis- 
covery and  account  against  B,  of  lottery  business,  which  had  been 
carried  on  for  3  years  under  franchises  granted  by  four  States. — Dis- 
missed. Comitv  would  not  make  a  nuisance  lawful.  Watson  v. 
Murray,  8  C.  E.  Gr.  257,  N.J.  (1872). 

Partners  may  lawfully  agree  upon  a  minimum  price  in  firm  con- 
trails. A  &  B,  partners,  agreed  not  to  furnish  recruits  for  less  than 
I500  per  man.  A  brought  account  against  B.  Defence  :  Agreement 
against  public  policy,  because  it  prevented  competition. — Decree.  If 
objecl  of  partnership  to  prevent  underbidding,  as  individuals,  the 
combination  would  be  unlawful,  but  A  &  B  did  not  contemplate  any 
particular  public  offer,  nor  any  conspiracy  to  control  prices.  Marsh 
v.  Russell,  66  N.  Y.  288  {1S76J. 

Partners  in  an  illegal  business  can't  compel  an  account  of  gains 
made  b-^  co-partner  in  competition  with  firm.  A  and  B  were  partners 
foi  trading  in  cotton  beyond  the  union  lines,  and  bought  certain  cotton 
in  conjundion  with  C.  While  the  cotton  was  ou'the  ocean,  C  be- 
came alarmed  for  its  safety,  and  B  secretly  bought  his  interest,  for 
I3.500-  The  cargo  arrived  safely,  and  sold  for  a  sum  which  gave  B 
a  large  profit  on  the  share  purchased  of  C.  After  settlement,  A  dis- 
covered the  fa(5ts,  and  brought  bill  against  B,  to  compel  an  accounting 
for  the  secret  profit, — Dismissed,  because  the  business  was  illegal. 
Dunham  v.  Presby,  120  Mass.  285  (1876). 

3.  Contra.  When  the  profits  of  an  illes;al  business  are  ifivested  in  lawful 
property,  the  law  protefls  the  partner's  shares.  A  &  B,  partners, 
bought  up  soldiers'  claims  for  laud  warrants,  contrary  to  A<51  of  Con- 

608 


Pt.  3,  Ch.  7-  Account.  §212. 

gress.  B  managed  the  business,  and  converted  the  lands  into  money 
and  mortgages.  By  concealing  the  real  value  of  the  assets,  he  bought 
out  A's  interest  for  a  song.  A  brought  bill  for  an  account  and  divi- 
sion.— Decree.  The  business  was  closed  and  the  capital  converted 
into  different  assets,  and  B  could  not  deprive  his  partner  of  his  lawful 
snare.    Brooks  v.  Martin,  2  Wall.  70  (1874). 


§212. 


(^vtvvi  abvax\ta%t  %aintb  bu  a  bread)  of  goob  faitl)  is  a  firm 
asset,  auit  tmvvi  loss  a  cljarge  against  tl]e  mronci-boer. 

The  breach  of  good  faith  between  the  partners  may 
occur  through  a  breach  of  the  partnership  contrail,  or 
a  violation  of  the  duty  implied  by  the  relation.  The 
duties  implied  by  the  relation  cover  not  only  transac- 
tions which  take  place  during  the  continuance  of  the 
firm,  but  also  transadlions  which  lead  to  the  formation 
of  the  partnership,  and  which  arise  out  of  its  dissolu- 
tion. But  the  breach  of  good  faith  must  clearly  ap- 
pear/ 

Any  loss  or  damage  which  results  to  the  firm,  or 
to  a  partner  in  his  separate  estate,  by  reason  of  a  vio- 
lation of  the  express  or  implied  provisions  of  the  part- 
nership agreement,  is  an  item  of  charge  against  the 
wrong-doer,  and  of  credit  to  the  injured  partner.^  For 
example,  the  premature  dissolution  of  a  partnership 
entered  into  for  a  definite  term,  or  a  failure  to  make  a 
contribution  as  agreed.^  The  fraud  by  which  a  part- 
ner is  induced  to  enter  a  firm  would  charge  the  wrong 

609 


^212.  Account.  Pt.  3,  Ch.  7. 

doer  for  indemnity  against  any  losses  or  liabilities  in- 
curred in  the  business.  This  indemnity  is  an  item  in 
the  account." 

A  partner  is  chargeable  in  the  account  with  any 
profit  made  by  him  in  competition  with  the  firm  with- 
out his  co-partner's  consent.  The  unlawful  competi- 
tion may  occur  where  the  partner  secretly  engages  on 
his  own  account  in  the  same  kind  of  business  as  his 
firm.  Also  where  he  has  dealings  with  his  firm  either 
as  buyer  or  seller,  and  withholds  information  which 
would  affedl  the  price,  or  where  he  seeks  to  retain  a 
profit  secured  by  means  of  his  position,^  or  where  he 
obtains  a  secret  profit  out  of  purchases,  or  sales  which 
he  makes  on  behalf  of  the  firm."  If  the  partner  is, 
without  objedliou,  a  common  member  of  two  firms  in 
the  same  line  of  business,  his  partners  in  one  firm 
cannot  require  him  to  account  for  his  profits  in  the 
other.  If  the  two  firms  deal  with  each  other  in  good 
faith,  the  common  member  cannot  be  charged  by  his 
partners  in  one  firm  with  any  profit  which  accrued  to 
the  other  firm  out  of  the  transadlion;  but  if  the  com- 
mon member,  in  the  interest  of  one  firm,  withholds 
from  his  co-partners  in  the  other  information  which 
aflfe6ls  the  transaction,  he  is  chargeable  with  the  entire 
loss  suffered  in  consequence  of  the  suppressed  informa- 
tion. 

The  principles  just  stated  apply  to  the  liquidation 
of  a  partnership  as  well  as  to  a  going  concern. 

If,  in  the  settlement  of  the  partnership  business, 
one  partner  gains  an  advantage  over  another,  and  gets 
more  than  his  due  share,  by  reason  of  a  mistake,  or 
by  withholding  information  which  would  affedl  the 
division  of  the  assets,  the  settlement  will  be  opened, 

610 


['T.  3,  Ch.  7-  Account.  i;2i2. 

md  the  partner  surcharged  with  the  amount  of  his 
^idvantage.^ 

Where  a  partner  has,  during  the  continuance  of  the 
5rm,  prepared  the  way  for  entering  into  a  transaction 
in  the  line  of  the  firm  business,  and  dissolves  for  the 
purpose  of  securing  the  benefit  to  himself,  he  is 
:hargeable  in  the  account  for  any  profit  gained.^ 

:.  Partner,  who  is  trustee  for  deceased  partner,  may  buy  his  share  at 
expiration  of  partnership.  A  &  B,  partners.  A  died,  and  his  will 
dire(5ted  the  main  business  to  be  continued  for  one  year,  according  to 
the  articles.  A  made  B  and  C  trustees  for  his  heirs,  with  power  to 
sell  and  re-invest  his  property.  B  sold  a  branch  house  in  St.  Louis, 
and  subsequently  bought  i-6  of  the  purchaser,  and  continued  the 
branch  in  partnership  with  him.  At  end  of  the  year  A's  share  in  the 
main  business  was  appraised,  and  B  bought  it  at  the  valuation.  A's 
heirs  and  devisees  asked  to  set  aside  conveyances,  and  compel  the 
trustees  to  carry  on  the  business  for  A's  estate. — No  evidence  that 
when  the  branch  was  sold  B  intended  to  buy  it  back,  and  entitled  tc? 
buy  A's  share  in  the  main  business  at  the  appraised  value  after  the 
year.  No  claim  for  good-will.  Rammelsberger  v.  Mitchell,  29  Ohio 
St.  22  (1875). 

I.  Breach  0/ agreement  not  to  engage  in  trade  outside  the  partnership 
gives  right  to  damages,  but  not  to  profits  of  independent  business.  A 
and  B  entered  into  partnership,  the  articles  providing  that  neither  part- 
ner should  engage  in  trade  outside  the  partnership.  B  did  so  engage 
in  another  firm  of  B  &  Co.,  and  after  B's  death  A  claimed,  as  against 
B's  heirs,  to  be  entitled  to  an  equal  division  in  the  share  of  B  in  the 
profits  of  B  &  Co. — Rejedled,  and  judgment  for  B's  heirs.  Afiirmed 
on  appeal.  B's  violation  of  the  partnership  agreement  might  give 
rise  to  an  a6lion  for  damages  by  A,  but  as  he  would  not  have  been 
liable  for  the  debts  of  B  &  Co.,  he  could  not  claim  to  be  a  partner 
therein,  even  unaware.   Murrell  v.  Murrell,  t^^i  La.  1233  (18S1). 

I.  Damages  for  dissotut  ion.  By  articles,  three  months'  notice  required 
for  dissolution.  B  dissolved  without  notice,  and  A  sued  for  damages. 
— Recovered.  Measure  of  damages  prospedlive  profits  for  ensuing 
three  months,  estimated  by  reference  to  profits  of  past  six  months, 
and  not  mitigated  by  A's  profits  in  another  business,  begun  during 
the  three  months.    Bagley  v.  Smith,  10  N.  Y.  489  (1853). 

\.  If  partner  breaks  contraFl,  Chancery  will  date  dissolution  from 
breach,  and  award  subsequent  profits  to  co-partner.  A  had  a  contradl 
with  State  to  construdl  a  canal.  B  &  C  agreed  to  furnish  capital,  in 
|3,ooo  instalments,  for  an  equal  interest  in  the  undertaking,  and 
stipulated  to  be  reimbursed,  capital  and  costs,  out  of  State  payments 
before  any  division.  B  received  a  payment,  which  he  concealed  from 
A,  and  used  with  C  in  speculation.  A,  discovering  the  facfl,  notified 
them  of  dissolution,  and  proceeded  with  the  work  alone,  and  made 
profits.  A  brought  bill. — Decree.  Dissolution  dated  from  notice, 
and  subsequent  profits  belonged  to  A,  who  furnished  labor  and  con- 
tra(5l,  while  B  &  C  did  not  furnish  contribution  of  $3,000.  Durbin  v. 
Barber,  14  Ohio  311  (1846). 

611 


§212.  Account.  Pt.  3,  Ch.  7. 

5.  Fraud  in  forming  partnership  gives  an  assignable  claim  to  corredl 
a  sttllfincnt.  B  sold  C  1-2  of  vessel  at  cost,  and  C  became  his  partner 
in  tradinj^  adventure.  After  final  settlement,  C  discovered  misrepre- 
sentation of  cost,  and  assigned  his  claim  to  A,  who  sued  to  vacate 
settlement  and  recover  cost. — Recovered.  Sheldon  v.  Wood,  2  Bosw. 
267,  N.  Y.  (1857). 

6.  I'ossibility  of  reneruat  of  lease  a  firtn  asset  after  dissolution.  A& 
B  dissolved  and,  after  bidding  with  each  other  for  the  lease  of  firm 
premises  with  right  of  renewal,  came  to  no  conclusion.  B  took  a 
renewal  in  his  own  name.  A  filed  l)ill  for  account. — Decree.  B  must 
account  to  firm  for  value  of  lease.  The  possibility  of  renewal  a  firm 
asset  in  litiuidation.    Johnson's  Appeal,  5  Am.  129,  Pa.   (i886j. 

If  .some  of  the  partners  are  lessees,  and  not  the  firm, 
they  alone  are  entitled  to  exercise  the  option  to  renew, 
and  may  retain  its  value. 

Option  of  lessees,  ivho  are  partners,  torenew  a  lease,  does  not  enure 
to  firm  for  benefit  of  co-partners.  B  &  C,  in  0(5lober,  i860,  leased  a 
quarrv,  for  three  years  from  January'  i,  1861,  with  the  option  to  re- 
new. In  December,  i860,  they  formed  a  partnership  with  A,  for 
working  stone,  to  continue  for  three  years,  and  for  so  much  longer  as  B 
&  C  continued  lessees  of  the  quarry.  A  clause  prevented  the  lessees 
from  assigning.  B  &  C  were  bound  to  furnish  the  firm  with  stone 
quarried,  at  cost.  They  refused  to  exercise  their  option  to  renew, 
and,  in  December,  1863,  formed  a  new  partnership  with  other  mem- 
bers, taking  a  different  lease.  A  brought  a  bill  to  enforce  a  continu- 
ance of  the  partnership  for  six  years,  and  compel  B  &  C  to  exert  the 
option  to  renew  for  benefit  of  firm. — Dismissed.  Lease  did  not  belong 
to  firm,  at  law  or  in  equity.  No  agreement  for  it,  express  or  implied, 
but  left  in  defendants  by  contract,  which  bound  them  to  work  quar- 
ries. Also  a  prohibition  against  assignment  to  firm.  Defendants 
had  right  to  refuse  to  renew,  though  for  purpose  of  getting  rid  of  A,  as 
continuance  at  their  option.  Phillips  v.  Reeder,  3  C  E.  Gr.  95,  N.  J. 
(1866).  I 

7.  The  secret  gains  made  by  partner,  who  aFled  as  agent  for  dealers] 
with  firm,  must  be  accounted  for  to  co-partner.  A,  manufadlurer  of 
machinery,  at  Patterson,  and  B,  merchant,  at  New  York,  went  into 
partnership,  in  1859,  ^"<i  continued  until  1872,  when  they  organized 
a  corporation,  the  A  &  B  Manufacturing  Co.,  though  without  dissolv- 
ing the  partnership.  In  1876,  A  brought  account  for  secret  profits 
made  by  B  in  transacfliug  the  business.  He  plead  Statute  of  Limita- 
tions.— No  bar.  B  adled  for  both  buyer  and  seller,  and  rendered  A 
liable  for  his  accounts.  The  profits,  when  received,  might  be  shared 
by  A.    Todd  v.  Rafferty,  3  Stew.  254,  N.  J.  (1878). 

8.  Though  equity  denied  by  answer,  injunclio)t  may  be  continued.  B, 
to  save  A's  separate  property  from  sale  on  a  mortgage,  bought  it.  On 
dissolution,  B's  title  to  mortgage  was  recognized,  but  A  subsequently 
enjoined  him  from  selling  under  it,  alleging  fraud  in  settlement,  and 
firm  title  to  mortgage.  B  denied,  in  his  answer,  A's  equity. — Injunc- 
tion maintained,  though  upon  condition  that  A  should  pay  sum  into 
court.    Murray  v.  Elston,  8  C.  E.  Gr.  127,  N.  J.  (1872). 

9.  Lease,  secretly  renewed  by  partner,  a  firm  asset.  A,  B,  C  and  D, 
partners  at  will,  took  a  lease  from  E,  for  5  years,  in  firm  name,  B  & 
Co.,  with  an  understanding  that  E  would  renew.  September  nth, 
B,  C  and  D  secretly  secured  a  renewal,  and  on  the  i8th  notified  A  of 
dissolution  on  January  ist.     A  assigned  to  B,  C  and  D  all  his  interest 

61  2 


Pt,  3,  Ch.  7.  Account.  §213; 

in  the  partnership,  except  his  claim  for  and  the  vahie  of  1-4  the  lease. 
Defence :  Evidence  of  conversation  between  B,  C  and  E,  that  B  and 
C  intended  to  dissolve  at  the  time  of  renewal,  and  that  E  had  renewed 
without  reference  to  any  prior  agreement. — ^Judgment  for  A.  Lease 
renewed  before  notice  of  dissolution  a  firm  asset,  whether  lessor 
bound  to  renew  or  not.  A's  percentage,  under  code,  allowed  upon 
his  1-4  interest  as  the  amount  in  controversy.  In  an  account,  suc- 
cessful party  might  recover  percentage  upon  the  whole  fund.  Struth- 
ers  V.  Pearce,  51  N.  Y.  357,  365  (1873). 


§213. 

(^[)t  account  mar)  be  barrel  bn  tl)e  Statute  of  Cimttations  oi 
bn  lacl]£s. 

The  a6lion  for  an  account  may  be  subjedled  to  the 
bar  of  the  Statute  of  Limitations.^  The  Statute  does 
not  run  from  dissolution,  but  from  the  date  of  the  last 
firm  transa(flions.'"  Although  the  Statute  does  not  in 
terms  refer  to  the  adlion,  yet  the  right  to  an  account 
may  be  lost  in  Equity  by  delay."  The  partnership 
relation  is  not  a  technical  trust,  and  the  right  to 
account  comes,  properly,  within  the  equitable  rule 
against  laches. 

1.  Partner's  bill  for  account  barred  by  Statute  of  Limitations.  Upon 
dissolution,  in  1853,  A  &  B  agreed  to  submit  all  differences  to  arbitra- 
tion. The  arbitrators  met  in  i860,  and  B  attended.  A  brought  bill 
for  account  in  1867,  and  averred  that  when  B  attended,  in  i860,  he 
refused  to  proceed,  and  promised  to  appear  again  in  three  mouths, 
but  never  appeared  again.  The  arbitrators  declined  to  a(5l.  B  denied 
his  promise  to  attend  again  afterwards,  and  pleaded  Statute  of  Limita- 
tions.— A  bar  in  Equity  as  well  as  at  law.  Cowart  v.  Perrine,  3  C.  E. 
Gr.  457,  N.J.  (1867). 

2.  Statute  of  Limitations  runs  betiueen  partners  o?ily  front  settlement 
of  account.  A  traded  in  his  individual  name,  and  B  was  a  dormant 
partner.  They  dissolved  in  1872.  C  brought  suit  against  A,  which 
ended  in  1876,'in  a  judgment  for  A,  who,  in  1878,  brought  bill  against 
B  for  account.  Defence  :  Statute  of  Limitations,  and  interest  on  ad- 
vances.— Recovered.  Statute  runs  only  from  settlement  of  outstand- 
ing claims,  or,  at  least,  presumption  of  payment.  No  interest  allowed 
without  agreement.    Prentice  v.  Elliott,  72  Geo.  154  (1883). 

613 


§214.  Account.  Pt.  3,  Ch.  7. 

T.  Parhirr's  bill  for  account  barred  by  his  laches.  A  &  B,  country 
merchants,  dissolved  partnership  in  1852,  and  made  B  liquidating 
partner.  A  was  indebted  to  B,  and  C  was  his  suret}',  to  whom  A 
assijjned  his  interest,  in  i860.  The  debt  was  gradually  paid  oflF,  the 
last  instalment  to  B's  executors,  in  1872,  the  year  he  died.  In  1874, 
C,  who  had  been  employed  by  B,  and  had  access  to  the  books,  brought 
account. — Refused.  Laches  not  to  bring  bill  when  full  equity  could 
be  administered  to  both  parties.  Stout  v.  Seabrook,  3  Stew.  187,  N. 
J.  (1S78). 


21d, 


(transactions  not  connected  luitl)  tljc  tirm  business  are  eiclubeb 
from  tl)e  account. 

The  exclusion  of  what  does  not  pertain  to  the  part- 
nership business  is  involved  in  the  adaptation  of  the 
account  to  the  firm  transadlions.^ 

On  this  ground  the  separate  transadlions  of  a  part- 
ner have  no  place  in  the  account.^ 

1.  Balance  of  partnership  account  a  set-off  to  jiidgtnent  against  indi- 
vidual partner.  B  &  C,  partners.  B  conveyed  of  his  land  an  undi- 
vided half  to  C,  and  took  bond  and  mortgage  for  price,  and  assigned 
them  to  A.  Before  assignment  to  A,  C  obtained  judgment  against  B 
for  balance  of  partnership  account.  A  foreclosed.  C's  defence:  Set- 
off of  judgment, — Judgment  allowed  as  a  set-off.  The  mortgage  being 
an  independent  transaction,  did  not  form  an  item  in  the  partnership 
account.     Reid  v.  Gardiner,  65  N.  Y.  578  (1875). 

2.  Partner  should  bring  cross-bill,  and  set  up  account  in  a  different 
pcirtnership  in  his  answer.  A  brought  account  against  B,  for  run- 
ning stage  line  under  contradl  with  U.  S.  B  set  up  A's  indebtedness 
to  him  on  individual  account,  and  out  of  a  farm  owned  by  A,  B  &  C, 
and  out  of  which  C  was  also  indebted  to  B. — No  set-off.  No  connec- 
tion between  U.  S.  mail  route  and  firm,  except  horses  fed  with 
products  of  farm,  and  farm  received  manure  in  return.  Brewer  v. 
Norcross,  2  C.  E.  Gr.  219,  N.  J.  (1865). 

Account  between  individual  partners  excluded  from  firm  account. 
Profits  m  a  partnership,  made  in  1865,  were  to  be  shared  thus:  A 
i-io,  B  4-10  and  C  5-10,  with  pro^^sion  for  quarterlv  accounts.  At 
end  of  1872,  B  promised  A  4-10,  and  3-8  for  1873.  In'1876  B  brought 
account  against  A  and  representatives  of  C,  uho  had  died.  A  claimed 
in  the  settlement  his  allowance  bv  B  for  1873,  which  was  excluded  as 
an  independent  transadtion  between  A  and  B.  Subsequently  A  sued  B 
upon  his  promise.  Defence:  Claim  was  without  consideration,  in- 
volved m  partnership  account,  and  barred  by  former  adjudication.— 
Recovered  ;  right  reserved  by  original  decision,  which  excluded  claim; 

614 


Pt.  3,  Ch.  7-  Account.  §215. 

promise  supported  by  consideration  of  A's  remaining  in  firm,  and 
share  for  1873  ascertained  by  quarterly  accounts.  Emery  v.  Wilson, 
79  N.  Y.  78(1879). 


§215. 

^  kci'K  for  an  account  is  not  essential. 

The  partners  may  anticipate  the  law  and  settle 
their  own  affairs  without  the  aid  or  intervention  of 
legal  process.^  This  may  be  accomplished  by  agree- 
ment, or  by  submitting  the  settlement  to  arbitration.' 
Either  method  is  available  for  the  partners. 

In  a  settlement  made  out  of  Court,  the  terms  are 
interpreted  in  accordance  with  the  rights,  duties  and 
obligations  of  the  relation.'^  It  is  assumed  that  the 
partners  meant  to  carry  out  the  original  purpose  in 
the  settlement,  as  well  as  in  the  transactions  of  the 
joint  business. 

The  construction  put  upon  the  submission  to  arbi- 
tration is  in  favor  of  a  retention  by  the  Court  of  its 
j uiisdiClion.'*  The  partners  must  exclude  the  judicial 
control  by  positive  stipulation,  or  the  Courts  will  not 
refuse  their  aid  to  reClify  an  error  of  the  arbitrators. 

I.  Account  stated  binds  the  partners,  though  unsigned.  By  articles, 
B  was  to  keep  the  books  and  render  periodical  accounts.  A,  in  181 2, 
assented  to,  but  did  not,  sign  the  accounts  which  B  rendered,  and 
partnership  was  dissolved.  In  1826,  A  demanded  an  account  from 
B's  executors,  on  the  ground  of  fraud  and  misappropriation.  De- 
fence: Account  stated. — Want  of  signature  immaterial.  Account 
conclusive,  except  for  last  year.  Heartt  v.  Corning,  3  Paige  566,  N. 
Y.  (1832). 

Balance  sheet,  struck  by  a  partner,  competent  evidence  against  him, 
though  unsigned.  A  &  B  were  partners.  They  dissolved,  and  A  sued 
B  for  ^314,  his  share  of  partnership  balance.  A  offered  in  evidence 
balance  sheet,  in  B's  handwriting,  though  without  his  signature.  B 
claimed,  as  set-ofF,  ^802,  a  debt  lost  by  A's  negligence,  as  liquidating 
partner. — Balance  sheet  competent  evidence,  and  set-off  allowed,  if 
B's  negligence  proved.   Jessup  v.  Cook,  i  Hal.  434,  N.  J.  (1798)- 

615 


L 


§215-  Account.  Pt.  3,  Cn.  7. 

2.  niscrction   conferred  by  articles  to  submit  not  controlled,    unless 
'partner  ehari^inf^  fraud  makes  out  prima  facie  case.    Articles  between 

A,  H  X:  C  piovi(ieil  that  if  business  was  not  managed  or  did  not  result 
to  B's  satisfaction,  be  might  dissolve  and  refer  difference  to  arbitra- 
tion. H  gave  partners  required  notice  of  dissolution  and  arbitration. 
.\  brought  bill  to  prevent  dissolution  and  reference.  He  charged  B 
with  fraud.— Dismissed,  and  reference  ordered.  Discretion  of  part- 
ner charged  with  fraud,  who  wished  public  trial,  not  controlled,  but 
only  of  partner  charging  fraud.  Russell  v.  Russell,  14  Ch.  D.  471 
(iSSo) 

The  partner  who  relies  upon  a  settlement  must  prove 
that  it  has  been  made. 

If  answer  sets  up  stipulations  of  settlement,  defendant  must  prove 
them.  A  &  H  dissolved  partnership.  A  brought  account,  on  ground 
of  no  settlement.  B  set  up,  by  answer,  A's  agreement  to  take  assets, 
pay  debts,  and  assume  all  liability.  He  averred  collecflions  by  A, 
and  his  liability  on  the  settlement  notes. — No  sufficient  evidence  of 
the  terms  stated  by  B  in  his  answer  of  the  settlement.  Account 
ordered.     Dickey  v.  Allen,  i  Gr.  Ch.  40,  N.  J.  (1838). 

3.  Settlement  opened  to  make  partner,  who  competed  with  firm,  account 
for  profits.     A,  B,  C,  T)  et  at.,  stationers.     C  and  D  secretly  bought 

plates  and  copyright  in  their  own  names,  paying  with  firm  money. 
They  sold  copies  to  the  firm  at  a  profit,  and  charged  the  expenditures 
to  a  printer  as  seller.  A  and  B,  on  discovering  these  fa<5ls,  sought  to 
open  a  settlement. — Allowed.  Transaction  a  fraud,  because  C  and  D 
competed  with  the  firm.  They  were  allowed  price  of  plates  and 
copyright,  which  were  awarded  to  firm.  Herrick  v.  Ames,  8  Bosw. 
115,' N.  Y.  (1861). 

Agreement  that  partner' s  debt  to  firm  shall  be  taken  out  of  surplus 
is  not  a  release  if  there  be  no  surplus.  A  was  liquidating  partner.  B, 
his  co-partner,  was  indebted  to  the  firm.  They  arranged  that  A 
should  take  amount  of  B's  indebtedness  out  of  his  share  of  the  sur- 
plus, after  paying  debts.  There  being  no  surplus,  A  sued  B  for  his 
indebtedness.  Defence:  Discharged  by  the  agreement. — Recovered. 
ContracT:  interpreted  not  as  a  novation,  but  as  a  plan  of  distribution 
on  basis  of  partner's  continuing  liability.  Sayre  v.  Peck,  i  Barb,  464, 
N.  Y.  (1847). 

Settlement  between  partners  binding,  unless  fraud.  Evidence  dis- 
proved fraud  in  settlement,  and  showed  full  opportunity  for  examina- 
tion by  A.— Binding.  Murray  v.  Elstou,  9  C.  E.  Gr.  310,  N.J.  (1873). 
Affirmed.     E.  &  A.  9  C.  E.  Gr.  589. 

Partners  cannot  rescind  settlement  accepted  by  third  person.  A,  in 
settlement  with  B,  agreed  to  take  the  assets  and  give  up  mortgage 
of  C,  contributed  by  B.  A  sued  C  on  mortgage,  and  objedted  to 
evidence  of  agreement  until  completed  by  delivery.— Judgment  for 
C.  Knowledge  of  settlement  and  acceptance  by  C  binds  A  and  B 
without  delivery  of  possession.    Benson  v.  Tilton,  58  N.  H.  137  (1877). 

Award,  allotting  one  business  to  each  partner,  not  enforced  until 
cash  consideration  paid.  A  &  B,  who  traded  as  merchants,  and  also 
as  tailors,  dissolved,  and  submitted  to  arbitration.  Tailor  store,  with 
Its  debts,  awarded  to  A ;  other  business,  with  its  debts,  to  B,  and  A 
ordered  to  pay  B  1470.  A  brought  injuncftion  to  prevent  sale  of  his 
property  to  satisfy  judgments  for  debts  arising  out  of  B's  business. 
B  answers  that  A  had  not  paid  the  cash. — A  no  equity  as  surety  until 
he  paid  the  I470.    Ruuyon  v.  Brokam,  i  Hal.  Ch.  340,  N.  J.  (1846). 


616 


Ji 


I 


Pt.  3,  Ch.  7.  Account.  ^216. 

4.  Arbitratioti  clause  does  not  otist  court' s  jiirisditlion.  Articles  pro- 
\aded  for  settlement  of  disputes  between  partners  by  arbitration.  A 
dissolved,  and  demanded  an  account  and  a  receiver. — Entitled  to  a 
decree.    Kapp  v.  Barthan,  i  E.  D.  Smith  622,  N.  Y.  (1852). 


lurisbictiou  of  tl]c  arcount. 

A  Probate  Court's  jurisdic1:ion  over  a  deceased  part- 
ner's estate  does  not  justify  an  account,  which  involves 
a  settlement  of  the  shares  of  all  the  partners.  The 
competence  of  the  Court  is  measured  by  the  deceased 
partner's  share.  The  co-partners  are  not  amenable  to 
the  jurisdiction.  It  is  only  by  consent  of  all  the  part- 
ners that  the  Probate  Court  can  exercise  jurisdi6lion 
over  the  partnership,  and  make  it  accessory  to  the 
single  partner's  estate.* 

The  jurisdidlion  of  the  account  depends  on  the 
domicile  of  the  partners,  not  the  forum  to  which  they 
must  resort  to  colledl  their  assets." 

I.  Orphan's  Court  has  no  jurisdiction  of  claims  arising  front  unset- 
tled partnership  account.     B  &  C,  partners.     B  died,  and  C  assigned 

"  to  A  for  benefit  of  creditors.  A  offered  to  prove  against  estate  in 
hands  of  B's  administrator  for  alleged  balance  of  unsettled  firm  ac- 
count due  C. — Dismissed,  for  want  of  jurisdidlion.  Ainey's  Appeal, 
II  W.  N.  C.  568,  Pa.  (1882). 

Where  Orphans'  Court  has  assumed  jurisdiflion  of  a  partnership 
account  with  consent  of  all  parties,  its  decree  will  stand.  A,  B  &  C, 
partners.  B  died,  and  A  became  his  administrator.  Without  objec- 
tion on  the  part  of  C,  A  undertook  to  settle  the  partnership  affairs 
in  his  account  as  administrator.  He  stated  an  account,  showing  that 
B  had  no  interest  in  firm.  This  view  was  contested  by  heirs  of  B, 
and,  on  final  account,  auditor  reported  against  A  for  123,800.  A  ex- 
cepted, on  the  ground  that  O.  C.  had  no  jurisdiction  of  partnership 
matters.  Thirteen  years  had  elapsed  between  A's  first  and  final  ac- 
counts.— Decree  for  heirs  of  B.  After  so  long  a  time  A  could  not 
question  a  jurisdidlion  he  had  himself  invoked  with  consent  of  all. 
Brown's  Appeal,  8  Nor.  139,  Pa.  (1879). 

Orphans'  Court  ivill  not  try  title  to  fund  in  its  hands  where  claim 
rests  on  an  unsettled  partnership  account.  The  administrator  of  B 
sold  all  the  goods,  stock,  fixtures,  &c.,  of  B's  business.     A  claimed 

617 


§2l6. 


Account.  Pt.  3,011.7. 


one-half  of  fund  obtained  as  partner  of  B.  The  facl  of  partnership 
WIS  denied.— Decree  for  B's  administrator.  The  court  can  not  try 
the  (luestion  of  partnership.  If  there  was  a  firm,  its  accounts  must 
be  settled  in  another  forum.  Bentley's  Est.,  i6  Phila.  263,  Pa.  (1883). 
Orphan's  Court  can  not  enforce  specific  perjormance  of  a  contraB. 
between  partners  in  a  firm  transafiion.  B  took  title  to  land  as  trustee 
for  C,  who  furnished  c  ish  consideration,  agreed  to  share  the  profits, 
and  convey  a  moiety  after  re-imbursing  C  his  outlay.  C  assigned 
his  interest  to  A,  and  B  died.  A  asked  O.  C.  for  specific  performance 
under  Act  16  June,  1S36,  P.  L.  792,  which  gives  jurisdidlion  to  compel 
conveyance  if  contract  by  deed,  and  A<51  24  Feb.,  1834,  P.  L.  75.  giv- 
ing mode  of  proceeding. — Dismissed.  O.  C.  no  jurisdidlion  if  firm 
account  involved.    Walker's  Appeal,  4  Pennypacker  452,  Pa.  (1884J. 

Attachment  of  partner's  interest  infirm  credit  gives  court  nojiiris- 
diflion  over  foreign  co-partners  to  enforce  a  settlement.  B  recovered 
judgment  against  A  in  West  Va.,  sued  him  upon  the  judgment  in 
Ohio,  and  attached  a  debt  due  from  C  to  A  &  Co.  A,  though  a  non- 
resident, appeared  and  demurred  to  the  attachment. — Dissolved.  The 
credit  attached  belonged  to  A  &  Co.,  and  A's  interest  gives  Ohio  no 
jurisdiclion  to  compel  foreign  co-partners  to  settle  their  accounts. 
Garnishee  could  not  dissolve  attachment  on  ground  that  he  held  no 
property  of  A.  B  entitled  to  prove  A's  property  in  C's  hands,  and 
then  jurisdidlion  z'w  reyn,  but  court  had  obtained  jurisdicflion  in  per- 
so  nam  by  A's  appearance.    Myers  v.  Smith,  29  Ohio  St.  120  (1876). 


618 


NDEX. 


ABANDONMENT  of  business,  ground  for  a  dissolution.  §173  and  n.  12, 

ABUSE  of  legal  process,  by  partner  charges  co-partner.  §  139,  n.  4,    v. 
TORT. 

ACCEPTING  SERVICE. 

Appearance  by  partner  like ;  partner  may  not  accept  service  for  co- 
partner. \  119.  Acceptance  of  service  by  partner  in  joint  suit  no  objec- 
tion, and  judgment  does  not  merge  claim.   ^83. 

ACCOUNT. 

The  account  is  an  epitome  of  partnership.  It  sums  up  and  applies  all 
its  principles  in  order  to  adjust  the  trausaAions  between  the  partners. 
The  account  is  the  only  process  which  is  co-extensive  with  the  partner- 
ship business.  \.  206.  Although  it  is  the  remedy  for  the  settlement  of  all 
the  transactions  of  the  firm,  yet  it  may  be  brought  for  any  trausaclions 
which  may  be  isolated  from  the  general  business,  and  which  do  not  in- 
volve a  dissolution  of  the  firm.  The  isolation  may  result  from  the  nature 
of  the  transa<5lion  or  from  the  contradl  of  the  parties.  \  159.  The  account 
gives  every  advantage  that  could  be  obtained  by  a  cross-bill.  \  206,  n.  i. 
A  partner  cannot  sue  his  co-partners  for  a  firm  transa6lion  without  an 
account.  \  206,  n.  2.  The  account  being  adapted  to  firm  transactions,  ex- 
cludes transacflions  on  individual  account.  ^214,  n.  i  &  2.  An  account 
stated  binds  the  partners,  though  unsigned.  §215,  n.  i.  A  balance  sheet 
is  evidence  against  a  partner  who  prepared  it.    ^215,    n.  i. 

The  basis  for  the  account  is:  i,  The  firm  property;  2,  The  partners' 
liability;  3,  Good  faith  in  the  business.  ^207.  The  partners  enforce  the 
contribution.  \  207,  n.  i.  The  partners'  quotas  must  be  ascertained  for 
distribution.  I.  206,  n.  i.  The  question  of  loan  or  contribution  must  be 
ascertained.  If  a  lender  took  no  security  and  made  no  bargain  for  repay- 
ment of  principal  and  interest,  a  mortgage  made  afterwards  to  cover  the 
loan  and  subsequent  advances  would  indicate  the  lender's  position.  ^.  207, 
n.  2.     The  theory  of  the  contribtition  determines  how  it  will  be  considered 

I  in  the  adjustment.    |  207,   u.  2.     The  profits  form  part  of  the  property, 
and  are  identified  with  it.   \  101 .     A  managing  partner  may  in  account 
be  made  to  show  why  the  business  was  not  a  success.     His  management 
619 


Index. 

requires  explanation,  as  profits  was  the  objedl  of  the  partnership.    ?  206, 

n.  4 

If  the  partner  uses  firm  paper  to  pay  his  individual  debt,  co-partner's 
payment  of  half  to  release  his  separate  estate  entitles  him  to  reimbnrse- 
mcnt.   i.126,  n.  I.     v.  Commercial  Paper. 

A  breach  of  good  faith,  resulting  in  loss  or  damage  to  the  firm  or  co- 
partner in  his  separate  estate,  is  an  item  of  charge  against  the  wrong-doer 
and  of  credit  to  the  injured  partner.  If  dissolution  is  made  by  a  partner 
before  the  period  fixed,  the  co-partner  may  recover  damages  for  the  breach 
of  contract,  and  they  will  be  measured  by  the  profits  made  during  the  pre- 
ceding months  of  the  partnership,  and  not  mitigated  by  the  plaintiff's 
profits  made  in  a  new  business  begi?n  before  the  term  expired.  ^  212,  n.  3. 
I'raud  in  forming  the  partnership  is  ground  to  correct  a  settlement.  ^  212, 
n.  5.     Competition  in  business,     v.  Good  Faith. 

The  decree  for  account  may  be  anticipated  by  a  settlement  or  by  sub- 
mission to  arbitration.  ^  214,  n.  3.  Partner  cannot  take  away  co-partner's 
discretion  to  submit  by  charging  him  with  fraud,  unless  he  makes  out  a 
prima  facie  case.  \  215,  n.  2.  The  settlement  is  interpreted  according  to 
the  principle  of  the  relation.  Agreement  to  take  debt  out  of  surplus  is  not 
construed  to  be  a  release  of  the  stock  if  no  surplus.  \  215,  n.  3.  The  set- 
tlement is  binding,  and  can  not  be  rescinded  if  accepted  by  third  persons. 
The  allotment  of  a  business  to  each  partner  is  not  enforced  until  owelty  is 
paid.  ^215,  n.  3.  Laches  will  bar  the  suit  for  a  settlement.  The  Statute 
of  Limitations  would  be  an  adequate  bar.  \  213,  n.  i.  After  a  settlement 
the  Statute  runs  between  the  partners.  \  213,  n.  2.  The  period  which  will 
bar  a  partner's  claim  for  an  account  is  the  ordinary  limitation  of  six  years. 
^  213,  n.  3.  The  agreement  to  submit  partnership  differences  to  arbitration 
is  not  construed  liberally  to  oust  the  jurisdiction  of  the  courts  to  decree 
an  account  and  appoint  a  receiver.  The  construdlion  is  in  favor  of  juris- 
diclion  by  the  courts,  and  the  differences  are  referred  to  such  as  arise 
during  the  partnership,  and  do  not  extend  to  controversies  arising  out 
of  the  settlement  upon  dissolution.  ^215,  n.  3.  The  jurisdi(flion  of  the 
account  depends  on  the  domicils  of  the  partners.  The  attachment  of  a 
partner's  interest  in  a  firm  claim  would  not  give  jurisdidlion  over  the 
firm,  in  order  to  enforce  a  settlement  of  its  business  for  the  benefit  of  the 
separate  creditor.  ^  216,  n.  2.  Though  if  the  parties  were  in  the  jurisdic- 
ion,  the  court  might  treat  the  attachment  as  a  method  to  compel  the 
partner  to  make  a  settlement  of  the  firm  accounts,  in  order  to  ascertain 
what,  if  anything,  was  coming  to  him  which  the  creditor  would  be  enti- 
tled to  claim  in  satisfaction  of  his  attachment.  This  seemed  to  be  the 
Pennsylvania  view  if  the  attachment  was  mesne  and  not  final  process. 
The  Orphans'  Court  has  no  jurisdidlion  over  the  partnership  account,  by 
reason  of  the  deceased  whose  estate  is  before  it  for  distribution  being  a 
partner,  unless  the  co-partners  consent  to  submit  the  account  to  adjudi- 
cation. ^  216,  n.  I. 


620 


II 


Index, 
action.   v.  procedure. 

ACTS  OF  PARTNERSHIP,     v.  Holding  Out.  Evidence. 

ADVANCES. 

The  privilege  which  a  partner  has,  who  advances  money  to  his  firm,  or 
makes  outlays  on  its  account,  is  a  lien  on  the  firm  assets,  §  165,  n.  I, 
which  must  be  paid  before  the  co-partners  can  take  anything,  \  165,  n.  3, 
or  the  separate  creditors  can  come  upon  the  fund.  The  lien  does  not 
avail  against  firm  creditors.  \  201,  n.  i  &  3.  The  lien  is  only  of  a  partner 
upon  the  firm  stock,  and  does  not  include  an  advance  to  a  co-partner. 
The  separate  creditors  of  the  co-partner  are  entitled  to  a  preference  in  the 
distribution  of  his  estate.  \  165,  n.  i ;  §201,  n.  4.  As  a  co-proprietor,  the 
advancer  cannot  be  a  lender  to  the  firm,  and  his  advance  cannot  be  col- 
ledted.  The  advance  is  assimilated  to  a  loan,  \  165,  n.  4,  which  carries 
interest  as  incident  to  the  debt,  without  an  express  agreement,  only  as  an 
item  in  the  account  upon  a  dissolution.  But  interest  will  be  colledted, 
even  from  a  stakeholder,  pending  an  account  between  his  co-partners, 
unless  he  proves  readiness  to  pay  on  demand,  and  no  employment  of  the 
money  in  the  interval.  \  297,  u.  4.  If  the  firm  had  no  capital,  the  partner 
advancing  it  is  entitled  to  recover  interest.  He  would  not  forfeit  his  in- 
terest by  mingling  the  advance  with  his  own  funds  in  bank,  if  no  loss 
occurred  by  the  deposit  in  his  individual  account.  §  165,  n.  4.  The  ad- 
vancer's share  of  the  loan  is  put  at  the  risk  of  the  business,  and  to  the 
extent  of  this  portion  is  contingent.  It  must  remain  in  the  business  until 
a  dissolution,  and  be  included  in  the  account.  \  208.  For  this  reason  he 
may  stipulate  for  any  rate  of  interest,  without  committing  usury.  \  165, 
n.  2.  The  partner's  lien  for  advances  has  a  preference  over  the  lien  of  the 
separate  creditors.  \  202,  n.  3.  Also  on  the  land  held  by  the  partners  as 
tenants  in  common,  though  for  the  firm,  in  N.  J.,  and  generally;  but  in 
Pa.  the  record  title  in  the  partners  would  give  their  separate  creditors  the 
preference.  ^112,  n.  6,  If  overdrafts,  which  are  the  converse  of  advances, 
are  made  without  a  settlement,  interest  would  begin  to  run  from  dissolu- 
tion, when,  at  least,  accounts  should  have  been  settled.  \  165,  n.  3.  In 
addition  to  the  rights  of  a  lender,  the  advancing  partner  is  entitled  to 
marshal  the  assets  for  his  payment.  A  partner  could  get  firm  paper  dis- 
counted to  reimburse  himself  his  advances.  He  would  not  be  defrauding 
creditors,  as  he  has  precedence  over  them.  \  184,  n.  3.  The  purchaser  of 
a  partner's  share  can  obtain  his  advances  upon  a  settlement.  \  206,  n.  2. 
The  liability  to  pay  debts,  unless  assumed,  does  not  entitle  partner  to 
reimbursement  as  for  an  advance.  ?2io,  n.  i  &  2.  But  the  amount  of 
firm  debts  paid  by  him  he  may  recover  without  interest,  'i  210,  n.  3.  A 
partner  may  recover  the  costs  of  litigation,  but  not  the  expenses  of  con- 
ducing the  litigation,  unless  by  agreement.  ?2io,  n.  4.  A  surviving 
partner  may  recover  compensation  for  carrying  on  the  business  for  the 
deceased  partner's  estate  ;  because  they  were  not  rendered  for  liquidation, 

621 


Index. 

but  for  continuing  the  business  for  the  deceased  partner's  estate.  This 
IS  an  exception  to  the  rule  which  prohibits  compensation  to  the  surviving 
partner  for  his  ser^-ices.  I  210.  n.  4,  a.  Partner  may  recover  payment  of 
damages  caused  by  co-partner's  tort,  or  excess  of  authority,  unless  pri\-y 
to  it.  i.  210.  Partner's  lien  for  advances  cuts  out  judgments  against  co- 
partner holding  title.  |  1 12,  n.  6.  A  suri-iving  partner  has  a  lien  for  his 
advances,  i.  15,  n.  2.    v.  Mining  Partnership. 

AGENCY. 

The  test  of  partnership,  if  the  property  element  is  excluded.  This  is 
an  error,  because  the  capacity  is  iuvolved  in  and  measured  by  property. 
The  principal  in  a  business  or  partnership  is  a  proprietor.  The  principal 
apart  from  the  business  or  partnership  is  not  a  partner.  Agency  the  re- 
sult, not  cause,  of  partnership.  Partner's  title  empowers  him  to  intervene 
to  protecl  firm  property,  i.  103,  n.  12.  v.  Property.  Husband,  wife's  agent. 
Partner's  implied  agency  measured  by  the  business,  agent's  by  the  charac- 
ter of  transaclion.  J,  69,  n.  9.  Agency,  unlike  status,  revocable,  g  10.  v. 
Status.  Cestuy  que  trust's  eleclion  not  founded  on  agency.  §  42.  v.  Trust 
Funds. 

APPEARANCE. 

Partner  cannot  employ  attorney  to  appear  for  the  firm.  :>.  Partners. 
V.  Accepting  Service.  Attorney  officer  of  court,  and  may  appear  for  any 
one.  Only  redress  against  attorney.  Judgment  would  not  be  stayed  with- 
out payment  of  costs.  >,.  119,  n.  i.  In  New  York,  opened  to  let  defendant 
into  a  defence,  but  not  avoided.  ^  119,  n.  i,  c. 

APPORT.     V.  CONTRIBUTION. 

APPORTIONMENTof  Assets  and  Liabilities,    z/.  CONTRIBUTION,    v. 
DIVISION. 

ARBITRATION. 

Not  construed  to  oust  jurisdiclion  of  courts.  ?  215,  n.  3.  v.  Account. 
May  anticipate  account.  ^212.  f.  Account.  Partner  cannot  submit  firm 
claim  to  arbitration,  because  a  judgment  on  the  award  would  bind  co- 
partner's separate  estate.  ^  120.  If  judgment  restricted,  as  in  N.  Y.,  to 
firm  assets,  submission  by  partner  valid.  ?  120,  n.  i,  b.  Partner  buying 
out  co-partner  can  submit,  because  award  would  bind  only  him  and  the 
assets.  Like  a  confessed  judgment  which  binds  only  firm  stock.  §  120, 
□  .  2. 

AREA.   ?  8.      V.  SUBJECT-MATTER. 

ARETIN.     Title  to  Contribution.   ?  34,  n.  i. 

ARNTS,  L.  von  Amesburg,  Civil  Law  indivisible  contradl.   'i  91,  n.  3. 


622 


<l 


Index. 

ASSETS. 

In  the  adjustment  of  account  between  the  firm  and  its  members  upon 
insolvency,  the  rule  is,  that  nothing  can  be  colledted,  either  by  the  firm 
from  its  members  or  by  a  partner  from  the  firm.  But  a  single  case  in 
Pennsylvania  permitted  a  set-oflf  between  the  partners  of  their  debts  to 
the  firm,  and  awarded  the  balance  to  the  creditor  partner's  assignee.  ^  io6, 
n.  7,  b.  Marshalling  Assets.  i\  Marshalling.  Partner's  debt  to  firm,  if 
incurred  by  fraud,  may  be  collected.  ^  197,  n.  2.  v.  Marshalling.  Part- 
ner's debt  to  firm  not  an  asset,  and  no  set-off  of  debts  between  partners, 
because  firm  creditors  paramount  and  firm  collects  both.  |  202.  As  part- 
ners parties  in  all  litigation,  no  partner  can  sue  firm  (i.  e.,  self  and  co-part- 
ners) nor  firm  (i.  e.  self  and  co-partners)  sue  him.  Both  claims  excluded 
as  assets  of  joint  and  separate  estates.  If  collected,  assets  (joint  and  sepa- 
rate) would  depend  on  a  balance  of  account.  Distribution  upon  execution. 
V.  Execution. 

ASSIGNEE  of  a  Partner,     v.  CHOICE  of  a  Partner.     Suit  by.   J.  76,  n. 
3.   V.  PROCEDURE. 

ASSIGNMENT. 

Of  firm  claim  to  let  assignee  sue  when  firm  filed  no  certificate.  ?  76,  n. 
17.  V.  Procedure.  By  partner  of  stock,  unless  for  equivalent,  does  not 
exclude  creditors  from  recourse  to  fund.  If  assignee  agrees  to  pay  debts, 
the  agreement  enures  to  the  firm  creditors,  who  may  enforce  application 
to  firm  debts.  ^  106,  n.  2  &  5.  The  partner's  transfer  of  his  interest  to  his 
co-partner  does  not  cut  out  separate  creditors,  if  he  is  insolvent,  unless  for 
sufficient  value.  The  joint  tenant  at  the  Common  law  could  neither  re- 
lease nor  surrender  his  estate  so  as  to  cut  out  creditors.  The  technical 
relation  back  to  the  creation  of  the  estate,  or  merger  of  it  in  the  reversion, 
was  not  permitted  to  defeat  the  claims  against  the  joint  tenant's  interest, 
i  103,  n.  2.  Assignee  of  a  partner  interested  only  in  liquidation,  v.  Exe- 
cution. Partner  may  assign  firm  stock  to  avoid  adverse  sale  if  co-partner 
cannot  be  consulted.  1 114.  v.  Powers.  Assignment  of  mortgage  in  pay- 
ment an  executed  contract  which  discharged  firm.  ^  117.  v.  Powers. 
Partner  may  assign  a  judgment,  but  not  guarantee  its  payment.  §  117.  v. 
Powers.  For  creditors,  v.  Powers.  By  firm  to  pay  separate  debts,  v. 
Diversion  of  Stock.  The  assigment  for  creditors  does  not  involve  the 
delegation  of  a  partner's  capacity.  The  assignee  becomes  rather  a  trustee 
for  the  creditors  than  a  substitute  for  the  partner.  In  the  function  of  ap- 
plying the  assets,  he  does  not  exceed  the  duties  of  the  sheriff.  The  assign- 
ment is  less  than  a  confessed  judgment.  <;  131-  Assignment  for  creditors 
an  agency  for  payment.  ?  59.  The  assignment  of  the  whole  stock  would, 
prima  facie,  dissolve  the  firm,  but  the  fact  might  be  rebutted  by  evidence. 
If  the  partners  mean  to  resume  business  after  paying  the  debts,  the  assign- 
ment would  not  be  a  dissolution.  Then  a  subsequent  bankruptcy  would 
stand  ,  if  a  dissolution,  no  firm  exists  to  be  put  into  bankruptcy.   '<•.  103. 

623 


Index. 

The  prefereuce  made  to  a  separate  creditor  in  the  assignment  for  firm 
creditors  does  not  vitiate  the  assignment.  The  preference  is  void,  and 
would  be  stricken  out  by  a  creditor's  bill.  ^  170.  n.  i.  A  pro  rata  dis- 
tribution of  the  surplus  among  the  separate  creditors  would  not  avoid  a 
firm  assignment  for  creditors,  although  the  distribution  would  be  a  fraud 
on  the  separate  creditors  of  the  partner  entitled  to  the  larger  share.  §  170, 
u.  2.  Purchaser  of  firm  stock  who  agrees  to  pay  the  debts  is  not  an  as- 
signee for  creditors.  1 148,  n.  i.  Neither  retiring  j^artner  nor  firm  creditor 
has  any  standing  until  the  margin  of  insolvency  is  reached.  Then  the  ex- 
posure to  the  debts  raises  the  equity  to  marshal  the  assets  to  discharge  the 
liability.  \  148,  n.  2.  The  indemnity  charges  any  subsequent  purchaser  of 
the  assets.  ^  100,  n.  9,  b.  The  assignment  of  firm  assets,  with  agreement 
to  pay  firm  debts,  does  not  enable  firm  creditors  to  ele6l  assignee  partner 
as  his  separate  debtor.  I  170,  n.  4.  Assignment  of  partner's  share,  v. 
Powers.  Purchaser  of  partner's  share  cannot  carry  on  business.  ?.  206,  n. 
2.  The  sale  must  be  of  the  partner's  interest,  for  he  has  no  separate 
property  in  any  specific  asset,  or,  if  a  particular  piece  of  property  is  as- 
signed, the  sale  must  be  subjeA  to  account,  and  cannot  be  separated  from 
it.  This  is  simply  selling  his  interest,  and  he  can  never  be  restrained  from 
selling  out,  although  it  might  result  in  breaking  up  the  business.  ^  171,  n. 
4.  The  partner's  assignment  of  his  share  as  security  operates  as  a  mort- 
gage, which  binds  the  assets  when  the  partnership  is  established.  \  172, 
n.  2.  Assignee  of  a  partner  becomes  a  co-proprietor,  and  resembles  a 
dormant  partner.  \  68.  Surviving  partner  not  an  assignee,  but  original 
owner  by  joint  title.  \  121  &  100,  n.  5.  Partner  can  not  sue  as  assignee 
of  co-partner,  although  he  represents  firm.   ?  76,  n.  3.    v.  Procedure, 

ATTACHMENT,     v.  EXECUTION. 

Attachment  of  partner's  interest  in  a  firm  claim  to  compel  a  settlement 
not  to  acquire  jurisdiction.  ?  216,  n.  2.  v.  Account.  Attachment  for  a 
partner's  debt  does  not  aflfeA  firm  lands.  ?  10.  Partner's  power  to  sell 
does  not  give  separate  creditor  right  to  attach  firm  stock.  \  103,  n.  3.  v. 
Powers. 

ATTORNEY. 

Attorney  taking  halfprofits  for  fee  not  a  partner.  |  59,  n.  2,  j.  Attorneys 
could  recover  a  fee  for  services  in  a  court  in  which  one  partner  was  not 
admitted  to  pradtice.  The  right  to  the  fees  belongs  to  the  firm,  and  al- 
though the  .services  were  rendered  by  one  partner,  his  co-partner  would, 
in  theory,  render  an  equivalent  in  some  other  department  of  the  business. 

AUTHORITY,     v.  POWERS.  \  160,  I  163.     v.  PROCEDURE. 

BAILMENT 

At  the  Common  law,  property  partook  of  the  nature  of  bailment.    1 4.    V. 
Property.     A  bailee  has  no  power  to  sell.    \  4,  n.  2.     Bailment  might  be 

624 


i 


Index. 

substituted  for  partnership.  The  property  might  be  bought  by  one,  and 
held  by  another  for  manufadlure,  and  they  might  share  the  profits  of  the 
transadlion.  |  67,  and  n.  ii. 

BANKRUPTCY, 

Partner  by  estoppel  put  into.  ^  69,  n.  22.  Proof  in,  does  not  deprive 
judgment  creditor  of  his  priority,  g  m,  n.  5.  z/.  Land.  Separate  liability 
for  joint  debts  enforced  in  bankruptcy.  I79.  v.  Contract.  Bankruptcy 
rule  a  makeshift  of  convenience.  \  196.  v.  Marshalling.  Repealed  by 
inconsistent  statute,  'i  204,  u.  3.  v.  Marshalling.  Bankruptcy  proceed- 
ings originally  discriminated  joint  from  separate  estates  by  the  commis- 
sions, 'i  103.  Double  proof.  \  205,  n.  6.  v.  Marshalling.  Bankruptcy  rule 
protedls  only  the  separate  estate.  \  197.  v.  Marshalling.  If  no  surplus 
after  paying  partner's  separate  debts,  co-partner  can  enforce  individual 
claim.  1 198.  V.  Marshalling.  Payment  of  firm  debts  would  enable  part- 
ner to  enforce  individual  claim  against  co-partner.  §201,  n.  2.  v.  Mar- 
shalling. Discharge  in  bankruptcy  of  innocent  partner  does  not  bar  suit 
against  him  for  co-partner's  tort.   \  149,  n.  3.     v.  Tort. 

BATES'  Special  Partnership.  \  37,  n.  2.  Release  by  partner  binds  firm, 
1 117,  n.  2,  a. 

BEGINNING  Partnership,     v.  COMMENCEMENT  of 

BENEFICIAL  ASSOCIATION,     v.  GAIN. 

BENEFIT.     V.  GAIN. 

BIBLE,  The.     v.  f.37,  u.  /. 

BIDDLE,  Geo.  W.  A  memorial  address  by,  upon  the  judicial  career  of 
the  late  C.  J.  Sharswood.   ^102,  n.  2,  b. 

BILLS  AND  NOTES,     v.  COMMERCIAL  PAPER. 

BISSET,  Andrew.     Partnership  laud.   |  109,  n.  5. 

BLACKBURN,  Lord,  Marshalling  between  firms  with  a  common  mem- 
ber. At  Common  law  double  claims.  Bankrupt  Adls  restored  the 
Common  law  rule,  'i  205,  n.  i,  2,  4.  Scotch  plan  of  collecfling  debts  by 
firm  from  members,  the  original  English  method.    '^  202,  n.  i. 

BLACKSTONE,  regarded  usury  as  a  debt.   \  66. 

BONA  FIDES,     v.  GOOD  FAITH. 

BORCHARDT.  Commercial  Codes.  Contribution  becomes  property  of 
the  firm.  \  30,  n.  i.  Equivalent  for  contribution  upon  dissolution. 
?28,  n.  I. 

BORROWING.  Limit  of  partner's  power  fixed  by  usage  of  business. 
I  123.     V.  Powers. 

625 


Index. 

BRACTON.       Inference  of  copyholds  from  emancipation.   ?  4,  n.  i.     v. 

Property. 
BRADLKY,  Mr.  J.     Argument  that  ursurpation  of  franchise  equal  to  a 

charter.   J  37,  n.  1 . 
BRAMWELL,  Lord.     Account  of  limited  liability,   'i  26,  n.  4. 
BRAVARD — VEYRIERES.     Tontine  not  partnership,   g  16  &  n.  4. 
BUILDING,  Partnership  in.  ^  11  &  n.  2. 

BUMP,  Orlando  F.  Joint  adjudication  b}-  modern  pracflice  includes  dis- 
tribution of  separate  estates,   j^  77,  n.  3. 

BUSINESS  CONTRACT,     v.  CONTRACT. 

BUYING  AND  SELLING  did  not  make  partnership  in  land.   |  8  &  n.  i. 

BUYING. 

Partner's  Capacity  for,  v.  Powers.  Trade  gave  right  to  buy  and  sell. 
No  Partnership  in.  The  association  for  buying  without  selling,  does 
not  constitute  a  partnership.  The  Common  law  was  familiar  with  joint 
purchases  to  hold.  The  purchase  for  division  excludes  the  idea  of  mak- 
ing a  joint  profit;  each  purchaser  realizes  his  profit  separately  in  the  en- 
hancement of  the  price  of  his  purpart.  |  7,  n.  i ;  |  49,  n.  3.  Only  limit 
to  partner's  power  to  buy  lies  in  the  proportion  which  goods  bear  to  the 
needs  of  the  business.   Oi5-     z'.  Powers. 

CADWALLADER,  J.  Assignment  by  partners,  unless  for  value,  entitles 
creditors  to  reclaim  stock.  ?  106,  n.  2,  a.  Partner's  renunciation  of  his 
equity  would  not  affedl  creditors.  §  106,  n.  2,  b.  Joint  creditors'  privi- 
lege not  dependent  upon  a  technical  lien.  ^  106,  n.  5,  d.  Privilege  fol- 
lows the  stock.   ?  106,  n.  5,_/! 

CAIRNS,  Lord.  Marshalling  assets  between  firm  with  a  common  mem- 
ber. Bankruptcy  allows  double  proof.  Argument  when  not  allowed. 
?  205,  n.  4,  6. ;  ?  64,  n.  3.  Partners  using  trust  funds  become  trustees 
ex  nialeficio.  ?  42,  n.  2. 

CALIFORNIA 
Has  changed  Common  law  procedure,  and  allowed  suit  against  partners 
in  firm  name.    \  76.     v.  Procedure.     California  Code  prohibts  fictitious 
name,  and  requires  certificate  of  publication.  \  76.     Release  of  partner 
and  not  of  co-partners.    ^90.     v.  Procedure. 

CANONS  OF  DESCENT,  v.  DESCENT. 

CAPACITY  AS  PARTNER. 

Common  law  admits  no  capacities  in  an  individual,  §  164,  though  the 
common  member  seems  to  be  acquiring  capacities  by  different  trades. 
'i  164,  n.  I.    Partners  cannot  announce  that  they  are  adling  in  the  capacity 

626 


1 

i 


Index. 

of  partners,  and  thus  charge  only  the  stock  which  might  be  devoted  to  the 
business.  The  Common  law  did  not  admit  anv  limitation  of  liabilitv,  and 
charged  the  individual  without  reference  to  his  assumed  restri(5lion  to  a 
special  fundlion.  The  suggestion  of  giving  the  partner  a  separate  ca- 
pacity arose  through  Feudal  tradition,  which  accustomed  lawyers  to 
measure  a  man  by  his  estate,  and  made  it  the  legal  fadlor  in  the  transac- 
tion. Partner's  capacity  to  buy,  sell  or  pledge,  v.  Powers.  Partners  can- 
not deprive  co-partner  of  authority,  even  by  notice  to  third  persons  who 
are  about  to  deal  with  him.  ?  133,  n.  i.  Insolvency  does  not  incapacitate 
him  to  adl  as  a  partner,  'i  133,  n.  2,  3.  The  partner's  authority  is  incident 
to,  and  co-extensive  with,  the  business.  |  133,  n.  4,  5,  6.  Partner  may 
re-deliver  goods  on  return  of  firm  notes.  The  merchandise  satisfies  the 
debt,  though  the  insolvency  of  the  firm  prevents  it  from  satisfying  its 
other  creditors.  Partners  can  restridl  their  liabilities  by  contradl  between 
themselves.  They  cannot  bind  each  other  by  contradl,  but  not  third  per- 
sons.  >/.  134. 

CAR-TRUST,  a  partnership.   ?  16,  n.  6. 

CASE,  of  Pollion  v.  Secor,  'i  69,  n.  i,  explained,  \  60,  n.  6.  v.  Holding 
Out.  Cox  V.  Hickman,  assignment  for  creditors.  ?  59.  Hart  v.  Kelly, 
not  a  decision.   \  64,  n.  3. 

CASSAREGIS.     Sharing  profit  and  loss  without  partnership.    \  51,  n.  a. 

CELSUS.     Quadriga,   'i  67,  n.  7. 

CERTIFICATE 
Of  publication,  when  required  by  statute,  must  be  filed  before  suit,  but 
firm  may  assign  claim  or  sue  for  tort  without  certificate.    ^  76,  n.  i.     v. 
Procedure. 

CHANGE  OF  PARTNERS. 
The  incoming  partner  is  uot  liable  for  aAs  done  before  he  entered  the 
firm.  He  cannot  ratify  them,  for  they  are  not  done  in  his  name  or  by  his 
authority.  Carrying  out  previous  contracts  of  the  firm  does  not  charge 
him  on  them,  \  144,  n.  2,  but  if  the  contrail  can  be  severed  in  interest 
and  apportioned  according  to  the  consideration,  that  is,  a  new  contrail 
implied  for  the  part  performed  since  he  joined,  he  will  become  liable. 
\  144,  n.  1,3,  4,  5.  His  contradl  with  the  partners  does  not  enure  to 
creditors.  \  144,  n.  6.  They  are  the  parties  who  must  contract  with  him. 
\  144,  n.  7.  The  theory  of  novation  is  being  replaced  by  that  of  trust  and 
consideration.  By  the  consideration  the  incoming  partner  becomes  an 
original  debtor,  and  his  contract  is  not  within  the  Statute  of  Frauds, 
although  his  assignor  remains  liable  for  the  debt.  The  fund  received 
charges  him  with  a  trust  for  the  creditors  who  can  sue  him  in  a  diredl 
adlion.  'i  145,  I  150.  The  trust  is  barred  by  the  Statute  of  Limitations. 
§  145.    Charging  as  trustee  the  incoming  partner  who  takes  the  assets  and 

627 


Index. 

«>jrees  to  pay  the  firm  debts,  results  in  imposing  an  ultimate  liability  upon 
his  separate  estate.  This  by  novation  could  have  been  accomplished  only 
by  substituting  the  personal  obligation  of  the  incoming  for  the  outgoing 
partner.  <!  150,  n.  J.  If  the  debts  are  scheduled,  the  effect  of  the  assignee's 
contracfl  to  pay  them  is  to  make  the  specified  debts  liens  upon  the  fund, 
and  equity  will  enforce  payment  out  of  the  assets  in  the  assignee's  hands. 
!}.  150.  Novation  remains,  however,  as  the  means  to  relieve  a  retiring 
partner,  i  146,  u.  i.  Running  contradls  continue  to  bind  the  retiring 
partner.  The  contract  charged  the  partner,  and  the  fulfilment  of  it  is 
not  a  new  obligation  created  after  his  retirement,  'i  146.  An  exchange 
of  partners  is  sufficient  consideration  for  a  release.  ^  146,  n.  2.  Taking 
security  is  ambiguous,  either  collateral  or  in  satisfadlion,  and  substitu- 
tion must  be  proved.  A  note  in  the  unchanged  name  of  the  firm  does 
not  release  the  retiring  partner,  unless  the  creditor  knows  of  the  change 
and  means  to  substitute  the  new  for  the  old  obligation.  ^  146,  n.  3.  The 
retiring  partner's  liability  for  the  outstanding  debts  is  the  foundation  of 
his  equit}'  to  prevent  a  diversion  of  the  assets.  |  147  &  n.  1.  The  equita- 
ble lien  is  a  term  of  the  sale.  He  enforces  the  destination  by  joining  a 
creditor's  bill,  i!  147,  n.  2.  z^.  Marshalling.  The  creditors  of  the  new  and 
of  the  old  firm  come  in  upon  the  assets  on  equal  terms.  §  147,  n.  3.  A  new 
partner  is  necessary  to  make  a  novation  binding.  The  creditors  had  the 
several  contracts  of  the  old  partners  in  the  business  contract  of  the  firm. 
By  the  technical  formula  the  joint  was  different  from  the  several  contradl, 
and,  as  a  substitute,  furnished  a  consideration.  ^  149.  Notice  to  creditors 
by  retiring  makes  him  surety  of  continuing  partner  in  New  York.  The 
receipt  of  rent  would  be  a  substitution  of  the  new  firm,  if  the  landlord 
knew  of  the  change  and  accepted  rent  of  the  new  firm,  especially  if  the 
term  had  expired.    <!  149,  n.  3. 

CHOICE  OF  A  PARTNER. 

The  choice  of  a  partner  is  the  right  to  seledl  him.  Consent  is  the  tie, 
and  without  it  there  is  no  partnership.  This  choice  relates,  and  should 
be  confined,  to  the  relation  between  the  partners.  It  has  been  errone- 
ously extended  so  as  to  affecl  third  persons.  They  don't  care  what  the 
partners  agree  to.  Investing  an  assignee  with  a  right  to  control  the  firm 
property  would  make  him  a  partner  towards  third  persons.  If  he  be- 
comes a  co-proprietor,  he  is  like  a  dormant  partner.  If  the  sub-partner 
is  intended  to  be  a  partner,  he  becomes  one  in  spite  of  the  form,  'i  68. 
No  choice  of  partners  in  a  mining  partnership.  ^15.  t^'.  Mining  Partner- 
ship. 

CIVIL  LAW  PROCESS.    ^^77,  n.  i.       t/.  Procedure,      CONTRACT,     v. 
Contra6l.     of  SET-OFF.  ^  130,  n.  8,  9,  12.  v.  Set-OfF. 

CLAIM.     V.  CONTRACT. 


628 


Index. 

CLERK. 

Clerk's  knowledge  of  employer's  a<fls  and  declarations  imputed  to 
principal.  |  69,  n.  16.  v.  Holding  out.  Not  between  partners.  ^  167,  n. 
4.  Firm's  guarantee  of  faithful  performance  by  clerk,  'i  71,  n.  i.  v.  Ex- 
ecutor. He  cannot  create  liabilities  against  the  firm,  but  he  may  carry  out 
contradls  made  by  the  firm.  I  130,  n.  10.  May  be  employed  by  liquidating 
partner.  1 178.     v.  Liquidation. 

CLUB.  §  16,  n.  I.     V.  GAIN. 

CODE,  Napoleon.     Adopted  Felicius'  definition  of  partnership.    ?  r6,  n. 
d.     ratio  of  profits  to  contribution.   >/,  36,  n.  2. 

COKE,   Lord.     Land  not  subjedl  of  partnership,    g  8.      Profits  equal  to 
property.  ?  57,  n.  4. 

CO.  LITT.     Statement  that  Law  Merchant  no  part  of  Common  law.   <!  11, 
'',  n.  w. 

COLLYER,  John.     Release  by  partner.    J  117,  n.  n,  a.     Accounts  of  iso- 
lated transadlions  during  partnership.   (!  159,  n.  i. 

COMITY. 

Special  partnership  recognized  by.  The  recognition  includes  the  im- 
munity of  special  partners.  The  failure  to  meet  the  statutory  require- 
ments of  record  and  cash  payment  would  not  forfeit  the  privilege,  if  not 
constituents  of  the  partnership  at  the  domicil.  The  law  of  the  domicil 
also  regulates  the  process  against  a  special  partnership,  although  the  law 
of  the  forum  is  different.   ^  37,  a. 

COMMENCEMENT  OF  PARTNERSHIP. 

The  intention  of  the  parties  determines  the  commencement  of  the  busi- 
ness. Partnership  would  not  be  frustrated  if  war  intervened  before  adlual 
commencement  of  the  business  by  citizens  of  belligerent  countries.  It  is 
not  war  which  suspends  the  relation,  but  it  is  the  interdicflion  of  com- 
merce, and,  in  the  meantime,  adls  of  business  might  establish  a  partner- 
ship. By  performing  the  acfts  the  parties  show  that  they  have  waived 
preliminary  conditions.  But  a  partner  could  not  begin  and  establish 
partnership  by  an  adl  in  excess  of  his  authority.  Thus  the  authority  to 
endorse  commercial  paper  did  not  justify  the  endorsement  of  forged  pa- 
per, and  bind  co-partner,  as  a  legitimate  adl  of  business.  Though  the 
contra6l  of  partnership  was  not  acfhed  on,  one  party  could  pledge  his  co- 
partner's credit.  The  contrail  formed  a  partnership  until  rescinded,  al- 
though not  carried  into  efifetfl,  but  abandoned.   ^17. 

COMMERCE.     Interdidlion  of   ^  17,  n.  3.      v.  Commencement  of  Part- 
nership. 

629 


Index. 

COMMKRCIAL  CONTRACT.      Nature  and  remedies  for  breach  of.     :'. 
Contxacl.      :'.  Procedure. 

COMMERCIAL  PAPER. 

Joint  payees  of  commereial  paper  at  first  held  to  be  partners.  The 
joinder  on  commercial  paper  by  the  owners  was  a  joint  act  in  trade.  .\s 
loni;  as  the  paper  was  used  only  as  an  instrument  of  trade,  the  joinder  as 
payees  was  proof  of  partnership  in  the  document,  'i  6.  The  cases  have 
Ijcen  explained  thus :  The  acceptor  was  said  to  be  estopped,  because  he 
had  accepted  the  paper  after  it  had  been  endorsed  by  only  one  payee. 
But  the  ruling  was  changed  by  the  faci  that  commercial  paper  outgrew 
the  limits  of  trade,  and  became  a  convenient  instrument,  which  was  used 
by  persons  not  engaged  in  trade.  Being  no  longer  confined  to  trade,  a 
joinder  on  commercial  paper  is  not  proof  of  a  joint  acT;  in  trade.  Hence, 
a  payee  could  not  endorse  for  his  co-payee,   i.  6. 

Nothing  but  partnership  creates  implied  power  to  bind  by  promissory 
note.  ii49,  n.  i.  The  authority  of  a  partner  is  defined  not  by  partnership 
principles,  but  by  Commercial  law.  There  is  no  authority  implied  be- 
tween the  firm  and  its  members,  but  only  between  the  firm  and  third  per- 
sons. .\ny  paper  by  the  partner  to  his  firm,  or  by  the  firm  to  a  partner, 
should,  on  partnership  principles,  be  notice  of  an  accommodation,  and 
give  the  holder  notice.  But  the  forms  are  disregarded  in  business,  and 
the  law  has  followed  usage,  and  charges  the  firm  without  reference  to  the 
form  of  the  paper.  ^  124,  n.  6;  |  126,  n.  4.  As  no  restridlion  can  be  ini- 
jMDsed  on  the  partner,  and  he  can  charge  the  firm  by  firm  paper  for  his 
individual  use,  there  is  no  limit  to  his  power.  ^  126.  No  argument  from 
jKiwer  given  by  commercial  paper.  ^  135.  If  a  partner  used  the  firm  name 
for  his  separate  debt,  and  the  co-partner  had  to  pay  a  moiety  of  the  debt 
to  release  his  separate  estate  from  execution,  he  could  recover  payment 
from  the  partner.  The  payment  would  be  under  a  duress  suflficient  to 
entitle  him  to  reimbursement,  i  126,  n.  i.  The  acceptance  by  a  partner 
of  a  draft  upon  his  firm  charges  him  as  well  as  the  firm,  so  that  he  has  no 
additional  credit  to  pledge.  ?.  126,  n.  2.  Note  charges  partner  held  out. 
?  69,  n.  18.     V.  Holding  Out. 

Partner  may  get  firm  paper  discounted  to  repay  himself  his  advances. 
?  184,  n.  3.  2:  Advances.  Partner  may  accept  a  draft  on  the  firm  in  his 
individual  name,  ?.  124,  n.  i,  and  a  partner's  note  can  be  shown  at  the 
trial  to  be  for  a  loan  to  the  firm.  §  124,  n.  6.  A  partner  can  not  be  re- 
stricted in  using  commercial  paper,  because  it  is  incident  to  business. 
?  124,  n.  2.  A  partner's  promise  to  give  commercial  paper  would  bind 
the  firm.  </  124,  n.  3.  Partners  in  different  firms  can  exchange  commer- 
cial paper  for  mutual  accommodation.  ^  124,  n.  4.  If  one  partner  makes 
and  another  endorses  a  note,  the  application  of  the  proceeds  would  not 
charge  the  firm  on  the  note,  ?.  128,  n.  3,  but  if  the  credit  was  given  to  the 
firm  the  loan  could  be  recovered  from  it.  'i  124,  n.  5.  A  partner  cannot 
make  accommodation  paper  in  firm  name.     No  one  taking  such  paper, 

630 


Index. 

with  knowledge,  cau  recover.  ).  125,  11.  1.  The  endorser  of  such  paper 
cannot  retain  pledge  received  for  his  endorsement.  \  125,  n.  2.  Tarty  to 
fraud  in  negotiating  firm  notes  will  not  be  compelled  to  recall  them.  The 
remedy  is  against  the  firm,  which  can  recover  at  Common  law.    ?,  125,  u.  6. 

Anything  which  discloses  to  lender  an  individual  transa(5lion  should 
put  him  on  inquiry.  \  1 25,  n.  5.  The  change  of  individual  to  firm  paper 
at  suggestion  of  endorser  would  be  notice,  ^125,  n.  3,  or  third  person's 
note  with  firm  endorsement  in  answer  to  demand  for  security  lor  a  per- 
sonal loan,  i  125,  n.  4.  If  the  partner  makes  a  note  payable  to  a  stranger 
who  endorses  it,  and  then  the  partner's  firm  endorses  it,  the  taker  sees  an 
accommodation  endorsement  by  the  firm  of  a  partner's  individual  debt. 
\  127,  n.  4.  Notes  of  partner  endorsed  bj'  firm  and  negotiated  by  him,  are 
no  notice  of  individual  transacflion.  \  127,  n.  i  &  2.  A  firm  note  made  by 
a  partner  in  two  firms  to  and  endorsed  by  himself  and  the  second  firm,  is 
not  notice  that  the  paper  was  not  for  the  second  firm's  benefit.  \  126,  n.  3. 
\  127,  n.  5.  Partner's  exchange  of  firm  notes  for  a  stranger's  notes,  which 
partner  endorsed  to  take  up  original  firm  notes,  is  binding.  ^,126,0.5. 
Firm  note  endorsed  by  a  stranger  presumed  a  firm  asset  if  partner  holds 
it,  unless  endorser  had  negotiated  it  in  the  market.  <;  126,  n.  6.  Usage  for 
single  partner  to  keep  bank  account  and  give  checks  makes  blank  check 
to  co-partner  available  for  him  to  negotiate  in  firm  business.  \  127,  n.  i. 
If  the  firm  draws  on  a  stranger,  who  accepts  the  draft,  which  is  payable 
to  the  partner  and  endorsed  by  him,  the  taker  holds  the  firm.    \  127,  n.  6. 

Dissolution  ends  the  power  to  use  commercial  paper,  even  for  liquida- 
tion. \,  178,  n.  3,  4,  5.  Except  in  Pennsylvania,  liquidating  partner  no 
power  to  issue  commercial  paper,  'i  184,  v.  Liquidation.  Partners 
charged  on  commercial  paper  though  not  parties  to  it.  ^,44,  n.  S.  v. 
Name.  English  statute  makes  parties  signing  bills  and  notes  alone  lia- 
ble. This  ena6lment  alters  the  law,  by  excluding  the  parties  in  interest, 
who  could  always  be  sued.  \  76.  Analogy  for  commercial  paper  deceptive, 
because  power  exceptional.  \  135.  Firm  creditors  cannot  set-off  payment 
of  partner's  individual  debt  against  bona  fide  holder  of  firm  paper.  ■(;  167, 
n.  5  (t.  If  firm  note  included  a  separate  debt,  payee  can  recover  but  only 
the  amount  due  by  the  firm.  ?  167,  n.  5.  c.  If  partner  gives  firm  paper  for 
his  individual  debt,  co-partner  need  not  repudiate  transadlion.  '^.  168,  n. 
I  &  2;  §  169,  n.  I.  V.  Tort.  No  implied  power  to  bind  firm  by  commercial 
paper  in  non-commercial  partnerships,  v.  Trust  Funds.  Mining  partner 
cannot  bind  firm  by  commercial  paper.  \  15,  n.  4.  v.  Mining  partnership. 
Partners  liability  on  though  not  parties.  ^44.  z/.  Name.  If  in  partner's 
individual  name,  question  for  jury  whether  firm  or  individual  transadlion. 
\  1S6,  n.  6.  V.  Liquidation.  Partnership  must  be  established  to  justify 
commercial  paper.   ?  49,  n.  i.     v.  Powers. 

COMMERCIAL  PARTNERSHIP,     v.  TRADE. 

COMMISSION  on  sales  not  evidence  of  partnership.   ?  63.     v.  Evidence 
Commission  on  profits.   \  60. 

631 


Index. 

C(>MM(»N  A('.KNT  of  Different  Principals.  5;  69,  n.  11.  v.  HOLDING 
OIT. 

COMMON   I.AW  TROCESS.     r.  PROCEDURE,     z/.  CONTRACT. 

COMMON   MEMBER 

Furnishes  no  basis  for  marshalling  assets,  l  205.  v.  Marshalling.  By 
subrogation  surviving  escapes  payment  and  enforces  payment  from  de- 
ceased partner's  estate.  ^203.  y.  Marshalling.  Litigation,  when  allowed 
between  firms  with  a  common  member,  results  in  limiting  execution  to 
joint  assets.  \  161,  n.  7.  Obstacle  inherent,  and  not  only  in  procedure. 
Ktjuity  compelled  to  put  common  member  in  plaintiff  or  defendant  firm. 
'</.  163.  Only  basis  a  settlement  of  both  firms.  \.  164.  Seems  to  be  acquir- 
ing capacities  by  different  trades.  \  164,  n.  I.  Like  a  Roman  slave,  who 
had  no  caput,  not  like  Roman  freeman.   \  164,  n.  5,  6,  7. 

COMPANY,  Distinction  between,  and  Corporation,  v.  SPECIAL  PART- 
NERSHIP. 

COMPENSATION.  Liquidating  partner  has  no  right  to,  \  186,  \  188. 
Compensation  for  management  by  firm  which  used  trust  funds  con- 
tributed by  trustee  partner,     v.  Trust  Funds. 

COMPETITION.  Partner  cannot  compete  with  firm.  §151,  ?  212.  v. 
Good  Faith. 

COMPOSITION.     V.  RELEASE. 

CONDUCT,  General,  evidence  of  partnership,   i!  69,  n.  4.     v.  Holding  Out. 

CONFESSED  JUDGMENT,  v.  JUDGMENT. 

CONNECTICUT  has  changed  Common  law  process  by  statute,  and  made 
firm  a  party.   iJ  76,  u.  i.     v.  Procedure. 

CONNECTING  LINES.  i>62,  n.  i.  e.     z;.  EVIDENCE. 

CONSENT. 

A  partner  may  be  bound  without  his  consent,  although  partnership 
arises  from  consent.  The  consent  refers  to  his  co-partners,  and  the  con- 
tracft  by  which  he  forms  the  relation  with  them.  He  is  not  bound  to 
strangers  by  consent  or  on  the  partnership  contrail.  That  is  foreign  to 
them  ;  they  sue  him  for  his  adt.  The  doing  a  joint  acfl  charges  the  adlors 
as  co-principals.  If  parties  intend  to  aA  like  partners  to  secure  an  end 
without  being  partners,  they  are  liable  as  partners.  The  effeA  of  their 
joining  charges  them  in  spite  of  the  intention  or  agreement  not  to  be 
partners.  §45.  Effedl  of  domicil  on  co-partner's  authority.  I  184,  n.  3.  f. 
Liquidation. 

632 


Index, 
consideration 

Implied  for  services  at  request  between  members  of  a  family.  ^  2,  n.  2. 
V.  Family  Relation.  Additional  partner  consideration  for  release  of  re- 
tiring partner,  g  146,  n.  2.  The  promise  bj-  continuing  partner  to  pay 
the  firm  debts  is  not  consideration  for  the  release  of  the  retiring  partner. 
'''/.  95.  V.  Contract.  Validit}-  of  release  depends  not  upon  the  seal,  but 
upon  the  receipt  of  the  consideration.  ?  117,  n.  2.  Title  to  land  results  to 
firm  from  payment  of  price.  ^112,  n.  7.  z'.  Land.  Denial  of  partner's  au- 
thority puts  holder  to  proof  of  consideration,  ii  184,  n.  3.  Consideration 
for  contract  of  partnership.  |  23.  v.  Partnership;  supports  indemnity  to 
co-partner,   'i  49,  n.  3,  a  &  b. 

CONSPIRACY.    Agreement  not  to  bid  above  limit  for  recrints.   ^  21 1.  n.  2. 

CONTINUING  PARTNER. 

V.  Change  of  Partners.  May  sever  contract.  >/.  144,  n.  3.  v.  Change  of 
Partners.  His  liquidation  may  be  the  security  for  price  of  retiring  part- 
ner's share.  ^  186.  v.  Liquidation.  If  insolvent,  retiring  partner  or  firm 
creditor  may  enforce  agreement  to  pay  debts.  <;  147,  n.  2.  v.  Marshalling. 
Continuing  may  set-ofif  debt  of  retiring  partner.   {(84,  n.  3.     :■.  Set-Off. 

CONTRACT. 

Construdtion  of  contradl  of  partnership  for  court.  ^  21.  v.  Partnership. 
Contra<ft  binding  until  rescinded,  although  not  adted  upon.  ^17,  n.  i.  r-. 
Commencement. 

Right  to  make  contra<5l  result  of  power  to  sell,  which  is  a  constituent  of 
trade.  ^  3.  v.  Powers.  How  does  the  law  charge  parties  on  a  contract  when 
they  have  made  none?  The  law  implies  a  contradl  in  order  to  enforce  the 
duty.  The  partners  have  joined  in  a  transadlion,  and  the  law  assumes  they 
contra(5led  to  perform  the  adl  together,  and  then  charges  them  for  the 
breach  of  the  implied  contradl,  which  has  nothing  to  do  with  the  partner- 
ship contradl.  ?  46.  This  contradl  is  imputed  not  only  in  joint  adls,  but  is 
implied  in  all  joint  receipts,  occupation,  use  or  possession  of  property. 
1 47.  The  efFedl  of  implying  a  contradl  as  the  remedy  for  a  tort,  'i  48,  n. 
2.     V.  Tort. 

The  contradl  which  partners  make  in  transadling  business  is  joint  ni 
form  but  severable  in  fadl.  ^  78.  This  appears  in  the  execution.  Also  in 
equity  and  bankruptcy  the  personal  liability  is  enforced,  but  the  Common 
law  process  prevents  the  enforcement  in  the  first  instance.  The  Common 
law  did  not  furnish  a  remedy  for  the  commercial  contradl,  or  adapt  one 
to  the  business  engagement,  but  proceeded  as  if  it  was  the  old  joint  con- 
tradl. ^  79.  Joint  contradl  admitted  of  but  one  judgment,  and  unless 
plaintiff  could  effect  service  upon  all,  he  lost  his  recourse  against  the 
non-served  partners.  ^  81.  v.  Procedure.  The  commercial  contradl  en- 
forces payment  from  all  the  contradlors.  The  ordinary  contradl,  at  the 
Civil  law,  apportions  the  liability  among  them,  and  that  was  the  rule  at  the 

633 


Index. 

Roman  law,  but  the  commercial  coutradl,  in  all  countries,  is  in  solido. 
The  joint  contra^  gradually  got  severed.  The  wedge  was  inserted  by 
Lord  Mansfikld.  He  m;ide  the  defendant  waive  a  joinder  unless  he 
pleaded  in  abatement.  This  ruling  admitted  several  contrails,  and  if  it 
had  been  carried  out  would  have  given  several  remedies.  ^80.  This 
change  has  been  effedled  by  statute  in  Colorada,  Alabama,  Kansas  and 
Iowa.  The  defendant's  right  would  have  been  protedled  by  a  plea  of 
non-joinder.  That  would  make  a  co-partner  also  subjedl  to  execution, 
and  enforce  contribution  in  advance.  |8i.  The  effedl  of  joint  contract 
upon  procedure,  v.  Procedure.  The  distindlion  between  a  joint  and  a 
joint  and  several  contra(5l,  it  was  decided,  has  been  obliterated;  but  co- 
obligees  must  join,  and  suit  against  two  would  not  justify  judgment 
against  one  on  his  individual  contrail.  The  joint  and  several  contradt  is 
no  better  than  the  joint  contradl.  The  abstra6lion  of  a  joint  obligation, 
which  is  not  made  up  of  the  individual  obligations  of  the  partners,  is  the 
ficlion  which  produces  the  mischief.  The  judgment  would  be  a  merger 
of  the  contracfl,  although  the  plaintiff  eledled  to  sue  one.  This  fiAion 
exists  at  the  Civil  law,  and  is  fully  discussed  by  German  authors.  The 
change  was  effected  by  converting  this  joint  contradl  into  the  several  con- 
tracts of  the  partners.  Lord  Mansfiei^d's  allowance  of  the  plea  in  abate- 
ment acknowledged  a  several  liability  of  each  partner  to  suit.  \  92  The 
severance  was  carried  forward  by  C.  J.  Marshall,  who  said  that  if  the 
judgment  merged  the  claim,  the  judgment  must  bind  the  co-partner.  \  93. 
The  modern  procedure  shows  that  the  severance  is  complete,  because  a  new 
and  independent  suit  is  brought  against  the  other  partners  after  judgment. 
The  former  method  showed  a  joint  cause  co-extensive  with  the  defend- 
ants; the  declaration  against  any  but  the  defendants  served  was  bad.  Now 
there  is  no  bringing  in  of  other  defendants,  but  a  new  suit  lies  against 
them.  That  the  joint  contracfl  is  severed,  appears  from  this:  The  relin- 
quishment of  the  joint  contradl  formerly  served  as  consideration  for  a  sev- 
eral contract,  but  now  it  does  not.  The  plaintiff  already  has  the  separate 
coutra(5t  in  the  joint  contract,  which  is  an  aggregate  of  all  the  contradls 
of  the  partners.  \  95.  The  business  contradl  is  simply  an  aggregate  of  the 
partners'  contradls ;  the  jointness  is  only  a  form  like  the  firm,  the  real  con- 
tradls  are  by  the  partners.  ^96.  This  appears  in  set-off.  A  partner  suing 
to  enforce  a  separate  claim  is  subjedl  to  a  set-off  of  the  firm  debt,  which  is 
thus  several,  and  corresponds  to  the  claim.    ^96,  n.  i. 

If  the  parties  apportion  the  claim,  they  can  enforce  it  at  law.  The  law 
divides  their  liability,  and  will  recognize  their  doing  what  it  imposes  as  a 
duty.  \  96,  n.  2.  A  mining  coutracl  charges  the  retiring  partner.  §  146, 
n.  1.  V.  Change  of  Partners,  or  deceased  Partner.  \  175,  u.  i.  A  contradl 
severed  and  apportioned  according  to  the  consideration.  §  144,  n.  3,  4,  5. 
V.  Change  of  Partners.  Common  law  charged  common  member  upon 
contradls  of  both  firms.  \  205.  v.  Marshalling.  Tort  erroneously  assimi- 
lated to  a  contradl.   ''/,  139,  n.  6.     v.  Tort. 


634 


Index. 

contribution. 

The  eflFedl  of  a  contribution  is  to  show  that  the  contributor  is  a  proprie- 
tor of  the  firm  stock,  and  a  proprietor  is  a  partner.  ^  4.  The  contribution 
need  not  consist  of  material  property  ;  it  might  consist  of  skill  and  ser- 
vices, if  the  co-partner  accepted  them  as  an  equivalent.  Nothing  pre- 
vents the  partners  from  waiving  a  contribution ;  but  their  waiver  does 
not  affecfl  third  persons  who  treat  every  partner  as  contributing,  and  on 
that  account  owning  the  firm  stock.  ^  4.  Loan  for  contribution.  ^  19.  v. 
Loan.  Partners  might  buy  directly  as  a  firm  for  their  contributions.  If  the 
purchase  was  made  on  firm  credit,  without  any  intermediate  and  separate 
ownership,  the  firm  would  be  liable  for  the  price.  If  each  purchase  of- 
fered as  a  contribution  is  subje6l  to  acceptance  by  the  co-partners,  the 
seller  could  not  hold  the  firm.  The  purchase,  unless  accepted  for  a  con- 
tribution, would  not  become  a  contribution.   ^  19. 

A  partner  contributes  the  use  of  his  property  during  the  partnership, 
but  not  the  property,  unless  it  is  necessary  for  the  business.  This  is 
shown  in  real  estate,  where  it  does  not  form  the  substance  of  the  firm 
business.  The  title  remains  in  the  partner.  This  is  generally  the  case 
with  fixed  capital.  The  reason  why  merchandise  vests  in  the  firm  is  be- 
cause the  use  alone  would  be  inconsistent  with  trade.  Buying  and  sell- 
ing involves  ownership,  as  a  loan  involves  title  in  the  borrower.  The 
transfer  is  inevitable  for  the  partnership  business  and  for  third  persons. 
Although  not  made  for  the  partners  inter  se,  yet  the  efifedl  is  a  legal  trans- 
fer of  title.  Hence,  forming  a  partnership  avoids  a  policy  which  prohibits 
a  change  of  title.  A  partner  cannot  retain  the  title  to  his  contribution. 
It  was  once  so  held,  but  the  ruling  is  inconsistent  with  partnership.  If 
the  original  stock  did  belong  to  the  contributing  partner,  the  stock  which 
replaced  it  would  belong  to  the  firm  on  whose  credit  it  was  bought,  and 
the  seller  would  have  no  vendee's  lien  on  the  new  stock.  The  firm  to 
which  the  contribution  belongs  during  the  partnership  bears  the  decrease 
and  gets  the  increase  in  value  of  the  contribution  during  that  period. 
This  is  also  the  German  and  Austrian  rule.  The  rule  is  extended  to 
fixed  capital  which  does  not  become  firm  property,  if  the  addition  cannot 
be  separated  from  the  original  contribution.  The  improvement  would  be 
attributed  to  the  firm  which  enhanced  the  propert)'  by  its  business  or  its 
funds.  The  partners'  agreement,  however,  would  change  the  rule  and 
enable  the  contributing  partner  to  withdraw  his  contribution  and  secure 
the  enhancement  for  himself,  unless  the  firm  had  made  improvements 
with  its  funds,  and  he  had  not  objedled.  Then  the  court  would  treat  his 
acquiescence  as  a  waiver  of  his  individual  claim.  ^  28.  Although  the  use 
is  contributed,  and  the  property  passes  to  the  firm  by  the  necessity  of  the 
business,  yet  the  title  will  be  held  by  the  contributing  partner  between 
himself  and  his  co-partner.  The  contribution  becomes  firm  property  only 
for  the  exigencies  of  the  business.  ?  29.  The  inclination  of  the  court  is 
in  favor  of  making  the  contribution  firm  property.     As  the  leaning  is  to- 

635 


Index. 

wards  vesting  the  contribution  in  the  firm,  slight  evidence  will  be  suffi- 
cient to  carry  it  to  the  firm.  An  ultimate  share  in  the  proceeds  of  a  mine. 
if  sold,  carried  the  mine  into  the  firm,    'i  30. 

The  English  theory  of  contribution  is  that  it  becomes  firm  property  out 
aud  out.  If  the  contribution  was  lost,  the  property,  being  shared  like 
the  profits,  would  be  lost  by  all  the  partners.  Upon  this  theory  one 
partner  .should  not  make  up  any  part  of  his  co-partner's  loss  of  contribu- 
tion. The  loss  would  be  borne  by  all  as  proprietors.  The  English,  how- 
ever, do  not  consistently  adhere  to  the  view  which  they  have  taken.  The 
partners  share  the  assets,  not  in  proportion  to  their  shares  of  the  profits, 
but  according  to  their  contributions.  By  the  Massachusetts  theory,  the 
contribution  is  a  debt,  and  each  partner  must  repay  it,  like  any  firm  debt, 
in  proportion  to  his  share  of  the  profits.  If  a  partner  is  insolvent,  or  out 
of  the  jurisdiction,  the  solvent  partners,  or  the  partners  amenable  to  pro- 
cess make  up  the  insolvent  or  absent  partner's  quota  of  liability.  But 
the  debt  theory  is  not  carried  out.  There  can  be  no  debt  during  the 
partnership,  for  the  lender  cannot  sue  himself  for  its  recovery.  The 
Massachusetts  courts  make  the  contribution  revert  to  the  partner  at  the 
dissolution,  though  a  lender  has  no  right  to  take  possession  of  the  prop- 
erty which  belongs  to  his  debtor  without  legal  process.  The  loan  does  not 
carry  interest,  'i  31.  The  Massachusetts  theory  is  adopted  in  some  other 
States.  In  Georgia,  the  agreement  of  a  partner  upon  dissolution  to  take 
the  assets  and  pay  the  debts,  charged  him  with  liability  for  his  contribu- 
tion, which  was  ranked  as  a  firm  debt.  In  Illinois  and  Indiana,  the 
partners  were  charged  to  make  up  a  partial  loss  of  contribution,  accord- 
ing to  their  shares  of  the  profits.  The  method  of  sharing  the  loss  of  con- 
tribution, suggested  by  Judge  HOFFMAN,  was  this:  Each  partner  lo£es 
his  contribution  which  he  risks  in  the  business.  If  a  partial  loss,  the 
distribution  of  loss  is  in  proportion  to  the  contribution.  After  the  con- 
tributions are  exhausted  by  debts,  the  loss  is  divided  among  the  partners 
in  proportion  to  their  shares  in  the  profits.  New  York  did  not  adopt  the 
division  of  loss  according  to  contributions,  but  enforced  the  liability  of 
each  partner  to  pay  the  loss  of  contribution.  An  agreement  might  restore 
the  correct  method  of  sharing  the  loss,  but,  unless  unequivocal,  the  courts 
will  not  let  it  supercede  the  established  rule.  An  agreement  to  share  the 
depreciation  of  stock  like  the  profits,  did  not  prevent  the  inference  of 
sharing  a  loss  of  the  stock  in  that  proportion.  The  only  State  which  car- 
ries out  the  debt  theory  consistently  is  Germany.  The  German  code  makes 
the  contribution  carry  interest  from  the  start.  ■^32.  The  original  theory 
was  that  the  property  in  the  contribution  remains  the  separate  estate  of  the 
contributing  partner,  subjeA  only  to  the  temporary  transfer  to  the  firm 
during  its  continuance.  It  was  owing  to  a  curious  oversight  that  this 
theory  was  not  maintained.  Pothier,  for  some  idiosyncrasy,  did  not 
adopt  it,  and  the  French  codifiers  followed  him.  The  Germans  followed 
the  French  Code.  ^33.  Pennsylvania  is  the  only  State  which  divides  the 
loss  of  capital  in  proportion  to  the  contributions.     Judge  Sharswood  is 

636 


Index. 


entitled  to  the  distinction  of  re-discovering,  without  historical  aid,  the 
nature  of  the  contribution  in  a  partnership.  He  apprehended  at  once,  by 
legal  instinct,  the  character  of  the  contribution.  In  unearthing  this  funda- 
mental principle,  he  exhibited  a  profound  knowledge  of  the  partnership 
relation,  'i  34.  He  showed  equal  insight  in  detecfting  the  source  of  a  part- 
ner's equity.  ^  102,  n.  2.  A  partial  loss  of  contribution  is  distributed  in 
Pennsylvania  according  to  the  contributions.  They,  being  separate  prop- 
erty, are  lost  in  whole  or  in  part  by  the  owners.  The  English  do  not  show 
any  confidence  in  either  theory  which  they  have  adopted.  A  slight  change 
by  contract  will  induce  the  courts  to  recur  to  the  division  of  the  loss  by 
the  contributions.  An  agreement  to  divide  the  assets  according  to  the 
partners'  interest  in  them  was  sufficient  to  measure  the  loss  by  the  con- 
tributions. Massachusetts  disregards  its  debt  theory  with  equal  facility. 
The  guarantee  of  profits  for  the  first  year  relieved  the  partner  guaranteed 
from  all  liability  for  his  co-partner's  contribution  of  |75,ooo.  An  agree- 
ment for  an  interest  in  the  ship  and  cargo,  invested  the  supercargo  with 
title  to  the  property  contributed  by  his  co-partner.  ^  35.  The  ratio  of 
profits  may  not  be  fixed  by  agreement.  Then  the  share  of  profits  will 
not  serve  as  the  standard  to  measure  the  loss  of  contribution.  But  in  the 
absence  of  contract,  the  law  may  divide  the  shares  among  the  partners 
according  to  their  number.  This  is  the  hard  and  fast  rule  of  the  German 
Code,  and  under  it  the  sharing  of  the  loss  will  include  the  contributions. 
The  French  code  provides  for  the  sharing  of  the  profit  and  loss  in  default 
of  agreement,  according  to  the  contributions.  The  English  method  does 
not  regulate  the  subjedl  by  law,  but  leaves  the  fadl  for  ascertainment  by 
the  jury,  which  finds  what  share  each  partner  should  have  of  the  profits. 
This  introduces  the  experts  in  each  trade,  and  fixes  the  share  by  usage  and 
custom.  It  is  only  in  default  of  any  evidence  that  the  division  by  heads  is 
adopted.  1 36, 

There  is  nothing  peculiar  about  a  special  partner's  contribution,  except 
that  it  must  be  actually  made.  ^  37.  If  property  contributed  by  a  partner 
■was  not  owned  by  him,  the  owner  could  reclaim  it,  unless  he  authorized 
the  partner  to  make  use  of  the  property.  Then  his  use  of  it  in  the  firm 
would  make  it  his  debt,  and  not  the  debt  of  his  firm.  §  38.  v.  Trust  Funds. 
Contribution  in  services,  'i  54.  v.  Profits.  Profits  as  increment  of  con- 
tribution, i  54,  and  ground  to  charge  partaker  as  a  partner.  |  55.  v.  Profits. 
The  correlation  of  profits  and  contribution  is  not  inconsistent  with  the 
theory  that  the  partnership  has  only  the  use  of  the  contributions,  for  the 
use  carries  the  ownership  during  the  partnership.  ^  57.  Contribution  of 
deceased  partner's  estate.  1 74.  v.  Executor.  Contribution  by  infant 
partner  and  its  recovery.  |  137.  v.  Infant.  Assets  marshalled  according 
to  theory  of  contribution.  ?,  207.  The  loss  of  contribution  entitles  part- 
ner to  consider  business  a  failure  and  dissolve.  ?  173  &  n.  8.  Contribu- 
tion might  be  bought  on  firm  credit.  ^  115.  Services  capitalized  if  ac- 
cepted as  a  contribution.  §  54.     v.  Profits. 


637 


Index. 

CONVERvSION 

Uf  Assets.    V.  Torts.     Conversion  of  stock  by  sheriff,     v.  Execution.     Of 
Land.    v.  Land.     Out  and  Out.    v.  Marshalling. 

CONVEYANCE. 

Firm  not  a  party,  but  deed  to  partners  trading  as  and  mortgage  by  them 
thus  trading  sufficient,  g  1 1 1 ,  n.  2.  v.  Land.  Joinder  of  partner  in  deed  of 
conveyance,  i!  112,  n.  18.     Pennsylvania  method.  ^.  109,  n.  7.     v.  Land. 

COOK,  Francis  W.     Advocate.     Scotch  pracflice.   ?  96,  n.  3. 

CO-OWNERSHIP. 

Natural  inference  from  law  of  tenure.  ?  67.  Raises  no  inference  of 
partnership,    v.  Evidence.    i\  Division  a  sale.     v.  Sale." 

COJ'RINCIPALS. 

Parties  who  deal  as  co-principals,  though  not  in  trade,  may  render 
themselves  jointly  liable.  The  joint  purchase,  use,  or  possession  of  prop- 
erty charges  them  for  each  other's  acfts,  without  reference  to  partnership. 
§  44,     V.  Consent,     v.  ContraA. 

CORPORATION. 

Parties  trading  in  corporate  form  are  partners.  The  directors  and  offi- 
cers are  agents  of  the  stock-holders,  who  are  the  principals.  Anything 
done  within  the  scope  of  the  business  charges  them  as  partners.  Defa£lo 
corporation,  v.  That  heading.  Ultra  vires  contradls  of.  v.  Ultra  Vires. 
Acceptance  by,  of  beneficial  legislation,  v.  Legislation.  Judicial  dis- 
crimination in  favor  of  corporations  and  against  special  partnership. 
Distin(flion  between,  and  Company.       v.  Special  Partnership. 

COTTENHAM,  L.  C.     Firm  charged  by  tort  of  partner.   \  140,  n.  3. 

CREDITORS. 

V.  Marshalling,  v.  Execution.  Separate  creditor  acquires  no  title  by 
transfer  from  debtor  partner,  because  firm  receives  no  consideration. 
\  no.  Could  not  claim  proceeds  of  land  if  account  showed  no  balance 
in  his  debtor's  favor.  ?  1 10.  v.  Land.  Separate  creditors  protedled  by 
legal  title,  if  vested  in  their  debtor.  ?  113.  z^.  Land.  Creditor  has  a 
standing  to  control  liquidating  partner.  \  189.  v.  Liquidation.  Bill  lies 
to  enforce  continuing  partner's  agreement  with  retiring  partner  to  pay 
firm  debts.  I  147,  n.  2.  v.  Marshalling.  Creditors  of  new  and  old  firm 
co-ordinated.  <!  147,  n.  3.  z/.  Marshalling.  Partner  creditor  of  co-partner 
for  balance  of  account.  ?  201,  n.  4.  v.  Marshalling.  Creditors  subrogated 
to  retiring  partner's  right,  if  they  renounce  joint  estate.  \  200.  v.  Mar- 
shalling. Creditors  have  nothing  to  do  with  profits,  term  confined  to 
partners.   ?55. 

638 


Index. 

credit-theory.  >,  107.    r.  preference. 
cropper.  i  12,  n.  i.    v.  landlord  &  tenant, 

CROPS,  Title  to.  §  12.     v.  LANDLORD  &  TENANT. 

DAMAGES. 

Recoverable  for  breach  of  contract  by  dissolution  before  period  fixed, 
measured  by  the  profits  made  during  the  preceding  months  of  the  part- 
nership, and  not  mitigated  by  plaintiff 's  profits  made  in  a  new  business 
before  the  term  expired.  ^212,  n.  3.  Damages  converted  into  a  debt  by 
assimilation  of  debt  to  contract.   ^  140,  n.  3.      v.  Tort. 

DA  VIES,  S.  D.     Receipt  of  merchandise  ground  of  contradl  implied  by 
law.   1 44,  n.  2. 

DEATH 

Of  a  partner  dissolves  partnership  without  notice.  ^  175,  n.  i  ;  ^  173,  n.  i. 
Death  released  deceased  partner,  and  carried  over  claim  against  co-partner. 
V.  Procedure.  Equity  gave  relief  only  after  legal  remedies  were  exhausted. 
1 86.  Adlion  also  carried  over.  I  87.  Dire<5l  remedy  against  deceased 
partner's  estate  in  Pennsylvania,  ^  88,  and  in  England.  ^  88.  n.  8.  Death  of 
partner  introduces  equality  of  distribution,  and  prevents  any  subsequent 
setoff  which  would  result  in  apreference.  '•'/.lya.  n.  13,  14,  15&16.    z^.Set-Off. 

DEBIT.     Firm  debt  to  partner  cannot  be  colledled  in  competition  with 
creditors,  because  partner  also  a  debtor,    'i  202,  n.  2.      v.  Marshalling. 

DECEASED  PARTNER 

Liable  for  firm  debts.  ^74,  n.  i.  r/.  Executor.  His  debt  set-off  against  firm 
claim  in  suit  by  surviving  partner,  ^,96,  n.  i,  for  balance  of  firm  debt  to 
co-partner.  1 106,  n.  7,  b.  Deceased  partner's  estate  liable  for  compensa- 
tion to  surviving  partner  who  carries  on  business  for  it.  g  210,  n.  4,  a.  v. 
Advance.  When  estate  liable  only  in  equity,  withdrawal  prohibited. 
^  204.  V.  Marshalling.  Deceased  partner's  debt  set-off  in  suit  by  surviv- 
ing partner.   §  96,  n.  i.     v.  Contradl. 

DECLARATIONS  of  Partnership,     v.  HOLDING  OUT.     v.  EVIDENCE. 
Declaration  in  adlion  against  less  than  all.   §  94,  n.  i. 

DECREASE  of  contribution  during  partnership.   1 28.     v.  CONTRIBU- 
TION. 

DEED  to  or  by  firm.     v.  CONVEYANCE. 

DE  FACTO  CORPORATION. 

The  members  of  a  de  fa5lo  corporation  are  not  exempt  from  liability  as 
partners  on  any  legal  ground.     Claiming  exemption  does  not  confer  it. 

639 


Index. 

Ifsclf-iiicori)oratiou  is  effedled  uuder  general  statutes,  aud  the  statutory 
requiremeuts  arc  not  complied  with,  the  organization  is  defedlive,  and 
fails  to  create  a  corporation.  The  applicants  remain  partners.  The  argu- 
ment advanced  by  MORAWETi,  for  the  recognition  of  a  de  /aBo  corpora- 
tion was  this:  Ultra  vires  acls  should  charge  the  members  of  a  legal 
corporation  as  partners,  if  the  adts  of  a  de  fa£lo  corporation  charged  its 
members  with  partnership  liability.  The  answer  to  this  argument  is  two- 
fold :  I,  Ultra  vires  contradls  do  not  exist;  2,  As  an  ultra  vires  tort  is  not 
an  excess  of  power,  but  an  incident  of  the  business,  the  wrong  would  not 
be  authorized.  If  in  excess  of  the  power  delegated,  the  tort  would  bind 
the  tort-feasors,  (i  24.  Illegal  corporations  favored  by  courts,  and  special 
partnership  discountenanced,     v  Special  Partnership. 

DkGRAY,  Mr.  Justice.     Proprietor  a  partner.     Erred  in  calling  profits  a 
fund  for  creditors,    g  55  &  n.  i . 

DELECTUS  Personae.   <>  68.     v.  CHOICE  of  a  Partner. 

DESCENT,  Course  of,  changed  in  England,  not  in  America,  by  conver- 
sion of  land,   'j,  109. 

DESTINATION. 

The  doctrine  is  founded  on  the  joint  tenancy  of  the  partners  in  the  firm 
stock,  and  prevents  any  disposition,  unless  the  firm  is  solvent  or  an 
equivalent  was  received  for  the  assignment.  The  creditors  stand  in  the 
partner's  place,  and  enforce  his  right  for  the  satisfacflion  of  their  claims. 
The  assignee  for  creditors  represents  them.  A  partner  who  takes  the 
assets  and  agrees  to  indemnify  his  retiring  partner  against  them,  charges 
himself  separately,  in  addition  to  his  joint  obligation,  so  that  the  firm 
creditors  become  also  his  separate  creditors.  The  firm  stock,  if  assigned 
for  a  separate  debt,  remains  subjedl  to  the  execution  of  the  joint  creditors. 
?  107.  Enforced  by  retiring  partner,  v.  Change  of  Partners.  Not  founda- 
tion, though  ultimate  cause  of  firm  creditors'  right  against  joint  assets. 
§  99.     V.  Marshalling  Assets. 

DISAGREEMENT  of  partners  not  a  ground  for  dissolution,  unless  it 
amounts  to  exclusion.    ?  173  &  n.  9. 

DISPOSITION.     V.  SALE. 

DISSOLUTION. 

Dissolution  occurs,  as  a  matter  of  course,  upon,  i,  the  death  of  a  part- 
ner; 2,  the  marriage  of  a  single  woman,  and,  3,  the  sale,  voluntary  or 
enforced,  of  a  partner's  interest.  <i  173,  n.  i  &  2.  The  relation  is  sus- 
pended, I,  by  the  lunacy  of  a  partner  and,  2,  by  war.  In  other  cases  the 
court  will  dissolve  the  partnership  by  decree,  for  the  following  causes  :  I, 
A  failure  of  the  undertaking ;  2,  the  exclusion  ,  3,  the  insolvency  ;  4,  the 
lunacy,  of  a  partner ;  5,  the  abandonment  of  the  business.   ?  173  &  n.  8-12. 

640 


Index. 

Notice  of  dissolution  must  be  given,  except  when  caused  by  death,  but 
no  particular  form  of  notice  is  required.  ^  175,  n.  3  &  4.  The  notice  va- 
ries, according  to  the  parties  to  be  notified.  A  single  advertisement  at 
the  place  where  the  business  is  conducted  would  be  sufficient  for  new 
customers,  who  are  bound  by  the  simple  announcement.  ^  176,  n.  2.  The 
old  customers  are  entitled  to  notice,  and  it  nmst  be  brought  home  to  them. 
^  1 77,  n.  I  &  2.  The  holder  of  firm  paper  is  not  an  old  customer,  although 
in  the  habit  of  discounting  it.  1 177,  n.  3.  Customers  crediting  the  nomi- 
nal partner  must  be  notified  of  his  retirement.  The  other  firm  customers 
could  not  hold  him.   1 175,  n.  4  &  5. 

In  effect,  dissolution  revokes  the  partner's  agency.  As  he  can  bind  his 
co-partners  until  dissolution,  it  must  be  proved.  ^  178,  n.  i  &  2.  When 
established,  the  power  to  use  commercial  paper  ceases,  except  for  liqui- 
dation. §  178,  n.  3,  4  &  5.  He  cannot  acknowledge  or  revive  by  part- 
payment  a  debt  barred  by  Statute  of  Limitations.  ^  178,  n.  6  &  7.  The 
dissolution  severs  the  joint  title  into  several  titles,  but  the  division  must 
be  completed  in  fadt.  |  179.  n.  i.  Damages  may  be  recovered  for  a  dis- 
solution in  violation  of  the  contradl.  ?2i2,  n.  3.  v.  Account,  v.  Distri- 
bution. V.  Marshalling.  Partner's  absolute  disposition  of  his  share  a 
dissolution.  §  171,  n.  2. 

DISTRIBUTION. 

c'.  Marshalling.  Depends  upon  the  property  rights  of  the  partners, 
and  they  can  be  ascertained  only  by  the  theory  of  contribution  which 
obtains.  The  profits  are  an  increment.  The  partners'  quotas  and  the 
charadler  of  the  advance  are  preliminaries.   ^  207.     v.  Account. 

DIVERSION  OF  STOCK. 

A  partner's  separate  debt  is  no  consideration  for  assignment  by  an  in- 
solvent firm.  The  firm  can  use  its  stock  only  to  meet  its  own  liabilities. 
A  preference  for  special  creditors  would  be  void,  but  it  would  not  avoid 
the  assignment  for  creditors.  The  permission  of  an  assignment  to  sepa- 
rate creditors  in  the  proportion  of  the  partners'  shares  is  according  to  the 
New  York  theory  of  a  tenancy  in  common.  |  106,  n.  9,  b.  The  assignee 
for  creditors  could  set  aside  the  disposition  as  a  fraud  upon  the  cred- 
itors. The  retiring  partner's  equity  prevents  the  continuing  partner's 
diversion  of  assets.  §  147,  n.  i.  z/.  Change  of  Partners.  Using  firm  assets 
for  separate  account,  v.  Torts.  Diversion  of  joint  to  separate  estate,  v. 
Marshalling.  Assets  diverted  to  payment  of  partner's  separate  debt  may 
be  recovered  by  assignee  in  bankruptcy.  ?  192,  n.  3.  v.  Marshalling. 
Partners  may  consent  to  appropriation.   ?  192,  n.  3,  a. 

DIVISION  by  partners  of  claims  or  debts   anticipates  the  law,  and  is 
enforced.    ^  96,  n.  2  ;  ^  178,  u.  5. 


641 


Index. 

DOE,  c.  J. 

Partnership  agency.  Partners  co-principals.  ?  44,  n.  i  ;  ?  58.  Made 
partiiersliip  question  of  fa<5l,  not  of  law.  Ignored  that  partnership  is  a 
conclusion  of  law  from  the  fadls.  \  54,  n.  3.  Admits  that  without  prop- 
erty as  basis  of  partnership,  the  profits  indicate  nothing,  'i  54,  n.  4.  Profits 
not  a  fund  for  creditors,  'i  55,  n.  2.  Sharing  in  double  sense,  \  58,  n.  2,  by 
creditor  confounded  without  sharing  by  a  proprietor.   \  58,  n.  3. 

DORMANT  PARTNER. 

As  co-plaintiff  or  co-defendant.  ^  54,  n.  i ;  ^  76  &  n.  3  ;  \  77,  n.  3.  v. 
Procedure.  The  commercial  type  of  undisclosed  prin»ipal.  'i  26.  At  the 
Common  law,  non-joinder  of  dormant  partner  an  unconscious  eledlion  to 
release  him.  ?  76.  v.  Procedure.  Enacflment  of  rule  that  parties  in  inter- 
est should  join,  compels  joinder  of  dormant  partner,  which  is  inconsistent 
with  the  nature  of  the  relation.  \  76,  n.  13.  His  not  being  joined  released 
him,  although  he  kept  plaintiff  from  knowing  of  his  existence.  \  84.  v. 
Procedure.  No  dormant  partner  at  the  Civil  law.  I51.  Superceded  by 
special  partner.  \  3.     v.  Special  Partnership. 

DOUBLE  PROOF.     Restored  in  bankruptcy.      ?  205  &  n.   6.      Against 
trustee-partner  and  against  firm.    \  48,  n.  3. 

DOWER. 

Land  held  for  firm  not  subjecfl  to  dower  of  title-holder's  widow.  \  208, 
n.  7.  Attaches  to  partner's  interest  in  firm  land  upon  re-conversion,  \  109, 
V.  Land.  No  dower  out  of  firm  land.  \  112,  n.  13,  14.  v.  Land.  In  Penn- 
sylvania, widow  cut  out  by  lien  of  a  decedent's  debts.  \  112,  n.  15.  In 
New  York,  husband  a  tenant  in  common,  and  widow  with  both  legal  and 
equitable  lien,  has  a  preference  over  creditors,   'i  112,  n.  16.     v.  Land. 

DUAL  POSITION  of  partner.    I  99,  I  100,  ?  1 16. 

DUR.A.NTON.     Contribution  measure  of  profits.    ^136.    Profits  by  Civil  law 
necessary"  to  contribution.    \  37,  n.  3. 

DURATION  OF  PARTNERSHIP. 

Partnership,  striAly  speaking,  cannot  outlast  a  partner's  death,  because 
a  change  of  partners  necessarily  creates  a  new  relation.  But  the  business 
is  continued,  and  that  is  .spoken  of  as  a  continuance  of  the  firm.  The 
introduction  or  lo.ss  of  a  member  changes  the  liability  imposed  by  law. 
A  guarantee  for  a  clerk's  faithful  performance  could  not  be  enforced  by 
executor,  though  testator  dire<5led  him  to  continue  business,  f  71. 

DURESS.     Liability  for  partner's  separate  debt  makes  payment  under 
duress.   \  167,  n.  8,  a. 

DUVERGIER'S  constru<flion  of  the  pearl  case.   I  63. 

642 


J! 


Index. 

EDDIS,  Arthur  Clement.     Do(5lrine  of  ex  parte  Waring.   ?  106,  n.  8,  c. 

ELDON,  Lord.     Survivorship  in  partnership  limited  to  legal  title,  and 
not  extended  to  beneficial.  \  100,  n.  2. 

ELECTION, 

Unconscious,  to  release  unknown  partner  by  not  joining  him  as  a  party. 
77,  n.  3.     V.  Procedure.     Equity  put  creditor  of  common  member  to  his 
ele<5lion.    \  205.      v.  Marshalling.       Cestuy  que  trust's  election  to  follow 
funds  or  take  interest.  I  42.     v.  Trust  Funds. 

ELLENBOROUGH,  Lord.     Power  to  buy  corresponds  to  power  to  sell 
firm  stock.  ^  115,  n.  i. 

ENGLISH 

Theory  and  practice  in  reference  to  contribution.  ^  31  ;  <!  35  n.  i.  v.  Con- 
tribution. In  default  of  evidence,  share  of  profit  and  loss  an  inference  of 
fadl.   i;  36  &  n.  5.     Process.    |  77  &  n.  2  ;  ^96. 

EQUITABLE  LIEN. 

The  control  of  the  stock  by  means  of  an  equitable  lien  would  be  suffi- 
cient for  the  protedtion  of  creditors.  But,  historically,  the  creditors' 
rights  are  legal,  not  equitable,  and  arise  from  the  joint  estate.  ^  103.  v. 
Marshalling. 

EQUITY. 

Partner's.  The  partner's  equity  is  the  right  to  have  the  firm  assets  ap- 
plied to  the  payment  of  the  firm  debts.  The  equity  was  thought  to  be 
founded  upon  the  property  interest  of  the  partner.  When  he  lost  his  in- 
terest in  the  property,  either  by  voluntary  or  adverse  sale,  the  equity  was 
held  to  pass  with  the  interest.  Judge  Sharswood  held  that  the  equity 
was  founded  upon  the  partner's  liability.  The  unlimited  liability  of  a 
partner  is  a  construcftion  of  law,  not  an  obligation  intended  by  the  part- 
ners, and  equity  relieved  the  partner  against  the  outstanding  liability. 
?  102.  V.  Change  of  Partners.  The  destination  by  partners  of  stock  to  the 
business  fixed  its  character  and  created  a  joint  estate,  which  was  pledged 
to  firm  creditors,  and  could  not  be  converted  to  any  other  purpose  without 
the  consent  of  the  firm  creditors.  The  partners,  if  insolvent,  could  not 
sell,  except  for  value.  Each  partner  has  the  right  to  prevent  any  diversion, 
and  this  right  is  called  his  equity,  because  the  remedy  is  generally  equita- 
ble. The  right  is  to  protedl  his  separate  estate,  which  might  be  called 
upon  to  make  up  the  loss  caused  by  a  diversion.  The  firm  creditors 
avail  themselves  of  his  equity  to  enforce  the  distribution  among  them- 
selves as  the  beneficiaries.  As  the  objecft  of  the  equity  is  tb  protedt  the 
partner's  separate  estate,  his  legal  liability  for  the  firm  debts  in  his  sepa- 
rate capacity  is  the  foundation  of  this  right,  'i  106.  n.  5  &  7,  also  v.  Execu- 
tor.    If  the  equity  was  founded  upon  his  property  right,  parting  with  his 

643 


Index.  . 

interest  would  leave  him  exposed  to  unlimited  liability  for  the  firm  debts,   | 
and  at  the  same  time  deprive  him  of  the  control  over  the  stock  w  liicb 
should  be  marshalled  for  his  relief.     A  nominal  partner  who  has  no  prop-   i 
erty  interest,  would,  by  this  theory,  have  no  equity.    §  io6,  n.  4.     But  if   j 
held  out  as  a  partner,  the  firm  creditors  would  be  preferred  to  the  indi-  | 
vidual  creditors  of  the  contributing  partner.      As  the  partner  held  out 
would  be  entitled  to  marshal  the  assets  for  his  relief,  the  firm  creditors   1 
would,  through  his  right,  be  entitled  to  the  assets.  ?,  69,  n.  19.     The  right  I 
cannot  be  relinquished  or  waived,  for  the  creditors  are  parties  to  the   j 
arrangement,  and  the  bar,  like  an  alienation,  would  be  a  withdrawal  and  1 
a  fraud  upon  them.   >/.  106.      Retiring  partner's  continued  liability  for  the  | 
firm  debts  is  the  foundation  of  his  equity.    ^  147  &  n.  i.      v.  Change  of   j 
Partners,    z:  Marshalling.     Equity's  restricflion  of  creditor  to  one  of  two  \ 
funds  the  origin  and  extent  of  marshalling  joint  and  separate  assets,     v.  j 
Marshalling.      Firm  creditors  do  not  depend  on  the  partner's  equity  for 
recourse  to  firm  stock.     They  have  an  independent  right,    ?  194,  n.  3.     v. 
Marshalling.     Equity  will  not  open  judgment  to  bring  in  after-discovered 
dormant  partner.  |  85.    z/.  Procedure.    Set-off  is  a  medium  of  equity.  ?  130, 
n.  4.  5.  7- 

ESTATE. 

The  estate  prevents  separate  creditors  from  seizing  their  debtor-partner's 
share.  His  dominion  as  owner  is  controlled  by  his  co-proprietors,  whose 
rights  prevent  any  withdrawal,  and  exclude  the  separate  creditors,  who 
stand  in  the  partner's  shoes.  1 100.  The  joint  estate  gives  a  status.  v. 
Status.  The  joint  estate  survived  upon  a  partner's  death.  The  property, 
as  well  as  the  claims,  survived  to  the  co-partner,  and  did  not  go  to  the 
deceased  partner's  representatives.  <!  99  &  n.  i ;  §  103.  The  surviving 
partner  did  not  take  as  a  new  acquisition,  but  by  original  title,  which 
related  back  to  the  beginning  of  the  estate.  This  was  recognized  in 
reference  to  real  estate,  as  soon  as  the  liability  for  debts  attached  to  real 
estate  at  the  Common  law.  Source  of  creditor's  control  of  firm  stock. 
§  103.     V.  Equitable  Lien.     Estate  personified.   ^  103. 

ESTOPPEL,  Partner  by.     v.  HOLDING  OUT. 

EVIDENCE. 

Of  Partnership.  Proprietorship  shows  the  title  of  a  principal  in  the 
business,  f.  Property.  Profits  show  ownership,  z/.  Profits.  The  capacity 
of  a  principal,  if  the  only  clue  to  partnership,  would  make  the  relation  a 
question  of  intention  or  a  state  of  mind.  The  legal  effedl  of  the  distinction 
between  a  principal  who  is  not,  and  a  principal  who  is,  a  proprietor  is  im- 
portant. Irthe  proprietor  is  a  partner,  the  evidence  of  his  proprietorship 
establishes  his  position  by  law ;  if  proprietorship  does  not  prove  him  to  be 
a  partner,  the  law  does  not  regulate  his  status,  but  it  is  a  question  of  fadl 
for  the  jury.    The  firima/anes,  which  infers  a  partnership  from  exerting 

644 


Index. 

he  right  to  take  profits,  proves  that  the  law  determines  his  standing.  The 
i>rima  fades  stand  until  it  is  proved  that  the  right  was  not  exerted  by 
/irtue  of  a  title  to  the  profits,  but  by  appointment  from  the  proprietor.  >,,  54. 
3n  the  theory  of  principal  and  agent,  partnership  is  a  question  of  the 
jartners'  secret  intention,  i'.  Property.  With  intention  as  the  test,  the 
iffedl  would  be  that  partnership,  which  has  become  an  establishment  of 
aredit,  would  be  reduced  again  to  the  standard  of  a  bargain,  or  of  a  private 
irrangement  between  the  partners,  and  the  public  benefit  of  an  institute 
jf  credit  would  be  destroyed,  'i  57.  The  inference  of  property  from  shar- 
ing the  profits  is  not  peculiar  to  partnership  ;  it  is  the  general  rule  of  law, 
ind  applies  in  partnership  as  elsewhere.  The  confusion  arose  from  the 
term  "sharing:"  The  sharing  by  a  proprietor  and  the  sharing  by  a  non- 
proprietor.  The  first  was  partnership,  the  second  was  the  opposite  of  part- 
aership.  If  sharing  is  the  inducement  to  partnership,  it  must  involve  the 
contribution  to  a  joint  business  for  the  purpose  of  making  them.  The 
means  (a  partnership)  must  be  willed  as  well  as  the  result  desired,  •i;  58. 
The  law  was  preserved  by  denying  the  eff"e6l  of  a  partnership  unless  the 
sharing  was  by  a  proprietor.  The  discrimination  was  efTedted  by  exceptions 
which  were  classified,  and  which  amounted  simply  to  the  re-establishment 
of  the  original  effe<5l  of  sharing  the  profits  as  proprietor.  The  exceptions 
were :  ist.  Payment  of  wages  or  salary  out  of  profits  ;  2d,  Payment  of  em- 
ployee, or  extension  of  hiring  to  any  subordinate  ;  3d,  Managing,  or  carry- 
ing on,  business  for  the  principal,  if  not  also  for  the  manager.  The 
exceptions  are  A-erified  by  Criminal  law,  which  sustains  indi(5lnient  agair.st 
member  of  any  class,  although  he  claims  to  be  a  partner.  Cox  v.  Hickman 
does  not  establish  any  new  position.  The  creditors  carry  on  the  business 
for  the  debtor  after  reimbursing  their  debts;  if  they  carry  it  on  for  their  ow  n 
benefit,  they  become  partners.  This  is  the  distindlion  between  an  assign- 
ment for  creditors  and  a  sale  to  them  by  the  debtor.  ^59.  The  foundation 
of  the  distincftion  taken  between  sharing  profits  and  receiving  a  sum  equal 
to  a  share  of  profits  is  the  proprietorship  of  a  partner.  The  position  of  a 
claimant  was  distindlly  expressed  by  disavowing  a  right  to  the  profits,  and 
by  presenting  a  claim  against  the  proprietor  for  an  allowance  by  him  of  a 
sum  corresponding  to  a  given  share  of  profits.  This  form  of  statement  was 
abused,  by  using  it  as  a  pretext  to  disguise  the  real  position  of  the  proprie- 
tor, who  thus  escaped  liability.  The  pretence  is  not  sandtioned  bj-  law. 
The  court  will  investigate  and  find  out  the  real  nature  of  the  arrangement, 
and  if  a  proprietan,'-  title  exists  to  the  profits,  no  phrases  will  change  the 
fadl.  I  60.  The  efFe<5l  of  sharing  both  profit  and  loss  was  said  to  prove  a 
partnership,  without  any  doubt.  Eut  sharing  the  loss  is  conclusive  of 
partnership  only  upon  the  principle  that  a  proprietor  is  a  partner.  If  not 
necessarily  a  proprietor,  the  agreement  of  principals  might  be  to  share  tl;e 
loss  and  yet  keep  the  business  independent.  They  might  share  the  losses 
and  yet  not  be  liable  for  the  miscoudu(5l  of  the  principal,  who  failed  to  pay 
money  received  for  the  transadlion,  but  misappropriated  it.  The  other 
principals  would  not  be  liable  for  the  price.    ?  61.     The  courts  never  con- 

645 


Index. 

sidered  Rross  profits  as  evidence  of  partnership,  l)ecause  the  proceeds  rep- 
resent tlie  merchandise  sold,  and,  if  divided,  give  each  party  a  purpart. 
They  hoKl  the  producl  as  they  held  the  merchandise.  This  view  is  cor- 
re<fl,  for  the  gross  profits  do  not  identify  the  participants  with  the  business. 
The  captain  who  received  2-3  difference,  or  advance,  of  price  for  coal  be- 
tween price  at  the  mines  and  at  the  market,  would  not  be  a  partner  with  the 
owner  of  the  boat  and  colliery.  The  owner  pays  his  own  expenses,  and 
the  captain  includes  his  in  the  2-3  enhancement.  The  cost  might  exceed 
the  increase  in  price,  or  there  might  be  no  increase.  Then  the  captain 
would  not  share  profits.  If  the  cost  of  transportation  just  equaled  the  2-3 
enhancement,  the  captain  would  get  no  profits,  while  the  owner  would  get 
his  share  in  full.  The  facl  that  sharing  gross  returns  is  held  not  to  make 
a  partner  verifies  proprietorship  as  the  test  of  partnership,  because  the 
stipulation  for  sharing  grossreturnsif  by  a  non-proprietor,  would  include 
profits,  and  bargaining  for  an  equivalent  out  of  capital,  although  no  profits 
were  made,  should  make  one  all  the  more  a  partner  if  profit-sharing, 
though  by  a  non-proprietor,  were  the  test  of  partnership.  But  if  only  by 
a  proprietor,  then  there  would  be  no  sharing,  unless  profits  were  made. 
Connecting  lines  are  considered  as  independent,  unless  the  proprietors 
share  the  expenses  of  the  entire  route.  That  would  unite  them  in  inter- 
est in  the  transportation,  and  charge  each  for  the  other.  ^,  62.  If  there  was 
no  common  expense,  they  would  be  independent.  A  commission  on  sales 
is  interpreted  in  the  same  way.  The  commission  discloses  no  identity  of 
interest.  The  broker  might  sell  at  his  principal's  loss.  The  pearl  case  of 
Ulpian  was  a  commission  to  sell  at  a  limit.  The  agent  and  owner  were 
not  partners,  because  agent  not  co-owner,  or  would  have  been  reimbursed  ' 
his  skill,  services  and  expenses  by  a  share  in  the  pearls.  At  Common  law, 
both  would  be  liable,  but  would  not  be  partners,  because  they  did  not  share 
the  expenses,  'i  63.  A  lender  is  not  a  partner,  although  he  takes  profits 
instead  of  interest  for  his  loan.  A  loan  is  the  opposite  of  an  interest  in 
the  property.  The  lender  gives  up  his  title,  and  looks  to  the  debtor  for 
the  return  of  an  equivalent  amount.  The  partner  retains  his  title. 
The  effect  of  the  statutes,  which  authorize  a  loan  without  making  the 
lender  a  partner,  is  to  declare  the  law,  not  to  change  it.  The  clue  to  de- 
termine the  difference  between  a  loan  and  a  partnership  is  the  control 
over  the  money.  If  relinquished  to  the  borrower,  it  is  a  loan ;  if  retained 
by  the  alleged  lender,  it  is  a  partnership.  The  statutes  which  postpone 
the  lender,  who  stijjulates  for  a  share  of  the  profits,  create  a  deferred  loan. 
The  privilege  is  granted  on  the  condition  of  a  postponement  in  case  of  a 
competition  with  other  creditors.  A  loan  can  be  made  to  a  particular  i 
fund  without  any  personal  debtor.  This  has  been  allowed  in  other 
branches  of  law,  and  extended  to  partnership.  The  creditor  renounces 
his  right  to  hold  the  partner,  and  looks  only  to  the  profits  for  payment.  |  ♦ 
In  the  Hindu  Rajah's  case  the  original  transadlion  was  a  loan,  and  the  1  j 
creditor  sequestrated  the  debtor's  property,  as  if  by  execution.  The  i7 
amount  of  interest  or  profits  does  not  make  the  lender  a  partner.      The  ill 

646 


Index. 

amount  indicates  the  desperation  of  the  borrower  rather  than  the  in- 
tention of  the  capitalist  to  become  a  partner.  A  stipulation  for  both 
interest  and  profits  would  not  charge  the  capitalist.  The  profits  might 
be  additional  compensation  for  the  use  of  money,  and  if  no  control  was 
exerted  over  it,  would  not  necessarily  charge  the  capitalist.  The  lender 
might,  under  some  circumstances,  control  the  property.  The  control 
might  be  for  his  protedliou,  and  be  a  security  for  the  loan.  A  single 
transaction  which  could  mislead  no  third  persons,  because  completed  by 
the  one  operation,  might  thus  be  carried  through  by  the  creditor.  A 
creditor  might  guarantee  the  capital  for  a  business  and  take  profits  with- 
out becoming  a  partner,  although  he  adled  as  a  trustee  in  the  distribution 
of  the  fund,  'i  64.  The  stipulation  for  interest  equal  to  25  per  cent,  of 
profits,  or  profits  equal  to  25  per  cent,  of  interest,  would  not  be  usurious. 
The  interest  or  profit  itself  is  contingent  upon  earning  profits.  If  no 
profits  were  made,  nothing  would  be  recoverable,  and  this  risk  of  loss  is 
equalized  by  the  excess  of  the  legal  rate.    {;  65.      v.  also  jj  66,  n.  6. 

A  usurious  contract  would  prevent  the  creditor  from  being  a  partner. 
If  a  lender,  he  is  not  a  proprietor.  Taking  profits  in  addition  to,  or  in 
excess  of,  interest  does  not  charge  the  recipient  as  a  partner,  unless  he  is 
a  proprietor.  This  does  not  apply  to  holding  out.  Holding  out  is  in- 
dependent of  any  arrangement  between  the  parties.  The  risk  of  lia- 
bility to  third  persons  would  not  justify  a  contradl  for  interest  in  excess 
of  the  legal  rate.  The  loan  is  not  contingent  upon  the  success  or  failure 
of  the  business.  The  debtor  also  gives  his  personal  liability  ;  (if  he  did 
not,  there  would  be  no  usury.  <i  64,  n.  a  ;  ^  64,  n.  c).  The  risk  of  liability 
to  third  persons  does  not  arise  from  sharing  profits,  unless  by  a  proprietor, 
and  if  it  arises  from  holding  out,  that  is  independent  of  the  contradl.   <(  66. 

The  inference  is  against  a  partnership  if  effedl  can  be  given  to  the  fadls 
without  establishing  a  partnership.  The  reason  of  this  construdlion  is 
the  reludlance  to  impose  the  unlimited  liability  of  a  partner,  unless  it 
cannot  be  avoided.  Co-ownership  excludes  a  partnership,  because  hold- 
ing or  tenure  is  the  Common  law  theory  of  property,  and  is  not  superceded, 
except  by  trade  necessity.  This  extends  to  other  property  than  land.  It 
was  applied  to  ships,  and  extended  to  any  fixed  capital.  To  convert  such 
capital  into  firm  assets  requires  something  more  than  using  it.  The  parties 
must  show  their  intention  to  convert  it  into  firm  property.  The  Roman  law 
did  not  make  this  distindliou.  There  the  contra(5l  regulated  the  question. 
The  parties  might  sue  co-owners,  and  not  partners,  if  they  so  stipulated. 
They  made  up  a  team,  but  retained  the  ownership  of  their  respecSlive 
horses,  because  they  contracfled  to  sell  in  partnership.  Inference  of  sale. 
Z'.  Sale.  Of  bailment,  z'.  Bailment.  Of  fadlorship.  r-.  Factorship.  Of  a 
gift,  V.  Gift.    ?  67. 

Managing  business,  or  general  condudt  as  partner,  evidence  of  partner- 
ship. V.  Holding  Out.  Motives  for  partnership,  as  well  as  contradl, 
incompetent  on  the  issue  of  holding  out.  v.  Holding  nut.  .Any  actor 
admission  by  one  that  he  is  a  principal  in  the  business  is  competent  to 

647 


Index. 

charge  him.  The  facfl  of  holding  out  is  for  the  jury.  Whether  a  late 
partner  becomes  a  partner  again  by  reason  of  his  wife's  receiving  a  de- 
ceased partner's  share  was  for  the  jury,  who  determined  whether  he  adled 
for  himself  or  as  agent  of  his  wife.  There  is  no  order  in  which  partners 
must  be  proved.  The  contra<fl  between  them  implies  that  an  admission 
bv  one  should  be  a  declaration  against  the  others  ;  but  it  is  not  given  any 
elTecl  until,  and  unless,  followed  up  by  a<5ls  and  admissions  by  the  others. 
The  admission,  however,  of  partnership  between  A  &  B  by  A  in  B's  pres- 
ence would  charge  B  if  he  did  not  deny  the  statement.  ^69.  Plaintiff 
cannot  compel  co-partner  not  sued  to  testify  as  adverse.  He  is  not  an 
adverse  party,  or  an  adverse  beneficiary  of  the  suit.  He  is  liable  in  a 
different  suit.   ^95,  n.  4. 

Surviving  partner  not  disqualified  by  joinder  of  deceased's  representa- 
tives, ?  87,  n.  3.  V.  Procedure.  Husband  of  wife,  a  partner,  disqualified 
by  interest,  v.  Married  Woman.  Evidence  of  firm  title  to  real  estate. 
V.  Land.  Issue  of  partnership,  v.  Liability.  Surviving  partner  not  an 
assignee  of  deceased  partner,  so  as  to  exclude  testimony  of  opposite  party 
as  to  transactions  with  deceased.  ?  121.  Contra,  in  Pennsylvania.  Evi- 
dence that  judgment  confessed  to  defraud  creditors  puts  judgment-creditor 
to  ^Tooi  oi  bona  fides,   'i  122,  n.  9.     v.  Powers. 

EXCEPTIONS 

To  the  rule  that  sharing  the  profits  is  a  test,  prove  the  rule.  The  princi- 
ple of  the  exceptions  is  that  sharing  by  a  non-proprietor  is  not  partner- 
ship.    The  sharing  profits  must  be  by  a  proprietor.  \  59. 

EXCLI'SION  of  partner  from  the  business  is  a  ground  for  dissolution. 
§  173  &  n.  9. 

EXECUTED  CONTRACT.  ^117.     v.  ASSIGNMENT. 

EXECUTION. 

The  Common  law  execution  takes  the  partner's  interest,  and  the  pos- 
session under  the  levy  is  referred  to  the  title.  Therefore  a  sale  of  the  firm 
title  would  not  pass  it  without  a  joint  levy,  even  though  the  sheriff  held 
a  joint  writ  and  thought  a  second  seizure  of  the  stock  already  seized  under 
the  separate  writ  unnecessary.  The  sheriff  cannot  seize  the  partner's 
share,  but  he  can  seize  the  stock  in  order  to  sell  the  partner's  interest  in 
it.  The  execution  (a  fi.  /a.)  required  a  tangible  thing  for  it  to  operate 
upon,  and  unless  something  could  be  seized,  nothing  could  be  sold.  The 
requirement  of  the  writ  being  satisfied,  the  sheriff  must  not  disturb  or  re- 
move the  stock,  and  can  sell  only  the  partner's  interest  in  the  stock.  The 
purchaser  acquires  no  right  to  co-possession,  but  merely  a  claim  for  an 
account,  to  ascertain  the  balance,  if  any,  coming  to  the  partner.  ?  104,  n. 
5  &  6.  .\  separate  execution  entitles  the  purchaser  only  to  the  debtor's  inter- 
est after  all  the  firm  debts  are  paid.      His  right  must  be  defined  by  an  ac- 

648 


Index. 

ocunt.     The  Common  law  at  first  direAed  an  account,  but  subsequently 
relinquished  the  ascertainment  of  the  interest  to  Equity,   'i  103.      By  the 
Chancery  pradlice,  a  sale  could  not  be  made  until  the  defendant's  interest 
was  ascertained.  ?  103,  n.  5.    The  sheriff  seizes  the  stock  for  the  purpose  of 
making  an  inventory,  but  becomes  a  trespasser  if  he  removes  the  property. 
He  sells  the  partner's  interest  in  the  goods.     A  special  partner  has  an  in- 
terest, though  it  was  thought  not  to  be  tangible,  because  he  had  renounced 
his  control  over  the  firm  stock.    <i  104,      v.  Special  partnership.     A  joint 
execution,  at  any  time  before  a  sale,  intercepts  the  title,   i;  106,  n.  8.     The 
sheriff's  pra6lice  of  selling  on  all  the  writs  in  his  hands,  compelled  the 
court  to  decide  how  the  proceeds  would  have  been  raised  and  distributed 
had  the  sheriff  done  his  duty.    (^  106,  n.  7.     If  the  sale  is  lumped  on  sepa- 
rate executions,  the  distribution  is  made  according  to  the  shares  of  the 
respedlive  partners.    §106,  n.  8,/.     The  proper  course,  in  Pennsylvania, 
would  have  been  to  hold  the  fund  raised  by  a  sale  of  the  firm  stock  on  a 
joint  execution  for  the  general  body  of  creditors.     This  is  the  established 
course  of  practice  where  the  court  must  make  a  pro  rata  distribution  of 
assets.     The  sale  under  an  execution  might  reasonably  be  treated  as  an 
admission  of  insolvency,  and  justify  the  court  in  impounding  the  funds. 
There  is  no  excuse  for  handing  them  over  to  the  separate  creditors  without 
exadling  proof  that  no  firm  debts  exist.    \  106,  n.  8,  </  &  b.     The  separate 
creditor  could  be  enjoined  from  selling,  if  the  assets  would  not  realize 
more  than  sufficient  to  pay  the  firm  debts.    \  108,  n.  8,  c.     The  mistake  of 
letting  a  separate  execution  seize  and  sell  any  part  of  the  stock  has  been 
corrected  in  Pennsylvania,  by  turning  to  account  a  statute  passed  to  sell 
the  intangible  assets  of  a  firm  which  a  fi.  fa.  could  not  seize.     \  106,  n.  g. 
The  confusion  arising  from  the  sheriff's  seizure  of  firm  stock  for  sepa- 
rate as  well  as  joint  claims,  is  obviated  by  the  use  made  of  the  Adt  8  April, 
1873,  P.  L.  65.     A  special  yi.  fa.  issues  to  sell  a  partner's  interest  without 
levying  on  the  firm  stock.     Xi'vNO  fi.  fas.,  the  first  in  Common  law,  the 
second  in  statutory  form,  the  second  will  take  precedence.     The  sheriff  is 
not  bound  to  execute  the  first,  and  if  he  does,  it  is  only  in  subordination 
to  the  second.     If  neither  is  in  the  statutory  form,  then  the  writ  which 
made  the  money  will  take  it,  although  execution  had  been  levied  under 
an  earlier  writ,  no  lien  being  acquired  by  the  earlier  form,    i)  16S,  n.  /,  g, 
h  &  i.     The  reason  why  the  purchaser  of  a  partner's  interest  does  not  step 
into  his  shoes  and  become  entitled  to  co-posses.sion  with  the  other  partners, 
is  that  the  sale  dissolves  the  partnership,  and  the  purchaser  is  interested 
only  in  the  liquidation  which  the  partners  are  entitled  to  make,  unless 
they  are  shown  to  be  unfit.     If  the  sheriff  levies  on  firm  stock,  and  sells 
a  partner's  interest  on  a  separate  execution,  the  co-partner  would  have  no 
claim  to  recover  in  trover,  as  nothing  passed  but  the  partner's  interest, 
which  was  liable  to  execution  ;  unless  the  sheriff  delivered  possession  of 
the  firm  stock,  then,  by  the  true  theory,  the  co-partner  could  recover  for 
the  conversion  of  the  firm  property,  but  by  New  York  law  he  could  re- 
cover only  for  his  half  as  a  tenant  in  common.     The  equity  to  control 

649 


Index. 

a  partner's  share  for  firm  jiurposes  is  not  equivalent  to  a  joint  title  over 
the  firm  stock,  i!  105,  n.  9-10.  Separate  execution  creates  no  lien  upon 
partner's  share,  v.  Lien.  An  attachment  could  not  be  laid  upon  the 
firm  stock  for  a  claim  against  a  partner.  The  attachment  would  forbid  to 
the  firm  the  use  of  its  stock,  and  amount  to  an  exclusion  until  the  con- 
troversy was  ended,  though  sustained  in  New  York,  on  the  ground  that 
the  sheriff  could  seize  the  stock  and  sell  the  partner's  interest,  which 
would  be  a  moiety.  This  is  according  to  the  theory  of  a  tenancy  in  com- 
mon, or  holding  by  several  titles  with  joint  possession,  which  would  be 
severed  by  execution,  and  the  purchaser  vested  with  the  defendant's  title 
and  possession.  I  104,  n.  4.  Tenancy  in  common  makes  execution  sever 
joint  title,  v.  Property.  Partner's  executing  firm  judgment,  if  an  abuse 
of  legal  process,  charges  co-partner.   1 139,  n.  4.     v.  Tort. 

The  stock  must  be  subje<5lto  execution  at  the  instance  of  the  firm  cred- 
itors, and  no  private  agreement  can  withdraw  it  from  them,  especially 
where  replaced  by  sale  and  re-purchase.  ^  106,  n.  8,  y  &  k.  The  firm, 
when  insolvent,  could  no  more  confess  judgment  for  a  partner's  separate 
debt  than  for  a  stranger's.  Much  less  would  an  agreement  to  appropriate 
firm  assets  to  the  payment  of  a  separate  debt  give  it  precedence  over  a  firm 
debt.  ?  106,  n,  9,  a.  Firm  stock  sold  on  separate  execution  can  be  recov- 
ered by  all  the  partners.  ^  167,  n.  5,  b. 

EXECUTOR. 

Under  direction  of  the  will,  an  executor  or,  under  articles,  an  adminis- 
trator, becomes  a  partner.  He  becomes  liable  for  all  the  debts  incurred 
during  his  administration.  Equity,  however,  cannot  enforce  the  articles, 
and  compel  the  representative  to  become  a  partner.  He  may  renounce. 
Then  the  surviving  partner  would  continue  the  business,  without  any 
substitute  for  the  deceased  partner.  ^  72.  The  effedl  of  letting  an  execu- 
tor, or  administrator,  take  the  deceased  partner's  place,  is  that  the  de- 
ceased partner's  estate  becomes  a  contribution,  made  by  the  beneficiaries, 
who  thus  become  special  partners  by  inheritance,  y^  74.  In  New  York 
and  Maryland  the  executor,  or  administrator,  who  aAs  under  the  direc- 
tion of  the  testator,  or  under  articles,  is  exonerated  from  liability,  ?  72, 
but  elsewhere  the  general  rule  is  that  the  executor,  or  administrator,  in- 
curs personal  and  unlimited  liability  as  a  partner.  He  represents  the 
deceased,  and  is  the  only  one  who  can  control  the  destination  of  the  assets. 
He  cannot  qualify  his  liability.  If  the  diredlion,  or  agreement,  imposes 
the  duty,  he  would  commit  a  breach  of  trust  if  he  did  not  acSt;  yet  he 
need  not  administer,  for  he  can  renounce.  The  moment  he  does  admin- 
ister, liability  attaches.  ^73.  If  the  executor,  or  administrator,  becomes 
a  partner,  this  may  relieve  the  deceased  partner's  estate.  It  enables  him 
to  limit  his  contribution  to  part  of  his  estate.  His  representative  could 
not  contribute  any  other  part  of  the  deceased  partner's  estate.  This  would 
be  a  breach  of  trust,  and  the  beneficiaries  might  reclaim  the  funds.  The 
representative  will  not  be  reimbursed  for  his  loss  incurred  on  behalf  of  the 

650 


Index. 

deceased  partner.  The  contribution  is  the  Hmit  of  the  deceased  partner's 
liability,  even  if  he  a6ls  lauder  testamentary  diredlion,  or  the  articles  would 
oblige  him  to  act.  If  the  representative  allotted  part  of  the  contribution 
to  a  beneficiary,  he  could  not  charge  the  recipient  for  a  loss  which  he  was 
subsequently  compelled  to  pay.  The  allotment  is  a  withdrawal.  Execu- 
tor's creditors  can  be  subrogated  to  his  rights  against  deceased  partner's 
estate.  To  the  extent  of  deceased's  liability,  i.  e.,  for  the  portion  of  his 
estate  contributed,  the  representative's  creditors  may  come  upon  the  de- 
ceased partner's  estate.  If  creditor  is  prevented  by  default  from  access  to 
deceased  partner's  contribution,  executor's  creditors  are  affecfled  by  his 
exclusion.  They  cannot  assert  his  equity.  The  set-off  pradtically  extin- 
guishes his  claim.  The  creditor  of  the  executor  is  a  creditor  of  the  de- 
ceased partner,  and,  as  such,  may  claim  administration  on  his  estate.  §  74. 
The  representative's  position  is  ascertained  like  that  of  any  partner.  The 
natural  inference  is  that  he  leaves  the  estate  in  the  firm  as  a  loan  or  in- 
vestment, but  if  he  contradidls  this  inference  he  will  be  charged.  ^  75  (§  73, 
n.  I,).  The  representative  can  escape  any  liability,  and  yet  continue  the 
business,  by  entering  into  a  special  partnership  and  making  the  deceased 
partner's  estate  his  contribution,  §  75.  Executor  enforces  partner's  equity, 
now  that  deceased  partner's  estate  is  liable  for  firm  debts.  §  106,  n.  6  &  7. 
Executor  of  deceased  may  be  joined  in  suit  with  surviving  partner.   §  88. 

EXEMPTION,  not  allowed  out  of  firm  property.  ?  103. 

FACTORSHIP. 

A  fadtorship  might  exclude  a  partnership.  The  consignees  might  answer 
for  the  solvency  of  their  vendees,  and  thus  bear  all  the  losses  of  the  busi- 
ness. The  consignors,  by  releasing  half  the  loss,  do  but  relinquish  a  right 
in  favor  of  the  consignees,  who  are  thereby  exonerated  from  full  liability. 
The  favor  shown  the  consignees  in  this  exemption,  and  in  fitting  up  their 
store,  is  not  evidence  of  partnership.   |  67  &  n.  12. 

FAIL,URE,  a  ground  for  dissolution.   ?  173  &  n.  8.     v.  Contribution. 

FAMILY  RELATION. 

Though  the  family  relation  rebuts  the  presumption  of  a  consideration 
for  services  rendered  at  request,  and  partnership  is  now  a  contract  founded 
on  consideration,  yet  its  original  character  clings  to  the  relation,  which 
grew  up  in  the  middle  ages  as  a  family  affair,  and  a  consideration  is  im- 
plied for  a  partnership  between  members  of  a  family  as  much  as  if  they 
were  strangers.  <;  2  &  n.  2. 

FARMING  in  Partnership.   U  2.     z^.  SUBJECT-MATTER. 

FELICII'S.     Definition  of  partnership.   \  16,  n.  d.^ 

FEUDAL  theory  of  property  injected  into  partnership,  I  3,   v.  Partnership, 
and  measured  partner's  capacity  by  his  property.  \  99,  'i  100. 

651 


Index. 

FICTITIOUS  name,  use  of,  though  prohibited,  don't  prevent  recovery, 
unless  credit  acquired  by  it.     v.  Procedure,     v.  Name. 

FI.  FA.,   Kinds  and  what  leviable  under,     z/.  EXECUTION. 

FIRM 

Not  a  party,  except  in  States  which  have  changed  Common  law  by  statute. 
\  76.  V.  Procedure.  Different  firms,  if  composed  of  same  individuals, 
treated  as  one,  no  matter  how  far  apart,  and  a  general  lien  covers  aggre- 
gate stock.  <!  164,  n.  3. 

FIRM  CREDITOR. 

A  general  creditor  may  enjoin  a  separate  execution  creditor  from  seiz- 
ing firm  assets.  His  equity  gives  him  a  lien,  or  interest,  to  protedl  the 
assets.  \  106,  n.  5.  It  was  so  held  in  New  Jersey  at  first,  but  this  ruling 
was  superceded,  and  his  right  made  to  depend  on  a  legal  lien,  which  does 
not  exist  without  an  execution  upon  the  assets.  \  106,  n.  5,  i?  &  c.  The 
joint  creditors  exclude  the  separate  creditors,  and  enforce  the  partner's 
equity.   \  106,  n.  5,  ^. 

FIXED  Capital  does  not  become  firm  property.   §25.     v.  Contribution. 
?  67.    V.  Co-Ownership. 

FITTING,  Dr.  Hermann.     Civil  law  indivisible  contradl.   §91,  n.  3. 

FOREIGN  JUDGMENT,     z^.  JUDGMENT. 

FORMATION  of  Partnership,  Fraud  in,  ground  for  corredling  .settlement. 
{(212,  n.  5.     z;.  Account. 

FRATERNITY,  A,  or  Brotherhood,  is  not  a  partnership  at  the  Common 
law.   i/ 16. 

FRAUD. 

V.  vStatute  of  Frauds.  No  diverting  firm  assets  to  separate  use.  v.  Torts. 
In  formation  of  partnership,  ground  to  open  statement.  ^212,  n.  5.  v. 
Account.     Partner  to  fraud  in  negotiating  firm  paper.  §  125,  n.  6. 

FRENCH 

Fi<5lion  of  partnership  as  a  corporation.  \  100,  n.  2  &  a;  §  loi.  v.  Status. 
No  joint  estate  for  firm,  fi6lion  of  personality  a  makeshift,  privilege  of 
joint  creditors  unfounded,  analogy  of />^tM/z«;«  groundless,  and  credit  to 
stock  because  no  person.  I  164,  n.  7.  ^  loi,  n.  3.  Firm  creditors  no  privi- 
lege, and  distribution  should  he  pro  rata  among  joint  and  separate  credit- 
ors.  <;  100,  n.  3. 

652 


Index, 
french  process. 

V.  Procedure.  By  French  law  a  civil  partnership  may  be  for  any  benefit; 
a  commercial  partnership,  for  gain.  \  i6.  Contribution  firm  property. 
\  33,  n.  I.     V.  Contribution. 

FiJSSElv,  Dr.  Fred.  Fransc.     Distin(5tion  between  corporation  and  com- 
pany.  I  37,  n.  d. 

GAIN. 

It  is  not  every  benefit  which  is  sufiicient  to  serve  as  the  objedl  of  a  part- 
nership. It  must  be  gain.  This  is  because  partnership  came  into  the 
Common  law  through  trade,  which  has  gain  for  its  objedt.  At  the  Civil 
law,  any  benefit  is  sufiicient,  e.  g.,  a  park  for  recreation.  But  this  being  a 
kind  of  partnership  derived  by  tradition  from  the  Roman  law,  is  discrimi- 
nated from  the  commercial  partnership,  which  is  regulated  by  the  com- 
mercial codes,  and  which  resembles  our  trade  partnership.  A  masonic 
lodge  is  not  a  partnership,  but  a  social  or  beneficial  association.  If  money 
is  accumulated  by  a  club,  the  members  do  not  become  partners  by  rea.son 
of  the  joint  fund.  It  is  an  incident,  not  a  controlliug  element,  of  the 
association.  An  association  for  mutual  protedlion,  or  mutual  insurance, 
is  not  a  partnership.  The  purpose  of  the  association  is  not  gain,  but 
security  against  loss.  Every  association  for  gain,  which  is  not  a  corpora- 
tion, is  a  partnership.  On  this  ground  a  car-trust  is  held  to  be  a  partner- 
ship.  \  i6. 

GENERAL  conducft  as  a  partner.   \  69,  n.  4. 

GEORGIA  adopts   the  Massachusetts   debt-theory  of  the  contribution. 
\  32.     V.  Contribution. 

GERMAN  LAW, 

In  reference  to  enhancement  or  decrease  in  value  of  contribution  during 
partnership.  \  28.  v.  Contribution.  Carried  out  theory  of  contribution 
as  a  debt.  ?  32.  f.  Contribution.  Ofjoint  estate.  ^29.  v.  Status.  German 
Code.  \  30,  n.  8,  9.  v.  Set-Off".  Profit  and  loss  divided,  in  absence  of 
agreement,  by  heads.    German  Commercial  Code.   \  36.     Process.  \  77,  n. 


GIBSON, 

Judge,  accounted  for  partnership  as  an  anomaly  tolerated  as  an  exception 
to  principle,  and  only  as  an  indulgence  to  trade.  Partnership  nothing  but 
a  contra6l.  If  the  firm  creditors  excluded  the  separate  creditors  from  the 
joint  estate,  he  thought  the  separate  creditors  thus  deprived  of  a  right 
should  exclude  the  joint  creditors  from  the  separate  estates.  ^  102.  The 
partner's  equity  a  property  right.  \  102,  n.  2  ;  ?  106.  Partner's  authority 
to  appear,  or  employ  attorney,  like  his  accepting  service,  'i  119,  n.  2. 
Cannot  submit  to  arbitration.   \  120,  n.  i,  a. 

653 


Index. 

GIFT. 

The  transa<ftioTi  might  be  a  gift,  instead  of  a  partnership.  The  motive, 
ordinarily,  would  not  be  considered,  but  where  the  parties  with  the  one 
who  acfled  for  the  donees  knew  of  the  intention,  it  might  be  given  eflfecft. 
567. 

GLUCK. 

The  purpose  classified  partnership.  §  i,  n.  3.  Services  capitalized  for 
contribution.  ^.  57,  n.  2.    The  nature  of  a  partner's  contribution.   ^33,  n.  i. 

GOLDvSCHMIDT,  Dr.  L.      Buying  and  selling    is  the  type  of  trade.   §  7 
n.  5- 

GOOD  FAITH. 

The  utmost  good  faith  was  originally  exa<5led  of  the  partners  in  their 
dealings  with  each  other,  on  account  of  the  intimate  relation  of  kindred. 
At  the  present  day,  property  identifies  the  partners  in  interest,  and  limits 
the  application  of  the  maxim.  In  reference  to  property,  a  partner  must 
make  a  clean  breast  of  his  knowledge.  ?  151,  n.  i.  The  property  interest 
he  acquires  belongs  to  his  co-partners,  i  151,  n.  2,  whether  he  competes 
with  the  firm  business,  'i  151,  n.  3,  uses  the  firm  property,  §  151,  n.  4,  or 
his  position  in  the  firm,  ^  151,  n.  5,  to  secure  a  separate  gain.  But  en- 
gaging in  a  different  business  is  not  a  breach  of  the  relation,  though  it 
may  be  of  the  articles,  and  furnish  ground  for  an  injundlion,  or  a  dissolu- 
tion, 'i  151,  n.  6;  ^212,  n.  2.  A  partner  cannot  transadl  business  of  the 
same  kind  apart  from  the  firm,  without  sharing  the  profits  of  the  inde- 
pendent business  with  his  co-partners.  If  secretly  done,  and  in  competi- 
tion with  the  firm,  the  partner  will  be  held  a  trustee  for  his  co-partners. 
The  partner  cannot  make  a  profit  in  his  secret  and  independent  business 
which  does  not  enure  to  the  firm.  ?  131,  n.  3.  A  settlement  would  be 
opened  to  make  the  competing  partner  account,  j;  212,  n.  3.  The  credit  of 
the  firm  cannot  be  used  by  him,  without  converting  the  benefit  derived 
from  its  use  to  the  co-partners.  He  cannot  make  separate  contradts  after 
a  joint  one  by  the  firm.  He  cannot  deal  with  the  firm,  because  his  inter- 
est will  be  adverse,  to  make  more  for  himself  as  one  party  to  the  bargain 
than  as  one  of  the  firm,  or  of  the  other  party.  He  cannot  use  the  advan- 
tage given  him  by  the  firm  to  make  a  separate  transacSlion  for  his  indi- 
vidual benefit,  'i  151,  n.  4,  5 ;  >!2i2,  n.  8.  He  cannot  buy  property  used 
by  the  firm,  or  renew  leases  without  being  a  trustee  for  his  co-partner. 
!l2i2,  n.  2,  7,  9.  He  can,  however,  deal  with  his  firm  at  arm's  length, 
and,  on  the  footing  of  a  stranger,  by  an  open  course  of  transaAions,  which 
show  a  full  knowledge  and  concurrence  by  both  parties  to  an  independent 
business  carried  on  apart  from  the  firm  business,  though  involving  diredl 
dealings  with  the  firm.  The  loss  or  injury  resulting  from  the  breach  of 
good  faith  is  an  item  of  the  account.  ?  212.  v.  Account.  If  partners 
brokers,  and  sale  impossible,  one  may  buy  for  himself.    ?  51,  n.  2.     Part- 

654 


Index. 

ners  in  mining  partnership  deal  at  arm's  length  as  to  individual  titles. 
^  15,  n.  4.     V.  Mining  Partnership. 

GOOD- WILL. 

Item  of  account.  \  209.  The  good-will  is  an  asset,  the  produdl  of  the 
partners'  joint  labor.  \  209.  The  professional  reputation  is  not  part  of  the 
good-will,  and  does  not  pass  by  the  sale  of  it.  \  209,  n.  i,  a.  The  partner 
who  has  sold  the  good-will  may  compete  with  the  firm,  if  he  does  not  use 
the  name.  He  will  be  restrained  from  using  the  name.  \  209,  n.  i,  b. 
The  good-will  carries  a  trade-mark,  though  it  is  the  name  of  the  selling 
partner.  \  209,  n.  i,  c.  If  good-will  unsold,  both  partners  retain  the  right 
to  use  the  trade  mark,  'i  209,  n.  \,d.  Neither  partner  can  appropriate  the 
good-will,  and  it  will  be  sold  for  joint  account.  \  209,  n.  2.  If  partners 
disagree,  they  will  be  made  to  bid  against  each  other  for  the  good-will. 
\  209,  n.  3.  Continuing  partner  must  account  for  value  of  good-will.  \  209, 
n.  2. 

GORDON,  J.,  shows  that  present  pracflice  justifies  joining  executor  of 
deceased  with  surviving  partner.   \  88,  n.  5  &  6. 

GOULD,  Tracy.    Account  lies  for  isolated  transadlion  during  partnership. 
\  159,  n-  I- 

GROSS  PROFITS,  Sharing.   ?  62.     v.  EVIDENCE. 

GROSS  RETURNS,  Sharing,   'i  62.     v.  EVIDENCE. 

GOW.     Explanation  of  partner's  liability  for  his  contribution.   ?  20,  n.  i. 

GREEN,  WM.     Partner's  power  to  employ  attorney.   \  119,  n.  i. 

GUARANTEE 

By  firm  ends  with  death  of  a  partner.  ^  72,  n.  i.  v.  Duration  of  Partner- 
ship. A  partner  cannot  charge  his  firm  for  the  debt  of  a  third  person,  or 
of  his  co-partner.  The  firm  note  for  one  partner's  debt  made  by  another 
would  not  bind  the  firm.  It  would  be  a  guarantee,  and,  as  such,  must  be 
made  by  all  the  partners.  \  129.  The  firm  might  be  compelled  either  to 
pay  a  partner's  debt  or  be  broken  up,  but  the  choice  of  going  out  of  busi- 
ness is  left.  \  129.  A  partner  in  selling  a  judgment  could  not  guarantee 
its  payment.  The  guarantee  would  be  void,  though  the  assignment 
would  be  valid.   \  129,  n.  4. 

HAHN,  Dr.  Friederich  von.     German  process.    §  77,  n.  i ,  a ;  ?  130,  n.  2,  4, 
8,  c.     V.  Set-Off. 

HAMILTON, 

G.  F.,  Esq.  \  41,  n.  4.  v.  Trust  Funds.  Mathematical  demonstration  of 
partner'sliability  for  trust  funds  contributed  by  trustee-partner.  <^42,  n.  4. 

655 


Index. 

HAMMOND,  Anthony.  The  test  of  joinder  is  an  interest  in  the  contra<5l. 
(^44,  u.  I.  Liability  of  joint  contradlors,  §44,  n.  i,  of  tort-feasors.  §47, 
n.  I. 

HARE,  Judge  J.  I.  Clarke.  The  joint  liability  of  the  Common  law.  §  44, 
n.  I.  Creditor's  possession  of  two  funds  basis  of  marshalling  firm  assets. 
'i  102,  n.  3. 

HEIR  of  deceased  partner  must  convey  to  purchaser  from  firm,  g  no,  n. 
3.     V.  Land. 

HINDU  RAJAH'S  case,   'i  64,  n.  3,  b.     v.  EVIDENCE. 

HISTORY  OF  PARTNERSHIP. 

Partnership  grew  up  at  the  Roman  law.  At  first,  the  faniilia  was  a 
partnership.  This  accounts  for  societas  omnium  honor um,  and  for  the 
dotSlrine  of  the  strictest  good  faith  in  the  relation.  The  relation  of  patron 
and  client  introduced  the  voluntary  element,  and  led  to  the  distindlion  be- 
tween coinmunitas  and  societas.  Farming  the  public  revenues  led  to  the 
trade  partnership,  the  only  kind  which  has  survived.  ?  i.  Partnership 
continued  during  the  middle  ages,  and  trade  was  carried  on  generally  by 
the  members  of  a  family,  like  the  Rothchilds  at  the  present  day.  In  a 
predatory  period  the  nearness  of  kin  re-established  the  confidence  which 
existed  in  partnership  among  the  Romans.   |  2. 

HOFFMAN,  Judge,  took  the  corre<fl  view  of  the  contribution.  ^  32  &  n. 
1 ;  ^  33,  n.  I  ;  ^34,  n.  i.     v.  Contribution. 

HOLDING  OUT. 

There  are  three  ways  for  holding  out :  i.  By  the  party's  diredl  authority; 
2,  by  his  consent ;  3,  by  his  knowledge  that  he  is  held  out,  and  his  failure  to 
prohibit  the  holding  out.  His  liability  does  not  vary  in  these  cases.  It  has 
been  said  so,  but  there  can  be  no  different  measurement  of  damages  for  a 
man's  consent,  or  for  his  negligence,  because  the  liability  arises  from  the 
injury  to  a  person  misled  by  the  party  charged.  Holding  out  is  representa- 
tion of  membership.  A  party  who  parted  with  nothing  because  of  his  reli- 
ance upon  the  holding  out,  suffered  no  injury  from  it,  and  hence  has  no  title 
to  compensation.  Managing  the  business,  or  adting  as  a  partner,  is  not 
stricT;ly  a  holding  out.  Holding  out  is  where  the  party  takes  no  part  and 
has  no  interest  in  the  business.  The  manager  is  held  liable,  on  the  ground 
tliat  he  performs  the  fundlions  of  a  partner,  and  will  be  held  by  his  express 
adls,  or  by  his  general  coudu6l.  He  nmst  notify  parties  dealing  with  him  of 
his  subordinate  employment,  in  order  to  be  exonerated.  General  conduct 
as  a  partner  would  not  charge  the  party,  unless  the  third  person  contracted 
with  knowledge  of  and  in  reliance  upon  the  course  of  conduct.  The  rep- 
resentation must  be  to  the  plaintiff.  Evidence  of  conduct  is  competent, 
but  it  must  be  known  and  relied  upon  by  plaintiff.  If  not,  he  cannot  avail 
himself  of  the  adls  indicative  of  partnership.     They  can  be  explained  and 

656 


Index. 

shown  to  be  mistakes.  One  charged  as  partner  could  not  give  evidence 
that  his  contradl  was  for  management  of  the  business,  and  that  the  firm 
was  insolvent,  in  answer  to  his  alleged  admission  of  partnership.  The 
contracft  between  him  and  the  partners  was  foreign  to  third  persons,  and 
his  motives  to  make,  or  not  to  make,  it  are  excluded  with  the  contradl. 
The  unlikelihood  of  his  making  the  contradl  is  part  of  the  issue  of  part- 
nership between  the  partners  under  the  contradl,  apd  that  is  foreign  to 
third  persons.  The  contradl  of  partnership  is  excluded,  because  it  is  a 
secret  which  creditors  cannot  use  in  order  to  charge  the  partners.  It  is 
generally  upon  a  failure  to  prove  partnership  that  the  creditors  resort  to 
the  liability  without  partnership  inter  se.  Having  frustrated  the  creditors 
by  withholding  articles,  the  partners  should  not  be  able  to  defeat  them 
again  by  producing  the  articles.  The  exclusion  should  be  mutual ;  if  the 
partners  can  withhold,  the  creditors  should  exclude.  If  the  contradl  of 
partnership,  and  the  inducements  to  it  are  excluded,  the  defendants  could 
not  introduce  their  books  in  order  to  show  the  relation  in  fadl.  They  are 
incompetent  for  the  same  reason.  The  question  is  independent  of  and 
paramount  to  the  relation  in  fadl.  The  adls,  or  representations,  of  the 
defendant  have  misled  the  plaintiff,  and  it  is  too  late  to  explain  the  con- 
dudl.  Moreover,  the  prior  explanation  should  have  been  made  to  the 
plaintiff.  The  explanation  by  arrangement  between  the  partners  does 
not  reach  him.  The  case  of  Pollion  v.  Secor  ma}'  be  explained  by  charg- 
ing a  man  for  his  name  in  the  firm  designation.  Everyone  dealing  with 
the  firm  relies  upon  a  partner  behind  the  name,  and,  upon  finding  him, 
holds  him  without  anything  more.  The  fadt  of  holding  out  is  proved  by 
any  adl  once  done  and  accepted  by  the  defendant.  Judgment  paid  by 
defendant  for  a  note,  like  one  upon  -vyhich  plaintiff  sues,  is  evidence  sufii- 
cient  to  charge  defendant.  The  promise  to  become  a  partner  would  charge 
the  promissor.  The  representation  for  the  future  would  be  equal  to  a 
representation  in  the  present.  The  difference  between  the  holding  out 
as  to  a  partner  and  as  to  an  agent  is  only  as  to  the  extent  of  the  agency. 
The  partner's  liability  is  defined  and  limited  by  the  business.  The  agent's 
.would  vary  according  to  the  variety  of  his  transadlions.  If  there  is  no 
individual  name  in  the  firm  designation,  all  are  liable  who  trade  under 
the  common  designation.  This  is  established  by  evidence.  The  credit 
would  be  given  to  all  who  thus  traded  when  ascertained.  The  name  cov- 
ers and  charges  the  parties  using  it.  The  effedl  of  employing  a  common 
agent  is  that  his  business  becomes  the  business  of  each  employer,  and 
charges  them  jointly  for  his  transadlions.  If  one  held  out  notifies  the 
party  holding  him  out  to  desist,  that  is  not  sufficient  to  exonerate  him 
from  liability.  The  notice  to  the  party  holding  out  would  imply  giving 
him  authority  to  continue  the  use  of  the  name.  The  reliance  would  be 
put  on  the  party  holding  the  other  out.  The  notice  must  be  diredl  to  the 
third  persons.  Reputation  of  partnership  is  not  sufficient  to  charge  one. 
Adls,  admissions  and  declarations  are  representations  to  the  plaintiff,  who 
relies  on  them.     He  cannot  rely  on  reports.     Nor  if  partnership  were  es- 

657 


Index. 

tablished  could  its  scope  be  defined  by  reputation.  The  reputation  could 
not  enlarge,  any  more  than  create,  a  partnership.  If  admitted  as  a  ground 
to  charge,  it  %vould  also  be  competent  to  discharge  a  defendant.  If  the 
plaintiff  relied  on  reputation,  and  the  defendant  proved  a  dissolution 
equally  circulated,  the  plaintiff  would  be  met  by  his  own  kind  of  evi- 
dence. The  defendant's  knowledge  of  the  reputation  and  declarations, 
and  his  failure  to  deny  them,  would  be  competent  evidence  of  partnership 
against  him.  A  clerk's  knowledge  of  acts  and  declarations  would  charge 
his  employer,  who  put  the  clerk  in  his  place,  and  relied  upon  him.  Hold- 
ing out  may  anticipate  partnership.  The  party  might  promise  for  the 
future  and  conditionally,  but  the  plaintiff  would  rely  upon  his  promise, 
and  consider  the  condition  waived,  or  disregard  it.  The  condition  is  a 
private  matter  between  the  partners,  which  might  be  waived  by  them.  A 
note  would  charge  a  partner  held  out,  as  well  as  the  partners  in  fadl.  A 
partner  by  estoppel  acquires  the  right  to  marshal  the  firm  assets  (also 
{(  103,  n.  4).  He  is  liable  for  the  firm  debts,  and  the  liability  entitles  him 
to  see  that  the  assets  are  applied  to  relieve  him  from  the  liability.  A 
married  woman,  where  competent  to  be  a  partner,  is  allowed,  on  this 
ground,  to  marshal  the  assets.  The  right  to  marshal  the  assets  enures  to 
her  creditors.  The  creditors  are  entitled,  although  subrogation  would 
not  be  available.  Firm  had  a  mortgage  to  secure  a  note,  partner  retired, 
and  mortgaged  property  taken.  Holder  obtained  judgment  against  all, 
and  asked  to  be  subrogated  to  continuing  partner's  place  to  get  the  prop- 
erty. Difference  of  parties  the  objedlion.  But  allowed  to  enforce  right 
of  all  against  the  property.  Defendant  may  insist  that  partner  by  holding 
out  shall  be  co-plaintiff.  The  defendant  might  have  a  set-off  which  would 
be  available  only  against  all  the  partners,  that  is,  the  partner  by  holding 
out  naight  have  made  the  contract  for  himself  and  the  other  partners,  and 
the  defendant  would  have  to  hold  the  firm  through  the  partner  by  estoppel. 
A  partner  by  estoppel  may  be  put  into  bankruptcy.  This  was  denied,  be- 
cause all  the  creditors  would  hold  him  liable  when  he  is  liable  only  to 
those  who  knew  and  credited  him.  But  this  position  is  not  sound,  for 
Equity  can  marshal  the  assets.  The  nominal  partner  can  be  sued  with  the 
partners  in  fadl.  In  England  it  is  held  that  he  cannot.  The  joint  contradl 
was  not  entered  into  by  him.  He  stands  apart,  and  must  be  sued  alone, 
or,  at  least,  not  with  a  new  partner,  because  he  is  unconnedled  with  him. 
This  is  making  the  partnership  contrail  the  measure  of  a  partner's  lia- 
bility, whereas  the  relation  inter  5<?is  foreign  to  the  question.  It  is  not  a 
fadl  that  no  cases  can  be  found  which  permit  the  joinder  of  partners  by 
estoppel  with  the  partners  in  facl.  The  praAice  in  America  is  certainly  to 
join  all.  <J69.  Joinder  of  nominal  partner  as  co-plaintiff,  z/.  Procedure. 
Admission  by  co-partners  don't  bind  partner  held  out.  \  146,  n.  3. 

HOLT,  Lord.     Partner's  right  to  buy.   I  5,  n.  i. 

HUNTER,  Dr.  W.  A.     Civil  law  indivisible  contradl.   ^91,  n.  3. 

658 


Index, 
hurlemann, 

Johannes.  Cantonsprocurator.  View  of  partner'a  title  to  firm  property, 
of  French  notion  of  partnership  as  a  corporation.  ^.  loi,  n.  3.  v.  Status. 
Credit  to  peculium  because  slave  or  son  incurred  no  liability.  §  164  &  n.  7. 

HUSBAND,  wife's  agent,   'v.  EVIDENCE. 

HUTCHINSON,  R.     Account  preliminary  to  sale  on  execution.   |  103,  n. 
6,  a. 

^l^ering,  bon.     By  contribution  partner  becomes  disinterested,  and  works 
fcrr  co-partner.   I  56,  n.  a. 

ILLEGAL  BUSINESS 

Excluded  from  account,  v.  Account.  No  account  lies  for  unlawful  trans- 
actions. A  partnership  for  a  lottery  would  not  be  recognized  bj'  comity. 
The  business  would  constitute  a  nuisance,  g  211,  n.  2.  If  part  of  business 
illegal,  as  trading  in  contraband  merchandise,  an  account  would  not  lie 
for  the  legal  part.  |  2 1 1 ,  n.  i .  A  partner  cannot  compel  an  account  of  gains 
made  by  competition  with  illegal  business.  The  ill'egality  is  a  defence  to 
the  bill.  I  21 1,  n.  2.  The  investment  of  proceeds  does  not  purge  the  trans- 
aAion  of  its  unlawful  characSler.  Contra,  I211,  n.  3.  Partners  agreeing 
not  to  bid  more  than  a  given  price  for  recruits  not  a  conspiracy  to  control 
price,  or  illegal.  ^  211,  n.  2.  Partner's  contradl  for  options  in  grain  does 
not  charge  co-partner,  though  firm  business.   ?,  139,  n.  3.     v.  Torts. 

ILLINOIvS  apportions  liabilit}^  for  partial  loss  of  contribution  by  the  share 
of  profits.   I  32.      t'.  Contribution. 

IMPROVEMENTS  to  real  estate  by  the  firm.   ?;  no,  n.  6.     v.  Land.   ?  28. 
V.  Contribution. 

INCOMING  PARTNER,     v.  Change  of  Partners.     Cannot  ratify.    ?  144, 
u.  2,  7.      V.  Ratification. 

INCORPORATION. 

Carrying  on  business  jointly  until  incorporation  charges  the  parties  as 
partners,  though  the  United  States  Supreme  Court  held  that  the  member- 
ship might  be  only  a  qualification  of  an  incorporator. 

INCREASE  of  contribution  during  partnership.    ?  28.     v.  Contribution. 

INDEPENDENT  name  of  partner  the  firm  designation,     v.  Name. 

INDIANA  makes  the  share  of  profits  the  measure  of  liability  for  a  partial 
loss  of  contribution.  §  32.     v.  Contribution. 

INDUSTRY,  Partnership  in.    ?  7.     v.  MANUFACTURING. 

659 


Index. 

INFANT 
As  co-plain  tifl.  g  76.  i'.  Procedure.  The  continuance  of  the  business  after 
majority  is  a  ratification  of  all  firm  transadlions  during  infancy,  ^  136,  u. 
1,  in  analogy  to  the  principle  which  charges  infant  for  price  of  property 
retained  after  majority,  'i  136,  n.  2.  Analogy  not  perfedt,  because  no 
physical  property  which  might  be  handed  over  to  firm  creditor;  but 
infant  retains  his  position  as  partner  and  co-proprietor  of  business,  which 
is  the  product  of  the  contra<5ts  made  durimg  minority.  Infant's  failure  to 
dissolve,  and  notify  creditors  of  dissolution,  also  charges  him  for  subse- 
quent contracts  of  the  firm.  ^  136,  n.  3.  Infant  may  reclaim  his  contri- 
bution, though  not  his  deposit  made  a  price  of  admission,  against  his  co- 
partner, ?  137,  but  not  indemnity,  for  he  retains  co-ownership  of  the 
property,  and  its  loss  results  from  his  own  adl.  When  he  reclaims  con- 
tribution, he  devests  his  co-partners.  §  136,  n.  4.  If  assets  equalled  in- 
fant's contribution,  he  could  take  them  in  competition  with  creditors, 
i!  136.  Infant's  position  as  partner  determined  entirely  by  his  property 
rights.  The  firm  acquires  no  right  by  the  partnership  contradl,  and  in- 
fant is  not  bound  by  the  business  contracts  of  the  firm.  The  cases  which 
charge  him  proceed  on  the  theory  that  he  invests  his  co-partners  with 
title  and  is  bound  by  his  adl.  But  his  deed  is  not  less  voidable  than  his 
promise.   ^  137,  n.  2,  3. 

INSOLVENCY. 
Proper  method  of  distribution  on  execution  if.    v.  Execution.    Ground 
for  dissolution,    'i  173,  n.  i,  a.     Of  firm  makes  payment  of  separate  debt  a 
fraud  on  firm  creditors.  ?.  167,  n.  7,  c ;  §  103,  n.  4.     v.  Tort. 

INSTITOR.  ?ioi,  n.  3.     v.  STATUS.    1 191.     v.  MARSHALLING. 

INSURANCE,  Mutual,     v.  Gain.     By  partner  covers  stock,  unless  lim- 
ited to  his  share.   \  103,  n.  10,  11.  j 

INTENTION 
Not  equivalent  to  contra6l.  \  23.     Without  property  as  a  qualification,  the 
secret  intention  of  the  parties  would  be  the  only  guide  to  a  partnership. 
V.  Property.     Intention  sujeScient  now  to  make  land  firm  assets.  \  109,  n. 
56;  ^112,  n.  I.     V.  Land.  c 


INTEREST. 
Amount  or  rate  for  loan.    v.  Evidence.      On  advances,    v.  Advances. 
Excess  of  when  not  usurious.   ?  165,  n.  2.     t'.  Advances.     On  contribution. 
?32.    I'.  Contribution.    Measured  by  profits  not  usurious.  |  65;  ^64,  n.  3, 
b.     In  addition  to  profits,     v.  Evidence. 

IOWA 
Code  makes  firm  a  party.  \  76,  n.  i.    v.  Procedure.     Prevents  judgment 
against  one  partner  being  a  bar  to  recovery  from  the  others.  \  82.     v.  Pro- 
cedure. 

660 


Index. 

ISSUE  of  partnership.  §44.     t'.  LIABILITY. 

ISSUE  of  partnership  as  to  creditors  excludes  evidence  of  partnership 
contradl  and  motives  of  parties.   §  69,  n.  5.     v.  Holding  out. 

JAMES,  Lord  Justice.      Considered  trustee-partner's  use  of  trust  funds  as 
a  loan  to  the  firm.  §40,  n.  2. 

JOINDER. 

The  only  joinder  recognized  by  the  Common  law,  was  joint  ownership 
and  joint  possession.  Neither  owner  nor  possessor  could  alien  or  mort- 
gage his  co-tenant's  share,  for  only  the  possession  or  title  was  in  common. 
\  5.  Joinder  in  suit  enforced  by  the  technical  joint  contradl.  \  81.  Inter- 
mediate joint  business  until  incorporation,  v.  Incorporation.  Legal 
excuses  for  non-joinder,  v.  Parties.  Joinder  of  surviving  and  executor 
of  deceased  partner  presents  no  difficulty.   ?88. 

JOINT  AND  SEVERAL  CONTRACT,  not  an  improvement  of  the  joint 
contrail.   ■^91. 

JOINT  CONTRACT, 

A  fidlion,  which  frustrates  the  process.   §81.    v.  Procedure.    Independent 
principals  cannot  be  sued  together,  because  no  joint  contradt.  \  63. 

JOINT  CREDITORS. 

Preference  derived  from  joint  estate,  v.  Property.  Right  to  assets,  v. 
Firm  Creditors.     Preference,    v.  Joint  Tenancy. 

JOINT  DEBTORS,     Partners  become  by  dissolution.  §178. 

JOINT  ESTATE. 

V.  Property.  Cause  of  partner's  capacity  and  firm  creditor's  right  to  the 
stock.  \  194,  n.  4,  5.  V.  Marshalling.  Legal  basis  of  joint  creditors'  pri- 
ority. §  99 ;  \  107.     V.  Preference. 

JOINT  PURCHASE. 

If  purchasers  agree  to  pay  by  quotas,  they  are  not  jointly  liable.  The 
purchases  are  separate,  and  each  is  liable  only  for  his  part.  A  joint  pur- 
chase charges  each  purchaser  for  the  whole  price,  which  is  apportioned 
among  them,  subsequently,  by  contribution,  or,  if  any  are  insolvent, 
among  the  solvent  purchasers.  If  one  purchaser  gave  the  note  of  himself 
and  co-purchaser  for  the  price,  his  co-purchaser  is  not  liable  on  the  note 
The  authority  is  limited  to  payment,  and  even  postponement  by  commer- 
cial paper  exceeds  the  authority.  A  promise,  though  less  than  payment, 
is  not  implied.   \  49. 

JOINT  TENANCY,  adapted  to  commercial  uses.   ?99.     v.  Property. 

661 


Index, 
judgment. 

If  against  fimi,  limited  in  first  instauce  to  joint  assets.  ?  77.  v.  Tro 
cedurc.  By  Civil  law  process  enlarged  so  as  to  bind  partners,  unless  thc\ 
have  i)ersonal  defences,  but  by  English  law  releases  partners  not  served. 
:'.  Procedure.  Judgment  against  one  merges  cause  against  several.  ^  77  ; 
don't  bind  partner's  ultimate  share  of  firm  land,  because  it  goes  to 
him  as  new  acquisition.  ^  109.  v.  Land.  vSeparate  judgment  don't  bin<l 
firm  land,  ii  1 10,  n.  5.  Judgment  against  the  firm  binds  its  land  and  that 
of  the  separate  partners  from  date  of  entry.  I  11 1,  n.  6,  7,  8  &  9.  v.  Land. 
In  other  States  than  Pennsylvania,  judgment  against  a  partner  binds  only 
his  interest  in  land  after  firm  debts  are  paid.  ^  1 11,  n.  10.  Except  against 
lonafide  purchasers,  land  is  marshalled  for  firm  creditors.  \  1 1 1 ,  n.  15.  v. 
Land.  Judgment  against  title-holder  is  not  a  lien  against  firm  creditors. 
^  112,  n.  6.  Notice  of  firm  title  sufiicient  for  purchaser  or  mortgagee. 
?  112,  n.  10,  II,  12.  Judgment  against  separate  partner  holding  title,  cut 
out  by  co-partner's  lien  for  advances.  ^  112,  n.  6.  Partner  cannot  confess 
judgment  against  co-partners.  They  can  have  it  stricken  off  against  them, 
\  122,  n.  2,  but  execution  takes  firm  assets.  1 122,  n.  i,  2.  Character  of 
judgment,  i.  e.,  joint  or  separate,  fixed  by  the  claim.  \  121,  n.  4.  If  judg- 
ment limited  to  firm  assets,  as  in  New  York  and  Louisiana,  partner  may 
confess  judgment.  ^  122,  n.  5.  v.  Powers.  Evidence  that  judgment  was 
confessed  to  defraud  creditors,  puts  judgment-creditor  to  proof  of  bona 
fides.  \  122,  n.  9.  V.  Powers.  Judgment  in  process  modeled  on  Civil 
law  process,  limited  in  first  instauce  to  firm  assets.  \  76,  n.  i.  If  special 
partner  a  party,  judgment  would  bind  his  separate  estate.  \  76,  n.  J4. 
Foreign  assimilated  to  domestic  judgment.  \  84.  v.  Procedure,  Equity 
will  not  open  judgment  to  let  plaintiff  bring  in  dormant  partner.  \  85.  v. 
Procedure.  At  Common  law,  on  death  of  partner,  sci.fa.  would  not  lie 
on  the  judgment  against  his  representatives,  although  survivor  insolvent. 
A(fls  were  passed  to  recTiify  this  process  and  bring  them  in.  \  89.  v.  Pro- 
cedure. Severing  judgment  severed  cause  of  action,  and  gave  independ- 
ent right  against  each  partner.  \  90.  v.  Procedure.  Partner  executing 
judgment,  if  abuse  of  legal  process,  charges  co-partner.  \  139,  n.  4.  v. 
Tort.  Credit  of  firm  claim  on  judgment  against  partner  don't  bar  firm's 
recovery.  </  167,  n.  4.  a.  The  character  of  the  judgment  is  ascertained  by 
the  claim  ;  if  separate,  the  judgment  is  separate  ;  if  joint,  the  judgment  is 
joint.  ?  95.  Merger  of  claim  by.  v.  Contradl.  At  first,  death  of  co- 
judgment-debtor  apportioned  lien  on  land.  ?  103.  Partner  may  assign,  but 
not  guarantee  payment  of,  judgment.    \  129,  n.  4. 

JUDICATURE,  ACT  and 

JUDICIAL  ORDERS,  adopting  Civil  law  process,     v.  Procedure. 

JURY. 
Partnership  for  jury,  unless  by  contradl  in  writing.  ?  21.     v.  Partnership. 
Whether  husband  became  partner  by  wife's  share,  or  her  agent,  for  jury. 
^69,  n.  17. 

662 


\ 


Index, 

JUS  SEPERATIONFS.  ?  164;  I  loi,  n.  3. 

KANSAS 

Joins  sur\nving  and  executors  of  deceased  partner  in  acSHon.    \  88.     v. 
Procedure.     Releaseof  one,  and  not  of  other,  partner.  ?  90.    z*.  Procedure. 

KELLER.  Dr.  F.  L.     Civil  law  indivisible  contract,  iigi,  u.  3. 

KENTUCKY  charged  deceased  judgment-debtor's  estate.    ?.  89.     v.  Pro- 
cedure. 

KL^NTZE,  Dr.  Einil.     Theory  of  joint  estate  in  German  law.   ^  loi,  n.  2. 
V.  Status. 

LACHES  deprives  partner  of  right  to  demand  appointment  of  receiver. 
\  182.     V.  Receiver. 

LADD,  J.     Coutracl  implied  by  law  as  a  substitute  for  duty.   \  46,  n.  i. 

LAND. 

Land  was  not  merchandise,  and  not  the  subjecl-matter  of  partnership. 
The  intention  which  united  the  act  of  buying  with  the  acl  of  selling  could 
not  convert  land  into  an  article  of  traffic.  The  buj'ing  and  selling  re- 
mained two  distindl  acfts,  unconnecfted,  in  spite  of  the  intention  to  fuse 
them,  by  reason  of  the  ponderability  of  land.  ^  8  &  n.  i.  Oral  partnership 
to  deal  in  land.  |  10.  v.  Statute  of  Frauds.  When  title  is  put  in  one  or 
both  partners,  evidence  is  competent  to  prove  the  equity  of  the  firm,  subject 
to  the  separate  claims  of  the  title-holder.  §  11,  u.  i.  Originally,  mutual 
covenants  were  required,  in  order  to  make  land  an  article  of  merchandise, 
and  trading  in  it  a  partnership.  Now  the  law  gives  eflfecl  to  the  purpose 
of  the  partners,  no  matter  how  their  intention  is  manifested,  but  does  not 
change  the  natural  character  of  the  land,  unless  the  parties  disclose  such 
an  intention.  \  13.  Laud  as  contribution,  v.  Contribution.  If  land  is 
conveyed  to  a  firm,  the  title  vests  as  personal  property.  Trade  converts 
the  land  into  merchandise,  and  makes  it  an  article  of  traffic.  A  stipulation 
was  originally  required  to  convert  land  into  firm  assets,  and  mutual  cove- 
nants were  made  in  the  partnership  articles.  Without  a  contra<5l,  the  land 
would  be  held  in  common,  and  each  partner  could  sue  his  co-partner  for 
his  share  of  the  price  realized  b}-  its  sale.  ?  109,  n.  5;  ?  112,  n.  i.  Subse- 
quently the  purpose  of  the  partners  became  sufficient,  without  any  agree- 
meiit.  The  right  of  the  firm  now  depends  upon  intention,  and  evidence 
of  intention  is  competent  to  establish  the  firm  title.  ?  109,  n.  5.  The 
partners  taking  land  for  a  firm  debt  would  establish  a  firm  ownership. 
Taking  title  by  the  partners  might  be  intended  as  a  separation,  and  a 
holding  as  tenants  in  common,  but  taking  the  land  in  satisfaction  of  a 
firm  debt  would  disprove  a  withdrawal,  because  the  title  was  acquired 
in  the  transaction  of  firm  business.    \  109,  n.  6.      The  fi(ftion  of  a  con- 

663 


Index. 

version,  like  that  of  an  equitable  lieu,  is  unuecessary.  The  firm  has 
the  control  of  the  land  for  its  purposes,  no  matter  how  it  acquired  title. 
'i  109.  The  ficl.ion  was  forced  in  England,  and  made  to  change  the  land 
iulo  personalty,  not  only  for  the  partnership,  but  altogether.  The  change 
shifted  the  property  from  the  heir  to  the  personal  representatives  upon 
the  expiration  of  the  partnership.  The  conversion  being  uncalled  for 
after  the  partnership  was  over,  a  re-adlion  took  place  against  the  arbitrary 
interference  with  the  laws  of  descent.  In  America,  no  such  alteration  of 
the  canons  of  descent  has  been  attempted.  ^  109,  n.  6.  The  statement 
that  laud  becomes  personal  property,  means  that  the  title  is  controlled  as 
a  firm  asset,  but  the  incidents  of  land  remain.  In  Pennsylvania,  convey- 
ancing is  founded  on  the  lien  of  a  judgment  being  limited  to  the  defend- 
ant's title  at  the  date  of  its  entry.  A  judgment  against  a  partner  does  not 
bind  his  quota  of  the  firm  land.  His  share  is  only  an  ultimate  balance 
of  account,  and  entitles  him  to  no  part  of  any  specific  asset.  The  judg- 
ment would  not  have  anjlhing  to  bind  until  the  balance  is  struck,  and 
then  the  portion  would  go  to  him  as  a  new  acquisition.  If  a  judgment 
was  recovered  against  a  firm  in  which  the  partners  held  real  estate  as 
tenants  in  common,  and  subsequently  judgment  was  recovered  against  a 
partner,  the  judgment  against  the  firm  would  take  precedence  on  his 
moiety,  because  the  lien  binds  each  partner's  land  from  the  entry  of  judg- 
ment. I  109,  n.  7.  After  the  firm  uses  are  exhausted,  the  land  goes  back 
to  the  partners,  and  vests  in  them  as  land,  giving  the  widow  of  a  deceased 
partner  dower,  and  not  a  third  outright,  and  goes  to  heirs,  and  not  to  per- 
sonal representatives.  Thefi(5lion  of  re-conversion  has  been  applied  to  pre- 
vent a  judgment  from  binding  the  land  of  a  partner  after  the  firm  purposes 
had  been  subserved.  Yet  the  heir's  title  relates  back  to  the  partner's  death, 
and  the  widow's  dower  attaches  at  that  instant.  If  the  title  relates  back 
for  devolution  upon  the  heir,  and  for  transmission  to  the  widow,  the  rela- 
tion should  take  place  for  the  creditor.  ^  109.  If  the  partner  holding  title 
should  convey  it  to  his  wife,  the  co-partner's  remedy  would  not  be  barred 
by  the  Statute  of  Limitations.  The  remedy  at  law  would  be  inadequate, 
and  a  bill  would  lie  to  compel  an  account  and  a  re-conveyance.  |  no,  n.  2. 
The  heir  of  a  deceased  partner  could  be  compelled  to  execute  a  convey- 
ance to  a  purchaser  from  the  firm.  ^  1 10,  u.  3.  The  separate  creditor  could 
not  claim  payment  out  of  the  proceeds  of  land  if  on  a  settlement  of  account 
no  balance  was  due  to  his  debtor.  ^  no,  n.  4.  No  separate  judgment  or 
lien  binds  the  firm  title,  nor  does  execution  or  attachment  affedl  it.  ?  no, 
n.  5.  Improvements  made  by  the  firm  belong  to  it,  and  cannot  be  taken 
by  the  partner  holding  title,  without  compensation.  ?iio,  n.  6.  If  he 
mortgages  or  sells  the  land,  the  title  will  pass,  under  the  mortgage,  to  a 
bona  fide  taker,  'i  no,  n.  7.  Notice,  however,  will  prevent  the  mortgagee, 
or  vendee,  from  taking  title  to  the  improvements.  \  1 10,  n.  8.  In  personal 
property  the  separate  creditor  cannot  claim  title  on  the  ground  that  he 
thought  the  property  belonged  to  the  partner,  because  he  paid  no  consid- 


664 


Index. 

eration  ;  but  in  land  the  title  may  be  conveyed  if  no  notice  of  firm  title. 
'i  no. 

There  is  no  marshalling  of  liens.  Therefore,  the  lien  of  a  joint  judg- 
ment-creditor will  not  be  controlled  so  that  a  separate  judgment-creditor 
can  be  paid  out  of  the  partner's  land  first.  Equity  cannot  devest  the  lien, 
but  follows  the  law.  <S  iii,  u.  i.  Nor  can  Equity  restrain  a  judgment- 
creditor  from  proceeding  by  execution  against  the  separate  partner's  real 
estate,  'i  i  ii,  n.  4.  The  creditor,  however,  does  not  lose  his  privilege  by 
proving  against  the  firm  in  bankruptcy.  §111,  n.  5.  The  firm  cannot 
take  title,  as  it  has  no  existence  except  in  the  partners.  But  a  deed  to 
A  &  B,  trading  as  A  &  Co.,  is  recognized  as  a  conveyance  for  the  firm, 
and  makes  the  land  firm  assets.  ?  iii.  n.  2.  If  the  deed  is  simply  to 
the  partners,  they  take  title  as  individuals,  and  judgments  against  them 
bind  the  land  in  Pennsylvania.  |iii,  n.  3,  11.  Judgment  against  the 
firm  binds  its  title,  and  also  land  of  the  individual  partners.  The  lien 
dates  from  the  entry  of  judgment  upon  the  record,  and  cuts  out  a  subse- 
quent judgment  against  the  separate  partners.  ^  11 1,  n.  6,  7,  8,  9.  In 
Pennsylvania,  apart  from  judgments  against  the  title-holder  and  the 
lien,  the  land  is  marshalled,  like  personalty,  among  the  joint  and  sepa- 
rate creditors.  Thus,  if  A  held  the  title,  the  land  would  be  marshalled 
between  the  creditors  of  B  and  the  creditors  of  A  &  B.  §  iii,  n.  9.  In 
other  States  than  Pennsylvania,  the  judgment  against  a  partner,  although 
he  holds  the  title,  binds  only  his  interest,  and  is  cut  out  by  debts  of  the 
firm  subsequently  incurred.  §  in,  n.  10.  The  partner's  mortgage  for  a 
firm  debt  makes  his  land  firm  stock  to  that  extent.  ^  in,  n.  16.  Except 
SLgSLinstdonaJide  purchasers,  who  did  not  know  of  the  firm  title,  the  land 
is  marshalled  for  the  firm  creditors,  ^iii,  n.  15.  A  partner's  lien  for 
advances  has  a  preference  over  the  lien  of  the  separate  creditors  of  a  co- 
partner in  land  held  by  him  for  the  firm,  g  112.  n.  6.     v.  Advances. 

The  use  of  land  for  the  firm,  or  the  purchase  or  improvement  of  it  with 
firm  funds,  is  competent  evidence  to  show  the  title  to  be  in  the  firm.  ?  1 12, 
n.  3.  The  employment  of  a  partner  to  raise  the  purchase-money  to  buy 
land  for  the  firm,  would  make  him  a  trustee.  The  purchase-money  be- 
longed to  the  firm  which  paid  the  commission  for  getting  it.  ?  112,  n.  4. 
Judgment  against  the  title-holder  is  not  a  lien  against  the  firm  creditors. 
■?  112,  n.  6.  The  co-partner's  lien  for  advances  cuts  out  judgment  against 
the  partner  holding  title.  §  112,  n.  6.  The  title  results  to  the  firm  if  it 
pays  the  price.  ?  1 12,  n.  7.  Notice  of  the  firm  title  is  sufficient  to  exclude 
the  claims  of  separate  creditors,  and  make  a  purchaser,  or  mortgagee,  take 
subjedl  to  the  title.  §  112,  n.  10,  11,  12.  The  widow  of  a  partner  is  not 
dowable  out  of  firm  land.  The  substantial  interest  is  in  the  firm,  and  the 
partner's  seizin  is  technical,  which  gives  no  right  against  the  firm  credit- 
ors. ?  112,  n.  13,  14.  In  Pennsylvania,  where  the  title  is  superior  to  firm 
creditors,  the  widow  is  cut  out  by  the  theory  of  the  lien  of  a  decedent's 
debts.  ?  112,  n.  15.  In  New  York,  dower,  which  attaches  on  account  of  the 
tenancy  in  common,  is  legal,  but  the  firm  creditors  are  both  legal  and 

665 


I 


Index. 

equitable.  ?  112,  n.  16.  A  single  partner  could  convey  real  estate  which 
was  held  for  both  partners  r.s  tenants  in  common,  though  for  the  firm  use, 
but  in  Pennsylvania  he  could  not  pass  title  without  his  co-partner's  join- 
iu"  in  the  deed.  ■^  112,  n.  18.  Partner  can  sell  his  interest  in  real  estate, 
Uiough  not,  it  should  seem,  specifically,  for  he  has  no  quota  until  the  bal- 
ance is  struclc.  <i  112,  n.  20. 

The  record  system  in  Pennsylvania  charges  the  title-holder  and  ignores 
the  beneficial  owner.  The  deed  is  taken  as  the  embodiment  of  the  parties' 
intention.  If  the  grant  is  made  to  the  partners,  they  take  as  tenants  in 
common.  Neither  purchasing  the  land  with  firm  funds  nor  using  it  for 
firm  purposes,  nor  both  combined,  will  overcome  the  form  of  the  convey- 
ance. The  deed  cannot  be  coutrc'di<5ted  by  parol.  Not  only  purchasers 
and  mortgagees  rely  upon  the  record-title,  but  creditors  are  assumed  to 
contract  with  reference  to  the  debtor's  title.  The  notion  did  not  originate 
in  Partnership  law,  but  was  taken  from  the  lien  of  a  decedent's  debts.  In 
that  branch  of  law,  judgment  creditors,  though  not  protedled  by  the  re- 
cording acts,  are  protedled  against  any  shifting  of  title  by  parol  evidence. 
The  inlerence  from  giving  the  judgment  a  lien  was  that  the  creditor 
contrac'led  on  the  faith  of  the  record,  and  then  had  a  lien  without  refer- 
ence to  his  judgment.  ?  113.'  No  use  results  against  the  legal  title,  but 
apart  from  the  title-holder,  the  use  will  result  to  the  real  owner.  §  113, 
n.  4. 

LANDLORD  AND  TENANT. 

v.  Subjedt-Matter.  The  title  to  the  crops  is  in  the  tenant.  By  the  gen- 
eral rule,  he  has  possession  for  his  term,  and  this  invests  him  with  title 
to  the  crops,  as  incident  to  his  possession.  The  landlord's  creditors  could 
get  at  his  share  by  attachment,  or  any  process  which  did  not  interfere 
with  the  tenant's  possession,  but  notified  him  to  hold,  or  pay  over,  the 
landlord's  share  when  set  apart  to  them,  and  not  to  him.  An  execution 
and  sale  of  the  landlord's  share  of  the  growing  crops  during  the  term 
would  not  pass  a  title.  The  execution  does  not  sever  the  title,  as  if  the 
law  acted  for  the  tenant  who  neglected  to  set  apart  the  landlord's  share. 
A  cropper  is  not  a  tenant  who  is  entitled  to  possession.  He  is  paid  foi 
his  labor  in  kind  out  of  the  crops,  and  has  no  right  to  possession,  or  title 
to  any  part  of  the  crop  until  it  is  paid  to  him.  All  the  States  do  not  treat 
the  tenant  as  entitled  to  possession.  Massachusetts  and  New  York  treat 
the  landlord  and  tenant  as  co-occupants,  with  sufficient  title  in  the  land 
to  proteA  their  interests  in  the  crops.  If  the  tenant  converts  the  land- 
lord's share,  trover  would  lie  for  the  conversion  against  the  co-occupant. 
Each,  or  both,  might  sue  the  stranger  for  a  trespass  or  conversion.  All 
might  assert  the  title,  or,  if  one's  share  was  sought  to  be  taken,  he  would 
have  special  cause  for  suit.  They  could  agree  for  a  division,  and  exclude 
a  joint  suit.  ^12. 


666 


Index, 
law  merchant, 

Does  not  regulate  partnership.  §3.  Created  power  to  sell  co-partner's 
share.  ^  5.  Did  not  charge  contributor  who  took  no  part  in  management 
with  unlimited  liability.  ^  37. 

LEGISLATION. 

Acceptance  of  legislation  in  its  favor  by  a  Pennsylvania  corporation, 
subsequent  to  the  Constitution  of  1874,  might  take  away  rights  acquired 
by  previous  contradls  with  the  State.  The  corporation  would  be  reduced 
to  the  condition. of  corporations  incorporated  under  general  statutes,  and 
would  be  subjedl  to  the  control  of  the  legislature.   |  24,  n.  10. 

LEIST,  Dr.  B.  W.     Origin  of  partnership,    g  i  &  n.  2. 

LENDER.     V.  EVIDENCE. 

LIABILITY,    PARTNER'S. 

By  the  contradl  which  partners  make  in  transadting  firm  business,  they 
bind  themselves  as  men  not  less  than  as  partners.  The  law  can  make  no 
limitation  upon  this  universal  liability,  and  recognizes  no  liability  in  one 
capacity,  i.  e.,  as  partner,  and  not  in  another,  i.e.,  as  an  individual.  The 
contract  was  treated  as  a  Common  law  formula.  The  partners  were  at 
first  treated  as  making  a  joint,  and  subsequently  a  joint  and  several,  con- 
tra(5l.  On  the  question  of  liability,  partners  are  nothing  but  joint  obligors. 
V.  Consent,  v.  Contradl.  If  partnership  is  simplj-  a  species  of  the|Common 
law  joint  obligation,  the  effedt  is  that  on  the  question  of  a  partner's  lia- 
bility no  partnership  need  be  alleged,  or  proved,  in  order  to  charge  him 
with  liability.  The  denial  of  partnership  would  be  irrelevant ;  it  would 
not  answer  the  charge,  which  might  be  made  out,  without  proof  of  part- 
nership, by  showing  any  joint  transadlion.  A  plaintiff  should  be  on  his 
guard  against  accepting  the  issue  of  partnership,  or  not,  because  the  issue 
would  narrow  his  claim  and  shift  the  bmrden  upon  him  of  proving  a  part- 
nership, in  order  to  recover,  when  that  might  not  have  been  necessary. 
\  44.  The  question  of  partnership  is  important  in  reference  to  the  powers 
of  a  partner.  The  partnership  creates  implied  powers  to  carry  on  the  busi- 
ness, and  proof  of  partnership  becomes  essential  to  one  who  relies  upon 
the  exertion  of  such  powers.  ?  49,  n.  i.  Taking  profits  by  creditors  does 
not  charge  them  as  partners,  because  the)'  are  not  proprietors,  v.  Profits. 
No  limitation  of  liability  at  Common  law.  v.  Capacity  as  partner.  Lia- 
bility to  creditor  as  a  partner  no  answer  to  a  charge  of  usury,  because  a 
personal  debtor.   \  66. 

LIBEL  of  editor  charges  co-partner.    ?  140,  n.  4.     v.  Torts. 

LIEN. 
For  a  partner's  advances.    ?  165.     v.  Advances.     A  separate  execution 
does  not  create  a  lien  on  the  partner's  share.    The  execution  seizes  and 

667 


Index. 

sells  his  right,  title  and  interest,  like  any  defendant's  in  execution,  but 
the  property  being  vested  in  the  firm,  the  partner's  share  is  nothing  tangi- 
ble, and  depends  on  an  ultimate  balance  of  account,  g  104,  n.  6;  ^  100,  n. 
4.  Partner's  lien  on  firm  assets  for  his  advances,  v.  Advances.  Liens 
not  marshalled.  ''/.  iii,  n.  i.  General  lien  covers  stocks  of  different  firms 
composed  of  the  same  members,  because  but  one  firm  in  law.    ^164,  u.  3. 

LIMITATION. 

Statute  of.  Bars  acflion  for,  and  adlion  upon,  a  settlement.  I  213.  v. 
Account.  The  trust  imposed  upon  the  purchaser  of  firm  assets  who  agrees 
to  pay  the  debts  is  within  the  Statute.  ^  145  &  n.  i  &  2.  Neithel"  acknowl- 
edgement or  part  payment  tolls  Statute  against  co-partner.  I  178,  n.  6  &  7. 
Adlion  for  land  conveyed  to  wife  of  partner  not  barred  by.  ^iio,  n.  2. 
Partner's  confessed  judgment  will  not  revive  debt  barred  by  Statute  of 
Limitations.  ^  122,  n.  6.  v.  Powers.  Alleged  excuse  for  making  judg- 
ment bar  remedy  against  dormant  partner.    ^84,  n.  i.     v.  Procedure. 

LIMITED  liability,     v.  Special  Partnership. 

LINDLEY, 

Lord.  States  that  the  Legislature  introduced  limited  liability.  \  37,  n.  b. 
Firm  a  bona  fide  purchaser  of  trust  funds  from  trustee-partner.  \  40,  n.  i. 
Sharing  profit  and  loss  a  partnership.  \  61.  n.  i.  Set-off  of  individual 
debt  by  surviving  partner  a  breach  of  the  relation.   §  130,  n.  14. 

LIQUIDATED  claim  a  set-off.     v.  Set-Off. 

LIQUIDATION. 

The  partnership  is  continued  after  dissolution  only  for  liquidation. 
1 183.  The  liquidating  partner  represents  the  firm  for  this  purpose.  \  184. 
The  effecl  of  a  partner's  denial  of  his  co-partner's  authority  to  make  com- 
mercial paper  is  to  put  the  holder  upon  proof  of  consideration  if  received 
from  the  co-partner,  and  of  his  authority.  >,  184,  n.  3.  The  liquidating 
partner's  note  was  held  to  merge  the  firm  debt,  and  precluded  the  credit- 
or's recovery  against  the  other  partners,  but,  unless  the  note  was  treated 
as  an  individual  contradl,  which  was  made  by  both  parties  to  supercede 
the  firm  contract,  the  note  should  be  considered  as  a  firm  note,  made  in 
his  capacity  of  liquidating  partner.  ?  184,  n.  3.  This  resulted  from  the 
New  York  decisions,  which  deny  the  liquidating  partner's  capacity  to 
make  commercial  paper,  and  precluded  the  natural  construdlion.  The 
form  in  other  States  is  not  notice  of  an  individual  transadlion,  but  the 
charaaer  of  the  paper  is  for  the  jury.  I  184,  n.  6.  If  no  liquidating  part- 
ner .s  appointed,  any  partner  could  ac<l,  and  unless  the  co-partners  prevent 
him  from  adlmg,  they  will  be  bound  for  his  liquidation.  I  185.  The  liqui- 
dation by  continuing  partner  is  part  of  his  security  for  the  price  of  retiring 
partner  sshare.?  186.  The  appointment  of  a  partner  is  irrevocable,  because 
coupled  with  an  interest ;  the  appointment  of  a  stranger  is  revocable,  and 

668 


Index. 

a  release  by  a  partner  extinguishes  the  debt,  although  the  debtor  had 
notice  of  the  appointment.  J  187.  This  does  not  apply  to  a  judicial  ap- 
pointment, nor  to  the  appointment  by  contracfl  made  as  security  for  the 
advance  of  the  retiring  partner's  interest  in  the  firm.  ^  186.  A  liquidating 
partner  is  not  entitled  to  compensation  for  his  services,  though  he  may 
employ  clerks,  at  salaries,  to  assist  him.  If  the  articles  provide  for  com- 
pensation to  partners,  the  surviving  partner  who  was  appointed  receiver 
by  the  court  could  recover  only  for  his  services  as  official  liquidator.  I  188. 
The  general  creditor,  though  without  a  judgment,  has  a  standing  to  con- 
trol the  liquidating  partner.  1 189.  The  liquidating  partner  will  be  dis- 
placed only  by  the  necessity  for  a  receiver.  |  190.  Distribution,  v. 
Distribution.  A  purchaser  of  a  partner's  share  is  interested  only  in  liqui- 
dation. V.  Execution.  A  surviving  is  pradtically  a  liquidating  partner. 
The  rights  survive,  but  the  beneficial  interest  goes  to  deceased  partner's 
representatives.   ^  130,  n.  13,  14,  15,  16. 

LITIGATION 

Between  Partners.  No  adlion  lies  during  the  partnership.  A  suit  would 
involve  a  settlement  of  every  item  in  the  account,  and  a  dissolution.  </  153, 
n.  I.  Trading  in  corporate  form  does  not  avoid  the  difficulty,  1 153,  n.  2, 
wJiich  underlies  any  partnership  business.  1 153,  n.  3.  Partner's  payment 
of  a  firm  debt  does  not  entitle  him  to  subrogation,  for  he  is  not  entitled 
to  repayment  until  a  final  adjustment,  </ 154,  n.  i,  though  subrogation  is 
permitted  between  firms  with  a  common  member.  ^  154,  n.  i.  A  partner 
cannot  sue  his  co-partner  for  mismanagement  during  the  partnership. 
The  damages  enter  into  the  account,  'i  155,  n.  i.  No  set-off  avails  between 
partners.  The  claim  is  not  liquidated,  ?  156,  n.  i.  A  partner  has  no 
quota  of  a  firm  debt  to  be  set-off.  |  156,  n.  2.  A  partner  cannot  set-off  his 
advances  made  to  pay  firm  debts  against  the  price  of  his  co-partner's  share. 
The  account  must  be  settled  before  the  co-partner's  share  could  be  ascer- 
tained, and  this  is  still  more  necessary  if  there  is  a  third  partner.  >,.  156, 
n.  5.  The  account  will  not  be  taken  as  accessory  to  any  other  litigation. 
The  partners  must  be  parties  to  the  proceeding.  ^.  156,  n.  6.  The  account 
stated  is  a  settlement  by  agreement,  and  equivalent  to  an  account. 
If  a  balance  has  been  agreed  upon,  assumpsit  will  lie  without  an  express 
promise  to  pay  the  balance.  The  promise  would  be  implied  as  a  conse- 
quence of  the  settlement.  ?  157,  n.  2,  4.  The  balance  struck  might  be 
shown  to  be  erroneous.  ?  157,  n.  i.  Debt  would  He  to  recover  the  bal- 
ance, but  not  case,  which  involves  an  unliquidated  claim.  ?  157,  n.  3. 
The  prohibition  does  not  affedl  an  independent  transa(?lion  which  is  not 
involved  in  the  firm  account.  A  partner  may  sue  his  co-partner  upon  such 
a  claim,  for  they  are  strangers  in  reference  to  it,  e.  g. ,  a  contribution  which 
is  antecedent  to  the  firm.  ?  158,  n,  i.  Partner  may  sue  firm  of  which  his 
co-partner  is  a  member  for  loans.  The  transacflion  is  foreign  to  plaintiff's 
partnership.  §  158,  n.  2.  If  partnership  consists  of  a  single  transa(5lion,  a 
partner  may,  without  an  account,  sue  his  co-partner  for  a  share  of  the 

669 


Index. 

profits.  1 158,  n.  3,  or  if  no  other  partnership  business  remains  to  be  set- 
tled, i  158,  n.  4.  Account  during  partnership  governed  by  same  principle. 
J  159.     V.  Account. 

LOAN 

To  partner  for  his  contribution,  does  not  make  lender  creditor  of  the  firm. 
The  firm  creditors  would  cut  him  out.  If  the  lender  obtained  judgment, 
the  consideration  could  be  investigated,  and  the  judgment  set  aside  as 
fraudulent  against  firm  creditors.  ^19.  Loan  for  share  of  profits.  ^64. 
i:  Evidence.  Loan  without  any  personal  debtor.  §64,  n.  3,  a.  v.  Evi- 
dence.    Loan  without,  or  even  with,  control.    \  64,  n.  3,  b.     v.  Evidence. 

LOSS.     Sharing  loss  said  to  be  conclusive  of  partnership,    \  6i,    but  not 
unless  by  proprietor.   <(  61 ;   'j.  57. 

LOTTERY.  ?  211.  n.  2.     v.  Illegal  Business. 

LOWRIE,  C.  J.      p-ailure  of  redress  against  each  partner  and  his  estate 
result  of  procedure.    \  86,  n.  2. 

LUNWCY  of  a  partner  suspends  the  partnership.   \  173.     Ground  for  a  dis- 
solution.   'I'f,  i-jT,  &  n.  II. 

MAINE  continues  firm  debt  against  deceased  partner's  representatives. 
{!  88.     v.  Procedure. 

MAINE,  Sir  Henry  Sumner,  LL.  D.     Joint  ownership  original  type  of 
property,   ii  98,  n.  1. 

MALINS,  V.  C.     Solicitors  investing  client's  money  without  submitting 
securities  for  approval.    ^  140,  n.  i. 

MANAGING 

Business,  evidence  of  partnership,  v.  Holding  Out.  Makes  partner  ex- 
plain his  failure  to  earn  profits,  g  206,  n.  4.  v.  Account.  Managing  busi- 
ness by  dire<ftion  of  proprietor.  <(  59,  n.  2.  4th  Exception.  Managing 
needs  explanation.  ^  69,  n,  2. 

MANSFIELD. 

Partnership  a  refuge  for  usurer.  ^66,  n.  i.  Remodelled  procedure.  §88, 
n.  I.  Effect  of  his  admitting  a  plea  in  abatement.  ^  92.  Attorney  no  power 
to  represent  without  authority.  ^  119. 

MANUFACTURING. 
Partnership  in.     The  manufaclurers  might  carry  on  the  industry  in  part- 
nership, and  .sell  the  goods  on  separate  account.   ?  7  &  n.  6. 

MARKBY,  Dr.  \Vm.     Joint  tenancy  transition  from  commercial  to  indi- 
vidual ownership.    ?  98  &  n.  2. 

670 


Index. 

MARRIAGE  of  a  woman  partner  dissolves  the  partnership.  ?  173. 
MARRIED  WOMAN, 

A  partner,  v.  Wife.  Right  to  marshal!  assets,  v.  Holding  Out.  Unless 
exempt  from  Common  law  liability,  a  married  woman  cannot  contracfl  as  a 
partner.  She  can  acft  as  agentof  her  husband,  assert  his  rights,  and  become 
subjedl  to  execution  by  separate  creditor.  ^  138,  n.  i.  If  a  partner,  her 
husband  is  disqualified  by  interest  from  testifying.  Ji  138,  n.  2.  A  hu.sband 
is  liable  for  his  wife's  ante-nuptial  partnership  debts,  although  he  does 
not  acquire  her  property  by  marriage.  |  138,  n.  3.  A  husband  can  trade 
as  agent  ot  his  wife,  and  his  separate  creditors  are  postponed  to  firm  cred- 
itors. §  138,  n.  4.  The  ratification  by  a  married  woman  after  discoverture 
relates  back  and  validates  all  firm  transadlions.  ^  138,  n.  5.  A  married 
woman  may  marshal  the  assets  in  relief  of  her  liability  as  a  partner.  |  69, 
n.  19.  Wife  of  partner  taking  title  must  re-convey  to  co-partner.  ?iio, 
n.  2.     V.  Land, 

MARSHALL,  C  J.,  carried  out  revolution  in  procedure  begun  by  Mans- 
field.  ^93  &  n.  I.     V.  Contra(fl. 

MARSHALLING  ASSETS. 

The  liability  of  a  nominal  partner  entitles  him  to  marshal  the  assets  in 
relief  of  his  liability.  ^  69,  n.  19.  v.  Holding  out.  Among  joint  and 
separate  creditors  of  partners  trading  in  individual  partner's  name.  v. 
Procedure.  The  exclusion  of  firm  creditors  from  the  separate  estate  in 
the  first  instance  arose  from  the  equitable  doArine  of  two  funds.  Chan- 
cery restriAed  the  joint  creditor  to  one  fund  when  he  had  two  in  order 
to  let  the  separate  creditors  have  one.  If  the  joint  creditors  came  on  the 
separate  fund,  they  had  to  allow  the  rate  received  from  the  joint  estate  to 
the  separate  creditor.  This  involved  a  sharing  of  the  joint  estate  by  the 
separate  creditors,  though  not  in  the  first  instance,  and  only  by  relation. 
From  this  equitable  adjustment  resulted  the  practical  exclusion  of  the 
joint  creditors  from  the  separate  estates  which  thus  reserved  for  separate 
creditors  gave  them  a  standing  in  opposition  to  the  joint  creditors.  But 
the  separate  creditors'  right  is  not  acknowledged  at  law,  and  exists  only 
in  equity,  for  if  there  are  no  joint  funds,  the  joint  creditors  assert  their 
right  to  come  on  the  separate  estates,  and  equity  has  no  ground  to  interfere 
with  the  exercise  of  the  legal  right.  ^  102;  i  193,  n.  i.  The  Pennsylvania 
vagary  of  marshalling  assets  arose  from  overlooking  the  historical  origin 
of  the  relation  and  trying  to  work  it  out  from  contradl.  ^  104.  The  clas- 
sification of  creditors,  or  dividing  them  into  joint  or  separate,  reveals  the 
system  of  marshalling  which  prevails.  The  opposite  theory  would  ex- 
clude any  joint  fund,  and  let  the  firm  creditors  compete  with  the  separate 
creditors  of  each  partner.  1 105.  But  the  existence  of  a  joint  fund  and 
the  liability  of  the  separate  estate  for  the  joint  debts  are  never  denied, 
but  constantly  a(fted  upon.     Equity  interferes  only  to  restridl  the  exer- 

671 


Index. 

cise  by  the  firm  creditor  of  his  legal  right,  and  can  do  this  only  by  im- 
posing a  condition,  or  putting  him,  as  it  is  expressed,  on  terms.  He  can 
share  the  separate  fund  only  upon  the  condition  that  he  first  permits  the 
separate  creditors  to  take  a  dividend  equal  to  the  rate  which  the  joint 
fund  yielded.  The  effecfl  of  this  interference  by  equity  involves  a  divi- 
sion of  the  joint  fund  between  the  joint  and  separate  creditors,  if  the 
firm  creditors  proceed  again§t  the  separate  estate.  It  is  this  pradtical  re- 
sult which  has  led  to  the  bankruptcy  rule,  and  which  explains  its  origin 
and  acceptance.  If  equity  can  indirectly  bring  about  an  allotment  of  the 
assets,  why  not  make  it  outright  and  at  the  start  ?  </  105. 

In  Pennsylvania  the  assets  were  originally  marshalled  by  letting  the 
firm  creditors  take  the  joint  assets,  and  also  come  in  upon  the  separate 
assets  with  the  separate  creditors,  though  not  until  the  separate  creditors 
were  allowed  a  rate  equal  to  the  partner's  quota  of  the  joint  estate.  §  105, 
n.  I.  The  right  of  the  joint  creditors  to  resort  to  the  separate  estate 
when  they  have  no  available  joint  fund,  i.  e.,  no  solvent  partner,  or  the 
joint  fund  is  exhausted  in  costs,  is  acknowledged,  ^  105,  n.  2,  3,  and  is 
inconsistent  with  any  exclusive  right  of  the  separate  creditors.  ?  105. 

Marshalling  assets  shows  the  want  of  principle.  The  practical  neces- 
sity of  keeping  the  stock  from  the  execution  of  separate  creditors  had  to 
be  admitted  in  all  Countries.  The  legal  reason  for  the  exclusion  has  not 
been  adequate  to  explain  it,  and  the  rights  which  result  from  it  to  the 
joint  creditors.  Partnership  exists,  and  its  existence  can  be  maintained 
only  by  preserving  the  stock  for  firm  creditors.  If  separate  creditors 
could  seize  and  sell  it  the  firm  would  be  broken  up  without  any  partner- 
ship justification.  The  theory  that  joint  and  separate  creditors  have  equal 
access  to  both  the  joint  and  separate  estate  means  either  a  severance  of 
the  title  and  no  joint  stock,  or  the  brotherhood  which  makes  all  the  prop- 
erty of  each  partner  the  common  stock  of  the  fraternity.  But  the  busi- 
ness partnership  is  not  a  societas  omnium  bonoruni,  nor  can  it  manage  to 
trade  with  stock,  which  belongs  to  the  separate  partners.  §  191.  Thepecu- 
liiim  gave  a  person  not  sui  juris  the  right  to  trade  exclusively  upon  the 
credit  of  the  fund,  but  a  person  sui  juris  had  no  such  privilege.  The  in- 
siitor,  or  agent  to  manage  a  business,  was  well  known,  but  no  mention  is 
made  of  limiting  a  principal's  liability  to  any  particular  business  when  car- 
ried on  by  means  of  an  iiistitor.  \  191.  The  analogy  of  sale,  which  might 
help  to  segregate  the  stock  at  the  Roman  law,  would  not  avail  at  the  Com- 
mon law.  ?  191.  A  firm  creditor  could  relinquish  his  priority  by  agree- 
ment with  the  separate  creditor,  but  the  separate  creditor  has  no  right 
except  by  his  contract.  ^192,  n.  2.  A  surviving  partner  is  a  trustee  for 
all  the  firm  creditors,  and  cannot  prefer  one  of  them.  \  192,  n.  i.  It  has 
been  held  that  all  the  partners  might  prefer  a  creditor,  although  the  firm 
was  insolvent.  \  192,  n.  i,  a.  That  a  subsequent  judgment  creditor  of  the 
firm  could  not  contest  a  prior  separate  j  udgment  which  took  the  assets.  §  192 
n.  2,  a.  But  firm  assets  diverted  to  payment  of  a  separate  debt  may  be  re- 
covered by  the  assignee  in  bankruptcy  from  the  partner's  separate  estate. 

672 


Index. 

^  192,  n.  3,  A  withdrawal,  however,  by  a  partner,  though  without  his  co- 
partner's knowledge,  will  stand,  if  not  made  in  expecftation  of  insolvency. 
§  192,  n.  3.  The  right  of  the  joint  creditor  against  the  separate  estate  sub- 
sists in  chancery,  as  is  seen  in  the  lien  of  a  judgment  again.st  the  firm  land; 
it  cuts  out  the  separate  judgment  creditor,  and  will  not  be  disturbed  for  his 
benefit.   §  193,  n.  2. 

The  unlimited  liability  imposed  by  law  upon  a  partner  who  contributes 
only  a  portion  of  his  property  to  the  firm,  induced  a  re-ac5lion  against  the 
excess  of  liability.  This  was  the  work  of  equity,  which  controlled  the 
exercise  of  the  legal  right,  when  it  invaded  the  estate  which  the  partner 
did  not  contribute  to  the  firm,  'i  195,  that  is,  when  equity,  by  its  princi- 
ples, had  cognizance  of  the  distribution.  ^  196.  The  firm  creditors  do  not 
depend  upon  the  partner's  equity  and  the  partnership  contra<5t,  but  have 
an  independent  and  a  diredl  recourse  to  the  joint  stock.  ^  194,  n.  3.  The 
destination  made  by  the  partners  of  the  stock  creates  the  joint  estate,  and 
thus  enables  them  to  trade  with  it.  The  creditors  contract  upon  the  faith 
of  the  estate.  The  destination  is  the  remote  cause  of  the  firm  creditors' 
right,  but  they  acquire  the  lien  by  dealing  with  the  partners.  ^  194,  n.  4, 
5.  The  partner's  debt  to  his  firm  is  not  collecfted  upon  insolvency,  un- 
less incurred  by  fraud,  then  it  is,  and  the  firm  creditors  can  enforce  pa}- 
ment  or  restitution.  1 197,  n.  2.  The  bankruptcy  rule  protects  only  the 
separate  estate.  If  a  firm  creditor  is  secured  by  a  firm  mortgage  and  by 
a  partner's  individual  mortgage,  a  general  creditor  cannot  pay  the  debt 
and  be  subrogated  so  that  he  can  come  against  the  partner's  separate 
estate  in  preference  to  his  separate  creditor.  Paying  the  firm  debt  extin- 
guished the  mortgage,  which  was  collateral  to  it,  and  the  assets  are  mar- 
shalled according  to  the  class  of  creditors.  ^  197,  n.  i.  A  partner  might 
enforce  his  individual  claim  from  his  co-partner  if  no  surplus  would  re- 
main for  the  firm  creditors  after  the  debtor-partner's  separate  creditors  are 
paid,  'i  197.  The  firm  creditors  might  be  subrogated  to  the  creditor  part- 
ner's claim.  But  not  if  the  surplus  and  the  enforcement  would  be  a  com- 
petition with  firm  creditors.  For  the  partner  is  himself  liable  to  the  firm 
creditor,  and  precluded  from  interfering  with  the  collecftion  of  his  claim, 
which  he  should,  but  does  not,  pay.  ?  198.  If  both  partners  are  insolvent, 
the  firm  creditor  would  have  no  surplus,  and  they  might  colledt  debts  from 
each  other.  1 198,  n.  i,  a.  Firm  creditors  may  be  subrogated  to  place  of  re- 
tiring partner,  and  enforce  his  rights  as  seller,  if  they  renounce  the  joint 
estate.  But  they  cannot  claim  the  price  he  received  and  also  the  assets 
for  which  it  was  paid.  ^200.  Payment  of  all  the  firm  debts  would  enable 
the  partner  to  enforce  his  claim  against  the  co-partner.  ^  201,  n.  2.  Part- 
ner is  a  separate  creditor  of  his  co-partner  for  balance  of  partnership  ac- 
count. §201,  n.  4.  The  debt  of  a  partner  to  the  firm  is  not  an  asset,  and 
if  it  were,  could  not  be  set-off  against  a  co-partner's  debt,  for  the  firm 
creditors  are  paramount,  and  would  collect  both.  ?  202.  The  debt  of  the 
firm  to  a  partner  could  not  be  colledled,  because  he  owes  the  firm  creditors 
in  his  individual  capacity,  and  can  not  compete  with  them  while  he  fails 

673 


I 


Index. 

to  pay  them.  ^,  2u2,  n.  2.  If  the  surviving  partner  is  indebted  to  his  firm, 
and  joins  a  succecling  firm,  he  could  not  be  compelled  by  the  subsequent 
firm  to  pay  bus  debt  to  his  original  firm,  nor  could  the  deceased  partner's 
estate  be  t'oiiipelled  to  pay  his  indebtedness;  but  if  the  succeeding  firm  is 
subrogated  to  the  creditors  whom  it  has  paid,  it  may  colledl  the  deceased 
partner's  indebtedness,  although  it  does  not  colleA  the  surviving  partner 
and  common  member's  debt.  \  203.  When  the  deceased  partner's  estate 
was  exempt  at  law  from  liability  for  firm  debts,  the  executor  could  not 
recover  the  share.  The  estate  being  liable  in  equity,  could  not  compete 
with  firm  creditors  by  withdrawing  the  assets  pledged  to  them.  If  the 
payment  of  the  deceased  partner's  share  was  guaranteed  by  his  co-partners, 
or  firm  assets  were  lost  by  their  tiismanagement,  he  could  enforce  the 
separate  liability  in  competition  with  their  separate  creditors,  provided 
the  firm  creditors  were  paid.  \  204.  The  bankruptcy  rule  being  statutory, 
is  repealed  by  any  legislation  inconsistent  with  it.  \  204,  n.  3.  The  Com- 
mon law  disregarded  the  common  member  on  the  joint  contracfb  formula, 
and  made  him  liable  on  the  contradls  of  both  forms.  Equity  put  the 
creditor  to  an  election  between  the  two,  although  it  had  no  ground  to 
deprive  the  creditor  of  his  independent  remedies,  and  the  objedl  of  equal- 
izing the  distribution  could  not  be  attained.  The  Bankrupt  acSls  have 
restored  the  right  to  double  proof.  In  America  the  remedies  might  ex- 
haust the  different  members  in  succession,  'i  205.  The  argument  against 
election  under  the  superceded  rule,  was  that  the  surplus  went  not  to  the 
other  firm,  but  to  the  individuals,  and  no  eledtion  is  enforced  in  bank- 
ruptcy between  the  joint  and  separate  estates.  \  205,  n.  6.  Partner  may 
marshal  assets  to  reimburse  his  outlays  on  behalf  of  the  firm.  \  184,  n.  3. 
:-.  Advances.  If  the  continuing  partner  who  has  agreed  to  pay  the  firm 
debts  is  insolvent,  the  retiring  partner,  or  the  firm  creditors,  could  enforce 
the  agreement.  A  bill  in  equity  would  lie  for  the  creditor's  equity.  \  147, 
n.  2.  Retiring  partner's  liability  founds  his  equity.  ?  147,  n.  i.  Creditors 
of  new  and  old  firm  share  assets.  ^  147,  n.  3.  Separate  creditors  rank  as 
joint  creditors  when  firm  transacts  business  in  name  of  individual  part- 
ner.   \  76,  n.  23.     V.  Procedure. 

MARYLAND 

Corre<5led  Common  law  process  against  partners.  §  82.  v.  Procedure. 
Maryland  pracflice  suggested  death  of  partner  on  record  and  substitutes 
representative  of  deceased  with  surviving.  \  88.  v.  Procedure  :  also  after 
judgment.   \  89.     v.  Procedure. 

MASONIC  Lodge,     v.  GAIN. 

MASSACHUSETTS,  debt  theory  of  contribution.   ?3i.     v.  Contribution. 
Not  consistently  maintained.   ?  35,  n.  2,  3. 

MATTHIAE.      Differences  of  opinion  among  Civilians  as  to  joint  and 
separate  creditors'  standing.    \  108,  n,  4. 

674 


Index. 

MAYNTZ,  Prof.  Charles,     aflio  tributoiia.   >,.  165.  n.  6. 

MEASURE  of  damages,  for  breach  of  contraifl  in  dissolving  parttiership. 
^212,  n.  3.     V.  Damages. 

MERCHANT,  LAW. 

The  Common  law  did  not  adopt  the  Law  Merchant.  ^  3  ;  ?  77.  By  the 
Law  Merchant  the  concurrence  of  ownership  and  management  was  neces- 
sary to  create  the  unlimited  liability  of  a  partner.  The  contribution  did 
not  charge  him  with  liabilit}-  unless  he  took  part  in  managing  the  business. 
§  3.  Covert  attempt  was  made  to  introduce  Law  IMerchant  by  getting  rid 
of  the  doclrine  peculiar  to  the  Common  law  of  an  undisclosed  principal. 
?.  26. 

MEREDITH.     Argument  that  sale  includes  pledge.    ^4,  n.  i. 

MERGER  of  claim  in  judgment,      v.  Contracfl. 

MICHIGAN 
Prevents  judgment  against  the  partner  from  merging  claim  against  co- 
partner.  I  82.     V.   Procedure.     Death  of  co-judgment  debtor  does  not  ex- 
onerate his  estate.   ?  89.     i'.  Procedure.      Release  of  partner  and  not  of 
co-partner.  §  90.     v.  Procedure. 

MINING   PARTNERSHIP 

Is  a  distincfl  species  of  partnership.  There  is  no  choice  of  partners,  and 
owning  a  share  of  the  firm  property  makes  the  owner  a  partner.  The 
purchaser  of  an  interest  becomes  liable,  like  a  partner,  for  all  the  debts 
of  the  firm.  There  is  no  limit  to  the  liability  of  a  mining  partner. 
He  has  a  lien  for  his  advances  to  the  firm.  Any  purchaser  of  an  interest 
assumes  that  debt  as  well  as  the  debts  to  the  firm  creditors.  A  court 
does  not  interfere  with  the  management  of  a  mining  partnership  for  the 
same  reason  that  it  appoints  a  receiver  of  a  commercial  partnership. 
Nothing  but  the  threatened  destrudlion  of  the  business  will  induce  a  court 
to  intervene.  The  partners  deal  at  arm's  length  with  each  other  in  refer- 
ence to  their  separate  titles,  and  one  partner  could  compete  with  the  firm 
and  buy  out  his  co-partner's  individual  title.  A  mining  partner's  au- 
thorit}^  is  defined  by  the  requirements  of  the  mining  business.   ?  15. 

MINNESOTA 

Severs  joint  cause  of  acflion  and  gives  remedy  against  any  obligor.  ?  88. 
7.'.  Procedure.  After  judgment.  <:  86.  z'.  Procedure.  Release  of  partner, 
not  of  co-partner,   l  90.     v.   Procedure. 

MISCONDUCT  not  ground  for  dissolution,  unless  it  excludes  the  co- 
partner.  I  173  &  n.  9. 

MISE.     I'.  CONTRIBUTION. 

675 


Index. 

MISSISSIPPI  Provides  remedy  against  surviving  and  representatives  of 
deceased  ])arlutrr.  ?.  yS.  v.  Release  of  partner,  not  of  co-partner.  ^90. 
:'.  Procedure 

M ITCIIKLL.  Judge  J.  T.  States  old  rule  in  Pennsylvania  formarshalling 
joint  auU  separate  assets.   ^  104,  n.  i. 

MULLOY.     Trade  gives  partners  capacity.    ?  35,  n.  3. 

MONTAGU,  Basil.  Separate  commissions  under  old  practice  kept  assets 
distinct,  and  made  separate  subjedt  to  joint  debts.    ^103,  n.  13. 

MORAWKTZ.     Argument  iox  defadlo  corporation.   (<  24,  n.  6.  9. 

MOTIVES 

Of  partnership  incompetent  evidence,  \  69,  n.  5,  except  where  parties 
dealt  with  knowledge.  \,  67.  Motive  might  be  to  establish  co-partners  in 
business.  ^46,  n.  3.    v.  Partnership. 

MOYLE,  J.  B.     Civil  law  indivisible  contradl.   <;9i,  n.  3. 

Ml'TUAL  COVENANTS  to  make  land  assets,  'i  105,  n.  5;  §112,  n.  i.  v. 
Land. 

MUTUAL  INSURANCE,  or  Proteclion.    ?  16,  n.  2.     v.  GAIN. 

NAME. 

No  firm  name  necessary  in  legal  proceedings.  The  name  is  surplusage, 
for  the  reason  given  [v.  Co-Principal  and  Liability)  that  the  question  of 
liability  is  independent  of  the  firm,  and  may  exist  without  a  partnership. 
?  44.  .-^  partner  can  sign  his  co-partner's  name.  He  represents  his  co- 
partner, and  if  the  partners  have  not  adopted  a  firm  name  a  partner  may 
sele(5t  one  for  them.  \  17.  Partners  may  trade  w'ithout  a  firm  name,  and 
in  joint  ventures,  especially,  by  two  or  more  firms,  this  is  the  usual 
method.  .\  firm  name  would  be  as  inconvenient  as  unnecessary.  Partners 
may  be  charged  on  commercial  paper,  though  not  parties  to  the  instru- 
ment. \  44.  Name  of  partner  in  firm  designation  charges  him.  v.  Hold- 
ing Out.  If  partner's  individual  name  the  firm  designation,  the  presump- 
tion in  Pennsylvania,  and  elsewhere ;  if  the  designation  of  two  firms,  cred- 
itor's choice.  >/,  76.  V.  Procedure.  No  name  necessary,  and  surplusage 
in  legal  proceedings.  \  76.  v.  Procedure.  Partners  who  agree  to  sue  and 
be  sued  in  a  firm  name  cannot  objeft  if  sued  in  that  name.  ?  76,  n.  7.  v. 
Procedure.  T'se  of  fitftitious  name,  though  prohibited,  does  not  prevent 
recovery,  unless  credit  acquired  by  the  name.  ?  76,  n.  15,  16  &  17.  If 
individual  name  the  firm  designation,  presumption  in  Pennsylvania  that 
commercial  paper  on  firm  account ;  elsewhere  on  individual  account.  \  76, 
".  iS,  19,  20,  21.  If  individual  name  designation  of  two  firms,  creditor 
may  eleft.   ?  76.  n.  22.     v.  Procedure. 

676 


Index. 
napoleon,  code 

Adopted  Felicius'  definition  of  partnership,  ?  i6,  n.  6,  d.  Divides  profit 
and  loss,  in  default  of  agreement,  according  to  qontributions,  ^36  &  n.  2. 
Makes  contribution  firm  property.   §31,  n.  3;  §33,  n.  i. 

NEBRASKA  statutes  make  firm  a  party.   ?  76,  n.  i.     v.  Procedure. 

NEGLIGENCE,     v.  TORT. 

NEW  JERSEY  provides  remedy  against  deceased  partner's  representa- 
tives. I  88.    Release  of  partner,  not  co-partner.   ?  90.     v.  Procedure. 

NEW  YORK 

Opens  judgment  obtained  by  unauthorized  appearance,  but  does  not  avoid 
it.  I  119.  Forbids  fidlitious,  and  requires  acflual,  names  of  partners.  ■§76, 
n.  15. 

NOMINAL  partner's  equity,  see  Equity.  Sued  with  partners  in  fa<5l.  v. 
Holding  Out.  As  co-plaintifF.  z^.  Procedure.  Not  bound  by  co-partner's 
admission,   'i  146,  n.  3. 

NON-COMMERCIAL  PARTNERSHIP,  v.  Trade.  Mining  partner  no 
power  to  bind  firm  by  commercial  paper.  ?  15,  n.  4.  v.  Mining  ])art- 
nership. 

NORTH  CAROLINA  corredled  the  Common  law  procedure.  ?  82.  v. 
Procedure. 

NOTES.     V.  COMMERCIAL  PAPER. 

NOTICE 

By  retiring  partner  to  creditors  makes  him  surety  for  continuing  partners 
in  New  York.  v.  Change  of  partners.  Notice  to  third  person  revokes 
implied  authority  of  co-partner,  v.  Powers.  No  notice  required  upon 
dissolution  by  death  of  a  partner.  ?  175  &  n.  i.  Notice  to  different  kinds 
of  customers,  v.  Dissolution.  Notice  to  party  holding  out,  implied  dele- 
gation of  authority.   |  69,  n.  12. 

NOVATION.     V.  CHANGE  OF  PARTNERS. 

OHIO  did  not  recognize  attorney's  appearance  without  authority.  ?  119, 
n.  I,  a.     Release  of  partner,  not  of  co-partner.  ^90.     v.  Procedure. 

OPTION 

To  become  partner.  The  option  when  exerted,  does  not  make  the  option- 
holder a  partner  by  relation,  unless  the  privilege  was  equivalent  to  a 
diredl  control  of  the  business.  The  natural  inference  is  that  the  partner- 
ship begins  when  the  option  is  exerted,  and  the  relation  to  the  com- 
mencement of  the  business  must  be  proved.  |  18. 

677 


Index. 

ORAL  CONTRACT  of  Partnership.   ?  lo.     v.  STATUTE  OF  FRAUDS. 

ORPHANS'  COURT.     No  jurisdidlion  over  partnership  by  reason  of  its 
distribution  of  a  deceased  partner's  estate.    ^.  216  &  n.  i.    v.  Account. 

OSTENSIBLE  partner  cannot  compel  joinder  of  dormant  partner  as  co- 
defendant.   I  76.     V.  Procedure. 

OUTGOING  PARTNER,  v.  CHANGE  OF  PARTNERS. 

OVERDRAFTS.  1 165,  n.  3.  v.  ADVANCES. 

PARSONS.  JAMES.     Tort  confounded  with  contradl.    I  47,  n.  a  &.  b. 

PARSONS,  Dr.  Theophilus.     Partnership  both  corporation  and  aggregate 
of  individuals.    §  100,  n.  2,  b. 

PARTIES. 

The  legal  excuses  for  non-joinder  are  infancy,  discharge  in  bankruptcy 
or  insolvency,  absence  from  the  jurisdidtion,  or  lost  by  statute.  ^  84,  n.  i. 
V.  Procedure.  Surviving  and  executor  of  deceased  partners  may  be  joined. 
?  88.  V.  Procedure.  The  partners  are  the  parties  in  all  litigation,  and  as 
a  partner  cannot  be  both  plaintiff  and  defendant,  no  claim  by  or  against 
the  firm  is  colledled.  §  160.     v.  Procedure. 

PARTNER. 
A  proprietor,  for  by  the  Common  law  the  possession  of  property  did 
not  give  the  possessor  the  authority  to  sell.  The  purchaser  must  prove 
authority  from  the  owner,  or  ownership  by  the  vendor.  It  was  necessary, 
therefore,  that  third  persons  should  treat  a  partner  as  a  proprietor.  ^  4. 
Property  measures  partner's  capacity.   ^  99,  et  seq.     v.  Agency. 

PARTNER'S  EQUITY,     v.  EQUITY. 

PARTNERSHIP. 

The  natural  division  of  the  subjedl :  i,  Entering  into  partnership  or 
the  relation ;  2,  The  principles  which  regulate  it  in  aAion,  and  3,  By 
which  the  business  is  wound  up.  At  Roman  law,  a  contradt  between  the 
partners  in  which  third  persons  had  no  interest ;  at  Common  law,  the  in- 
terest of  third  persons  is  the  main  subject  of  attention.  The  Common 
law  does  not,  as  the  Roman  law  did,  regulate  the  private  bargain  of  the 
partners.  Partnership  came  into  the  Common  law  through  trade.  ?  i.  v. 
Trade.  The  Common  law  introduced  a  change  in  the  characfter  of  the  re- 
lation, and  interjected  the  feudal  notion,  that  property  was  the  principal 
thing,  and  man  the  accessory.  \  3.  The  contradl,  if  written,  is  for  the 
court ;  if  oral,  for  the  jury,  who  then  find  the  terms  of  the  contradl,  and 
the  court  decides  the  legal  eflFedl.  \  21.  If  the  fadls  are  uncontradi<5led, 
the  court  excludes  the  jury.  Intention  is  not  equivalent  to  a  contradl  of 
partnership.     There  is  room  for  penitence  or  reconsideration.     There  is 

678 


Index. 

no  consideration  or  binding  agreement.  ?  23.  Partnership  as  qualifica- 
tion for  incorporation,  v.  Incorporation.  Partnership  involves  title  to 
firm  stock,  v.  Contribution.  A  partnership  in  the  profits  and  not  in  the 
stock,  is  a  misnomer.  The  partner  is  paid  out  of  the  profits,  but  is  not  a 
proprietor,  and  therefore,  not  a  partner,  but  only  an  employee.  The  legal 
aspecfl  of  the  partnership  is  the  relation  as  it  affecl:s  third  persons.  ^  48. 
This  has  not  been  recognized,  because  the  origin  of  partnership  was  be- 
tween the  partners.  But  in  modern  law,  the  domestic  arrangement  is 
not  controlled  by  law,  but  left  to  the  partners.  They  can  adjust  the 
terms  to  suit  themselves.  ?  48.  One  may  own  all  the  stock,  or  lend  a 
co-partner,  without  renouncing  the  right  to  repayment,  and  profits  maybe 
additional  to  interest.  \  48,  u.  2.  Profits  maj'  be  given  for  the  loan  of  one's 
name  or  credit ;  all  without  being  partners  between  themselves.  \  48,  n.  3. 
A  partner  could  indemnify  his  co-partner.  The  coutracfl  w-as  thought  to 
lack  consideration,  but  the  contracft  of  partnership  supports  the  particu- 
lar provisions.  <*49,  n.  3,  a  &  i^.  A  partner  might  aqj:  wholly  for  his  co- 
partners, and  not  have  any  interest  in  the  business.  His  motive  might 
be  to  establish  them  in  business.  ^  49,  n.  3,  c.  There  is  no  partnership  in 
buying  apart  from  selling.  \  7,  n.  i.  v.  Buying.  In  manufacfluring.  ?  7,  n.  6. 
V.  Manufacturing.  When  the  arrangement  between  the  partners  is  brought 
before  the  court,  the  law  interprets  the  provisions,  in  order  to  give  effecl 
to  all.  If  inconsistent  with  each  other,  the  general  purpose  controls  the 
minor  provisions.  ^50.  The  constituent  elements  of  partnership  are: 
The  destination  of  the  stock,  which  involves  control  and  prevents  diver- 
sion to  another  objedl ;  accounting  for  the  disposition  and  management, 
which  implies  such  destination  ;  sharing  profits  and  agreement  to  devote 
oneself  to  the  management  of  the  business.  The  eccentric  chara<5ler 
of  partnership  at  the  Common  law  is  caused  by  the  dual  position  of  the 
partners.  They  contribute  stock,  which  is  the  estate  pledged  to  credit- 
ors. The  law,  however,  does  not  limit  their  engagements  to  the  stock, 
but  by  imposing  an  unlimited  liability,  charges  all  their  separate  prop- 
erty also  for  the  firm  debts.  The  partner's  contra<5ls  bind  him  as  an  in- 
dividual, and  charge  his  separate  estate.  ?99;  ^  100,  n.  I.  Thus,  his  cred- 
itors come  into  competition  with  the  firm  creditors.  \  102.  Relation 
founded  on  status,  not  contra<5l.  \  104.  Definition  of  partnership  in 
French  code.  \  16,  n.  6,  d.  Partnership  extends  beyond  trade.  It  has  out- 
grown trade,  and  now  embraces  manufadluring,  which  is  not  a  trade,  but 
an  industry,  and  extends  to  any  "business,"  which  parties  join  in  trans- 
acting \  7.  The  original  constituents  of  buying  and  selling  need  not  co- 
exist in  the  business  of  a  partnership.  Neither  buying  nor  selling  need 
be  an  element  of  the  partnership  business.   \  7. 

PARTNER'S  NAME  as  firm  designation,     v.  NAME. 

PAXSON,  J.      Cesttiy  que  trust  may  waive  tort,  and  sue  in  assumpsit  for 

trust  funds.  I  141,  n.  i. 
PAYEES.     Joint  payees  of  commercial  paper,     v.  Commercial  Paper. 

679 


Index. 

PECVLIL'M.     r.  MARSHALLING  ASSETS, 

PENNSYLVANIA, 

Constitution  of,  prohibiting  special  legislation,  lyj,  n.  2.  Only  State 
which  divides  the  loss  of  capital  according  to  the  contribution.  I  34.  A 
partial  loss  of  capital  is  also  distributed  according  to  the  contribution. 
i  35.  Pennsylvania  pracftice  for  pro  rata  distribution  of  assets,  v.  Exe- 
cution. Pennsylvania  conveyancing.  \  109,  n.  7.  v.  Land.  Record-sys- 
tem controls  firm  title  to  land,  and  prevents  marshalling  assets.  \  113.  v. 
Land.  Vagary  of  marshalling  assets,  t'.  Marshalling.  Pennsylvania  lets 
attorney  of  court  represent  others  and  bind  them  by  judgment.  ^.119.  v. 
Powers.  Partners  no  power  to  submit  firm  claims  to  arbitration.  Fadls 
in  case  limited  decision  to  firm  assets.  ^120,  n.  i,a&^.  Surviving  part- 
ner an  assignee  of  deceased  partner,  and  excludes  testimon}-  against  his 
estate.  ^121.  Trading  in  individual  name  presumed  on  firm  account. 
\  76,  n.  18,  21.  V.  Procedure.  Distribution  to  separate  creditors  as  well  as 
joint  confirms  Pennsylvania  view.  \  76,  n.  23.  v.  Procedure.  Pennsylva- 
nia corrected  process  by  preventing  judgment  in  joint  adlion  from  merging 
claim  against  non-served  partners.  \  82.  v.  Procedure.  If  adlion  not 
joint,  judgment  still  merged  claim.  \  83.  v.  Procedure.  Acceptance  of 
service  did  not  cause  judgment  to  merge  claim.  \  83.  v.  Procedure. 
Pennsylvania  passed  adl  to  bring  in  representatives  of  deceased  judg- 
ment-debtor. </  89.  V.  Procedure.  Release  of  partner  without  releasing 
co-partner.  \  90.  v.  Procedure.  Plaintiff  permits  partner  to  be  plaintiff 
and  defendant.  ?i6i,  n.  i.  v.  Procedure.  Pennsylvania  allowance  of 
compensation  to  firm  for  management  of  business  when  called  to  account 
for  trust  fund.     v.  Trust  funds. 

PERSONAL  REPRESENTATIVE,     v.  EXECUTOR. 

PLEDGE. 

Partner's  right  to.  v.  Powers.  To  mortgage  share  in  future  partnership. 
V.  Powers.  Power  to  pledge  results  from  the  power  to  sell  and  to  borrow. 
S123. 

POTHIER.    Title  to  contribution.  \  34,  n.  i.    ConstmAion  of  pearl  case. 
1 63,  n.  4. 

POWER. 

A  partner's  power  to  sell  his  co-partner's  share  of  the  firm  stock,  arose 
from  trade,  partnership  being  an  organ  of  trade.  All  a  partner's  powers 
are  derived  from  this  right,  apart  from  commercial  paper.  1 126.  The 
power  to  sell,  which'  is  the  badge  of  dominion,  carries  the  right  to  make 
any  contracfl  with  reference  to  a  sale,  and  the  correlative  power  to  buy 
for  a  co-partner  involves  the  right  to  contradl  for  a  purchase.  Any  con- 
tract, therefore,  with  reference  to  the  trade  is  within  a  partner's  power. 
S3.     The  business  gives  the  partners   power   to   represent  each  other. 

680 


Index. 

Trade  is  the  grouudwork  of  partnership,  aud  the  firm  is  an  instrument 
of  trade.  The  authority  is  implied  by  and  limited  to  trade.  A  joint 
purchase,  which  involved  a  joint  sale,  would  not  nece.'^sarily  be  a  part- 
nership transaAion.  The  objedl  might  not  be  gain,  but  might  be  sharing  a 
loss,  §  49,  or  a  division  of  property,  v.  Joint  purchase.  Powers  of  part- 
ners derived  through  the  joint  estate,  v.  I'roperty.  v.  Capacity  as  Partner. 
The  partner's  right  to  sell  gives  the  separate  creditor  no  ground  to  at- 
tach firm  stock.  The  right  is  to  sell  for  the  firm,  and  the  attachment 
must  be  for  a  firm  claim.  \  103,  n.  3.  If  each  partner  sold  his  interest, 
the  firm  creditors  would  not  be  cut  out.  The  sale  must  be  joint,  or  the 
firm  title  will  not  be  devested,  but  remain  subjedl  to  the  execution  of  firm 
creditors.  Implied  power  depends  on  partnership,  and  unless  established , 
none  exists  to  bind  by  commercial  paper.  ^49,  n.  1.  The  business  of 
buying  and  selling  gives  a  partner  the  power  to  sell  the  firm  stock.  >f,  5. 
The  authority  of  a  partner  might  extend  to  a  sale  of  the  entire  stock.  If 
made  in  the  course  of  trade,  the  sale  might  be  sustained  as  a  valid  exercise 
of  a  partner's  authority.  The  stock  might  be  old  style  and  better  replaced 
by  new.  In  Pennsylvania  the  assignment  of  the  whole  stock  was  sustained, 
because  the  co-partner  had  absconded,  and  by  the  assignment  the  stock  was 
saved  from  an  adverse  and  forced  sale  by  the  execution  creditor.  But  un- 
less absent,  the  co-partners  must  be  consulted,  or  the  sale  will  be  invalid. 
\  1 14.  The  right  to  buy  corresponds  to  the  right  to  sell.  As  to  the  extent 
of  his  correlative  right  to  buy  :  He  may  buy  articles  which  the  firm  is  ac- 
customed to  vse  in  its  business,  without  reference  to  the  actual  use  which 
he  makes  of  them.  The  only  limit  to  the  amount  of  merchandise  which  he 
may  buy  is  to  be  found  in  the  proportion  which  the  goods  bear  to  the  de- 
mands of  the  business.  Ordinarily  contributions  are  made  before  the 
business  is  begun,  but  if  not,  aud  a  partner  bought  on  credit,  what  he 
agreed  to  contribute,  the  firm  would  be  charged.  A  restridlion  will  not  de- 
prive a  partner  of  the  power,  unless  enforced  by  the  co-partner,  who  rescinds 
the  sale  and  returns  the  goods.  1 1 15.  The  authority  is  implied  from  trade, 
which  enables  a  partner  to  sell  his  co-partner's  share.  A  contract  made 
in  negotiating  a  sale  is  part  of  it,  and  thus  any  dealings  for  the  purpose 
of  buying  and  selling  are  included  in  the  business.  The  agency  is  de- 
fined, it  is  said,  by  the  scope  of  the  business.  But  the  principle  which 
enforces  the  limitation  of  the  partner's  power,  springs  from  the  co-part- 
ner's equity.  The  law  extends  the  business  contraifl,  and  makes  it 
embrace  the  separate  estate  of  the  co-partner.  As  he  did  not  contribute 
this  fund  to  the  firm,  he  is  prompted  by  his  self-interest  to  prevent  any 
further  invasion  of  his  private  domain  than  that  sancflioned  by  the  law. 
He  disputes  any  obligation  which  does  not  arise  necessarily  out  of  the 
business  transadlions  of  the  firm,  because  the  obligation,  unless  im- 
peached, would  charge  his  separate  estate.  ?  116.  A  partner  cannot  bind 
his  firm  by  a  specialty,  because  the  seal  precludes  an  inquiry  into  the 
consideration,  and  takes  away  by  anticipation  the  co-partner's  defence  to 
the  claim.    Each  partner  is  entitled  to  make  a  defence,  because  the  judg- 

681 


tuc 


Index. 

_  111  binds  his  separate  estate  iu  the  first  iustance.  An  executed  contradl  is 
said  to  be  an  exception,  because  it  does  not  charge,  but  discharges  the  firm. 
\  single  partner  assigned  a  firm  mortgage.  The  assignment,  as  an  executed 
contract,  discharged  a  firm  debt,  and  the  seal  was  surplusage.  §117,  n.  i. 
He  can  ^sigu  a  firm  judguient.  The  judgment  is  a  firm  asset,  which  any 
partner  or  the  assignee  for  creditors  might  sell,  aud,  if  bought  in,  would  re- 
vert to  the  firm,  \  117,  n.  i-  A  release  does  not  bind  the  firm  ;  the  seal  does 
not  preclude  enquiry.  Unless  there  is  a  debt,  the  specialty  would  create  an 
obligation,  in  order  to  extinguish  it.  The  transaction  depends,  therefore, 
for  its  validity,  upon  the  consideration  received  by  the  firm,  and  not  upon 
the  show  of  a  consideration  contained  in  a  seal.  ^117,  n.  2.  The  phrase, 
*  a  partner  may  release  a  debt, '  carries  the  point  in  its  tail.  The  debt  must 
be  proved  to  exist  before  the  power's  arises.  A  partner  could  not  give  a 
bond  and  warrant  for  a  loan  made  to  his  firm.  The  bond  would  be  his 
individual  obligation,  and  the  judgment  entered  on  the  warrant  would 
not  bind  the  separate  estates  of  his  co-partners.  \  117,  n.  4.  A  power  of 
attorney  accompanying  a  certificate  of  stock,  though  executed,  is  to  ena- 
ble the  holder  to  substitute  himself  for  the  principal.  The  adl  is  not  past, 
but  future,  and  therefore  does  not  stand  by  itself,  but  requires  the  seal  to 
supportit.  '^117.  The  reason  a  partner  has  no  implied  authority  to  perform 
the  adl  by  a  sealed  instrument,  is  that  the  specialty  changes  the  character 
of  the  contract.  The  Statute  of  Limitations  is  different.  The  implication 
would  be  general,  and  not  limited  to  a  single  transacStion.  \  118.  The 
right,  however,  is  inferred  from  an  express  power  delegated  to  perform 
the  acl.  The  express  authority  sandlions  the  a6l,  and  the  seal  is  disre- 
garded as  surplusage.  There  is  no  risk  of  extending  the  authority  to  bind 
the  firm  by  specialty,  or  of  disregarding  the  seal  in  the  whole  class  of 
specialties  made  by  a  partner  for  his  firm.  What  would  be  gained  by 
saying  a  partner  could  execute  specialties  for  his  firm,  but  that  they  would 
be  disregarded  as  specialties,  and  treated  as  simple  contra<5ls?  It  is  sim- 
pler to  say  at  once  that  he  must  make  simple  contradls,  in  order  to  bind 
the  firm.  \  118.  A  partner  can  still,  in  some  States,  employ  an  attorney 
to  appear  for  the  firm.  It  is  now  held  in  England  that  he  cannot,  and  the 
earlier  pracflice,  which  was  established  in  ignorance  of  Lord  M.\nsfield's 
decision,  has  been  disregarded.  The  only  redress  of  the  firm  would  be 
against  the  attorney,  if  solvent,  and  even  then  astay  of  proceedings  would 
not  be  granted,  except  upon  payment  of  costs.  \  119,  n.  i.  In  New  York 
the  judgment  obtained  by  an  unauthorized  appearance  will  be  opened  to 
let  the  firm  into  a  defence,  but  will  not  be  set  aside  as  void.  \  119,  n.  i,  c. 
In  Pennsylvania,  the  character  of  an  attorney,  as  an  oflBcer  of  the  court, 
gives  him  authority  to  represent  anybody.  ^119,  i,  d.  Ohio  refused  to 
follow  the  English  practice  before  it  was  discarded  in  England.  \  119,  n. 
I,  a.  The  corredtion  was  first  pointed  out  iu  England  by  "E.  W.,"  in 
1847.  The  power  to  appear  by  attorney  by  a  partner  corresponds  to  the 
service  upon  him,  and  no  claim  has  ever  been  made  that  a  partner  could 
accept  service  for  his  co-partner.    \  1 19.     A  partner  cannot  submit  firm 

682 


Index. 

claims,  or  debts,  to  arbitration,  even  if  the  agreement  is  by  parol.  The 
contrary  ruling  injPennsylvania  was  limited  by  the  fadls  of  the  first  case 
to  bind  the  firm  assets,  and  even  in  the  last  case,  in  spite  of  the  compre- 
hensive language,  the  opinion  refers  to  firm  property.  <;  120.  The  effedt 
of  the  judgment  upon  the  separate  estate  is  the  explanation.  In  States 
where  the  judgment  is  limited  to  firm  assets,  a  partner  may  submit. 
Therefore,  in  New  York  the  purchaser  of  a  partner's  share  can  submit 
a  disputed  claim  to  arbitration.  The  sale  of  the  share  empowers  the 
buyer  to  represent  the  interest  which  is  co-extensive  with  the  firm  prop- 
erty. As  the  award  would  bind  only  firm  assets  in  New  York,  a  part- 
ner can  always  submit  to  arbitration.  §  120,  n.  i  b.  It  is  like  a  confessed 
judgment,  which  is  limited  in  execution  to  the  assets  of  the  firm.  \  120, 
n.  2.  After  the  partnership  is  established,  a  partner  can  bind  his  co-part- 
ner by  an  admission  made  in  the  transaction  of  the  firm  business.  The 
surviving  partner  is  no*^  an  assignee  of  his  deceased  partner,  so  as  to  ex- 
clude the  testimony  of  the  opposite  party  in  reference  to  transactions  with 
the  deceased  partner.  The  surviving  partner  does  not  derive  his  title  b}- 
assignment  from  his  co-partner,  but  is  an  original  owner  by  virtue  of  his 
joint  title,  'i  121.  In  Pennsylvania  the  deceased  partner  is  treated  as  the 
assignor,  and  the  surviving  partner  as  the  assignee,  and  the  death  of  a 
person  excludes  testimony  against  his  estate  in  a<5lions  by  or  against  ex- 
ecutors, administrators,  guardians  or  assignees.  The  disqualification  has 
been  curtailed  by  statute.  |  121.  A  partner  cannot  confess  judgment 
against  his  co-partners,  and  they  can  have  the  judgment  stricken  off 
against  them.  \  122,  n.  2.  But,  in  analogy  to  the  service  upon  one  part- 
ner, the  firm  assets  can  be  taken  in  execution  under  a  judgment  confessed 
by  a  partner.  ?  122,  n.  i,  2.  The  joint  or  separate  chara(5ler  of  the  judg- 
ment would  be  fixed  by  the  claim,  which  would  be  the  only  means  of  as- 
certainment, except  where  the  special  7?.  y2z.  under  the  Pennsylvania  acl 
of  1873  shows  the  distinclion  between  a  joint  and  separate  claim.  ^  122, 
n.  4.  Where  the  judgment  is  confined  to  the  firm  assets,  as  in  New  York 
and  Louisiana,  a  partner  may  confess  judgment  against  the  firm,  because 
he  does  not  charge  his  co-partner's  separate  estate,  'i  122,  n.  5.  Therefore 
a  judgment  confessed  by  a  partner  will  not  revive  a  lien  barred  by  the 
Statute  of  Limitations.  ?  122,  n.  6.  Evidence  that  judgment  confessed  to 
defraud  creditors  puts  judgment-creditor  to  proof  of  bona  fides.  §  122,  n. 
9.  The  limit  of  a  partner's  power  to  borrow  is  fixed  by  the  usage  of 
business.  ^  123.  The  power  to  pledge  results  from  the  power  to  sell  and 
to  borrow.  §  123.  A  partner  as  a  proprietor  has  the  power  of  disposition 
over  his  share.  ^171.  If  absolute,  a  dissolution  results  ;  if  qualified,  it 
does  not.  §  171.  n.  2.  The  alienation  is  not  accompanied  by  delivery 
of  manual  possession,  and  the  alienee's  rights  are  available  only  in  Equity. 
^171,  n.  3 ;  I  172.  Partner's  sale  of  his  interest.  ^  171,  n.  4  ;  ?  172,  n.  i. 
lK  Assignment.  A  partner  can  sell  his  interest  in  real  estate,  though  he 
has  no  quota  until  a  balance  is  struck.  ^  112,  n.  20.  v.  Land.  Partner- 
ship creates  implied  powers  to  carry  on  the  business,     v.  Liability.     Power 

6S3 


Index. 

of  liquidation  to  a  partner,  coupled  with  an  interest,  is  irrevocable.  ^  187, 
V.  Liquidation.  Power  of  mining  partner  measured  by  the  business.  ^  15, 
n.  4.  Z'.  Mining  Partnership.  Partner  may  sign  his  co-partner's  name, 
or  sele<5l  a  firm  name,  i  17-     v-  Name. 

PREFERENCE 

Of  firm  creditors.  The  priority  can  be  explained  only  by  the  joint  ten- 
ancy of  the  partners.  The  credit  theory  which  charges  the  fund,  because 
it  is  the  proceeds  of  sales  made  by  the  creditors  to  the  firm,  is  misapplied 
at  the  Common  law,  where  the  sale  transfers  the  title  and  makes  the  price 
an  independent  claim.  Insolvency  does  not  rescind  the  contra<5l  of  sale, 
and  restore  the  property  to  the  seller.  At  the  Roman  law  the  sale  was 
conditioned  upon  payment  of  the  price,  and  the  failure  to  pay  might  raise 
an  equity  to  follow  the  proceeds  into  the  fund.  The  debt  of  a  partner 
charges  both  his  joint  and  his  separate  estate.  His  debt  not  contradled 
in  the  business,  charges  only  his  separate  estate.  The  separate  estate  is 
charged  in  each  case,  the  joint  only  in  the  first.  The  joint  creditor  is 
confined  to  his  firm  debtor  only  in  equity,  and  on  the  ground  that  he  had 
two  funds  for  the  satisfaction  of  his  claim.  The  regulation  of  his  right 
bj-  equity  and  making  recourse  to  the  separate  estate  depend  upon  an 
allowance  of  an  equivalent  for  the  partial  payment  received  from  the 
joint  estate,  led  to  the  notion  that  the  separate  creditors  had  a  right  to 
the  separate  estate,  similar  to  the  joint  creditors'  right  to  the  joint  estate. 
Making  the  joint  creditors  share  the  joint  estate  with  the  separate  credit- 
ors before  they  could  touch  the  separate  estate,  seemed  an  acknowledg- 
ment of  the  separate  creditors'  right  to  the  separate  estate.   ^  107. 

PRICE.     Title  to  land  results  to  firm  from  payment  of  price.     gii2,  n.  7. 
V.  Land.     v.  Consideration. 

PRINCIPAL  AND  AGENT,     v.  AGENCY. 

PRINCIPAL.     V.  CO-PRINCIPAL. 

PROBATE  COURT.     Its  jurisditflion  over  a  deceased  partner's  estate 
does  not  extend  to  the  partnership  account.   ^  216  &  n.  i.     v.  Account. 

PROCEDURE. 

The  firm  is  not  recognized  as  a  party  in  legal  proceedings.  The  part- 
ners are  the  only  parties.  A  firm  could  not  aver  citizenship  and  main- 
tain suit  in  United  States  Court.  ?  76.  Some  States,  however,  permit 
the  firm  to  be  a  party,  e.  g.,  California,  Iowa,  Nebraska,  and  Conne(5licut. 
But  then  the  statutory  process  does  not  supercede  the  Common  law  form 
in  which  the  designation  is  surplusage.  In  a  suit  against  the  firm  the 
judgment  is  limited  in  the  first  instance  to  firm  assets.  A  partner,  it  is 
said,  cannot  sue  in  his  own  name,  as  assignee  of  his  co-partner ;  but  he  rep- 
resents the  firm,  including  his  co-partner's  interest,  not  less  than  his  own. 

684 


Index. 

If  parties  agree  to  sue  and  be  sued  in  the  name  of  an  association,  they  caw- 
not  obje6l,  if  sued  in  that  name  ;  though  suit,  if  it  involved  the  partnership 
account,  would  not  be  maintained.     An  infant  need  not  be  a  co-plaintiff, 
as  he  might  be  charged  even  as  plaintiff  by  a  counter-claim.     A  nominal 
partner  must  be  co-plaintiff  if  held  out  with  the  concurrence  of  the  actual 
partners;  if  not,  the  defendant  could  not  compel  his  joinder  as  co-plaint- 
iff.    A  dormant  should  be  a  co-plaintiff,  as  only  by  his  joinder  could  the 
defendant  recover  his  counter-claim.    The  ostensible  partners  when  sued 
cannot  compel  the  plaintiff  to  join  the  dormant  partner  as  co-defendant, 
because  they  are  liable  on  the  contract  as  they  made  it.     The  Common 
law  rule  which  still  obtains  in  England,  was  that  the  non-joinder  of  a 
dormant  partner,  though  unknown,  discharged  him.     It  was  an  uncon- 
scious eledlion.     The  effedl  of  an  enactment  requiring  the  parties  in  in- 
terest to  join,  was  to  compel  the  joinder  of  a  dormant  partner  under  all 
circumstances.     A  special  partner  may,  it  is  said,  join  as  a  partner  on  ac- 
count of  his  interest,  though  his  control  is  suspended  during  partnership ; 
but  this  may  be  doubted,  for  judgment  against  a  special  partner  would 
bind  his  separate  estate.     If  the  use  of  a  fidlitious  name  is  prohibited, 
the  partners  using  it  may  nevertheless  recover,  unless  credit  was  acquired 
by  the  name.    A  iirm  could  recover  the  price  of  merchandise  for  negligence 
of  carrier,  for  rent  of  building,  and  enforce  clerk's  bond  for  faithful  per- 
formance.    If  a  certificate  is  required  as  a  preliminary,  it  must  be  filed, 
or  suit  can  not  be  maintained;  but  the  firm  may  assign  the  claim,  or  re- 
cover for  a  tort  without  a  certificate.     The  effedl  of  trading  in  name  of 
individual  partner  varies  in  different  States.     In  Pennsylvania  the  pre- 
sumption is  that  the  transa(flion  was  on  behalf  of  the  firm ;  in  England, 
and  elsewhere,  the  presumption  is  that  the  transacftion  was  on  individual 
account.    If  the  individual  name  is  the  designation  of  two  firms,  the  cred- 
itor may  hold  either.     The  separate  creditors  rank  as  joint  creditors  in 
the  distribution  of  the  assets.     This  confirms  the  Pennsylvania  view  that 
all  transa6lions  are  on  firm  account.      Partnership  can  exist  without  any 
designation.     The  designation  is  surplusage  and  the  individuals  are  the 
partners.  |  76.     English  statute  which  permits  suit  against  any  but  par- 
ties to  bills  and  notes,   excludes  partner,    v.  Commercial   paper.     The 
Common  law  did  not  adopt  the  Civil  law  process,  nor  enquire  what  it 
was.     The  Civil  law  process  resembles  the  Common  law  remed}'  for  torts. 
The  remedies  are  concurrent,  or  successive  and  cumulative.     If  judgment 
is  against  the  firm  alone,  it  ran  be  enlarged  so  as  to  bind  the  partners, 
except  where  they  have  a  personal  defence.     The  English  have  recently 
tried  to  introduce  the  Civil  law   method   by   judicial  orders  under  the 
Judicature  A61.      But  the  Common  law  method  has  not  been  superceded ; 
it  still  subsists  beside  the  new  method.     The  effe<5l  of  the  construdtion  put 
upon  the  orders  is  that  the  partners  at  the  time  the  debt  was  incurred  are 
the  parties  to  the  suit,  and  a  judgment  against  one  merges  the  cause  of 
a6lion,  and  releases  the  others,  exadlly  as  it  did  before  the  orders.     This 
construdlion  makes  the  new  process  as  ineffectual  as  the  old.     The  pro- 

685 


Index. 

cedure  under  the  joint  contradl  frustrated  a  recovery.  §  77.  If  any  defend- 
ant confessed  judgment,  or  gave  a  specialty  to  plaintiff,  or  he  recovered 
judgment  against  one  or  more,  he  extinguished  his  claim  against  all 
others.  Although  the  plaintiff  could  not  effecl  service  upon  all,  his  ina- 
bility did  not  make  any  diflference  ;  the  non-served  partner  was  relieved 
from  the  liability  by  the  judgment  against  the  served.  This  result  was 
worse  in  Pennsylvania  than  in  Kugland,  because  the  English  had  the 
process  of  outlawry,  and  the  non-served  partner's  goods  could  be  taken. 
^Si.  In  correcting  the  procedure  Pennsylvania  began  by  preventing  the 
judgment  in  joint  actions  from  merging  the  claim  against  the  non-served 
partners.  §  82.  Other  States,  e.  g.,  Rhode  Island,  North  Carolina,  Mary- 
land, Iowa,  South  Carolina,  and  Michigan,  corrected  the  procedure.  If 
the  action  was  not  joint,  the  Pennsylvania  statute  did  not  relieve  the 
plaintiff.  If  he  took  a  confessed  judgment  the  cause  merged,  and  the 
other  partners  were  released.  A  specialty  or  death  extinguished  the 
claim.  ^  S3.  If,  however,  the  suit  was  joint  the  judgment  did  not  merge 
the  claim.  The  acceptance  of  service  was  no  objedlion,  nor  no  return  by 
the  sheriff  as  to  the  non-served  partner.  But  the  fadl  that  the  plaintiff 
did  not  know  of  another  partner's  existence,  and  was  kept  from  knowing 
it  by  the  dormant  partner,  was  no  excuse  for  not  joining  him.  ^  84.  The 
legal  reason  given  for  this  decision  was  that  the  Statute  of  Limitations 
would  be  frustrated !  But  it  does  not  run  until  discovery,  especially  when 
knowledge  was  prevented  by  the  defendant.  The  legal  excuses  for  the  non- 
joinder of  a  defendant  were  infancy,  discharge  in  bankruptcy  or  insol- 
vency, absence  from  the  jurisdidlion,  or  lost  by  statute.  If  the  judgment 
is  in  a  different  State  the  enforcement  is  regulated  by  the  law  of  the  forum. 
\  84.  Originally  the  claim  was  joint  and  several  in  equity.  \  85.  Now 
equity  would  not  open  the  judgment  to  let  the  plaintiff  bring  in  another 
partner,  not  even  if  a  dormant  partner.  Death  extinguished  the  claim 
against  the  deceased  partner's  estate.  Death  carried  the  claim  over  against 
the  sur\nvor,  who  alone  was  liable  to  pay  it.  \  86.  Equity  relieved  the 
plaintiff  only,  if  the  legal  remedy  is  exhausted,  and  deceased  was  not  a 
surety.  Then  there  was  no  joint  remedy  against  surviving  and  represen- 
tatives of  deceased  partner.  There  was  no  remedy  at  law,  and  a  remedy 
in  equity  only  after  the  legal  remedies  had  been  tried  and  produced  noth- 
ing. ^86.  If  a  partner  died  pending  suit,  the  plaintiff  proceeded  against  the 
surviving  partner  alone.  ^87.  The  plaintiff  could  not  join  the  executors 
of  the  deceased  partner,  even  for  conformity.  If  the  surviving  partner 
confessed  judgment  the  claim  was  extinguished.  If  the  executors  were 
made  parties,  they  would  be  disregarded  as  parties,  and  as  suit  would  be 
between  plaintiff  and  surviving  partners,  joining  executors  of  deceased 
would  not  disqualify  surviving  partner  as  a  witness.  Pennsylvania  pro- 
vided against  this  extingiiishment  of  the  claim  by  the  death  of  a  partner. 
It  gave  a  dire<5l  recourse  against  the  deceased  partner's  estate.  \  88.  The 
creditor  can  recover  against  either  surviving  or  deceased  partner,  and 
judgment  for  survivor  don't  bar  suit  against  deceased,  and  recovering  a 

686 


Index. 

judgment  against  surviving  don't  prevent  recourse  to  deceased's  estate. 
The  interpretation  of  the  Pennsylvania  statute  is  not  that  the  burden  of 
proving  insolvency  of  the  surviving  partner,  and  no  firm  assets  is  shifted 
to  the  defendant.  That  question  of  equity  is  excluded  altogether,  and  a 
legal  right  is  given  against  the  deceased  partner's  estate.  If  a  partner 
dies  pending  suit,  the  statute  provides  that  the  suit  shall  proceed  against 
the  deceased  partner  alone.  The  plaintiff  may  either  bring  a  new  suit  or 
suggest  the  death  and  proceed  by  substituting  the  executor,  or  adminis- 
trator. Statute  of  1836  enables  courts  to  frame  a  suit  in  which  executor,  or 
administrator,  should  be  joined ;  but  a  statutory  provision  is  unnecessary, 
for  pra(5lice  justifies  the  process.  Other  States  have  enaAed  provisions  like 
Pennsylvania,  e.  g.,  Rhode  Island,  Mississippi,  New  Jersey,  Tennessee, 
Vermont,  Maine,  Minnesota,  Wisconsin,  Kansas,  and  Maryland.  Adiredl 
recourse  is  now  conceded  in  England,  and  the  right  admitted.  At  Common 
law,  if  a  partner  died  after  judgment  against  himself  and  his  co-partners, 
asci.fa.  would  not  lie  against  the  deceased  partner's  reprsesentatives, 
although  the  surviving  partner  is  insolvent.  §  89.  In  order  to  redlify  this 
defeA,  Pennsylvania  passed  an  a<5l  to  bring  in  the  representatives  and 
prevent  judgment  from  being  a  bar  to  subsequent  suit  against  other  part- 
ners. Other  States  passed  adls  to  this  efifecfl,  e.  g.,  Minnesota,  Kentuck}', 
Maryland  and  Michigan.  ^  89.  The  severance  of  the  judgment  severed 
the  cause  of  adlion.  In  a  suit  against  the  executors  of  a  deceased  co- 
maker, who  was  surety  for  the  other  makers,  of  a  promissory  note,  the 
defence  of  suretyship  was  of  no  avail,  because  there  was  an  independent 
cause  of  action  against  the  deceased  partner's  estate.  |  90.  If  the  plaintiff, 
releases  a  partner,  the  effedl  is  an  extinguishment  of  his  quota  of  the  joint 
debt.  The  plaintiff  could  stipulate  to  release  the  partner  altogether,  it  is 
said,  and  yet  retain  his  right  to  recover  the  full  amount  for  his  co-partners, 
but  this  would  be  unjust.  Statutes  have  enabled  the  plaintiff  to  compound 
and  release  a  partner  without  releasing  his  co-partners,  e.  g.  Pennsylva- 
nia, Kansas,  Michigan,  California,  Minnesota,  New  Jersey,  Ohio,  Rhode 
Island,  South  Carolina,  Vermont,  and  Virginia.  Distinction  between  the 
joint  and  the  joint  and  several  contrails,  v.  Contra<5l.  Severance  of 
process,  v.  Contradl.  The  Scotch  did  not  follow  the  English  procedure ; 
they  adopted  the  French  process,  which  is  the  general  Civil  law  course. 
For  account,  v.  Account.  The  partners  are  the  parties  to  any  litiga- 
tion by  or  against  a  firm.  Hence  no  partner  can  sue  or  be  sued  by  his 
firm,  for  if  this  were  permitted  he  would  appear  as  both  plaintiff  and  de- 
fendant in  the  same  case.  As  a  consequence  of  this  form  of  the  process, 
no  debt  can  be  colle6led  by  the  firm  of  a  member,  or  vice  versa,  and  such 
claims  are  excluded  from  the  assets  of  either  the  joint  or  the  separate 
estates.  ?  160.  A  Pennsylvania  statute  permits  partners  to  be  both  plaint- 
iffs and  defendants  in  the  same  adlion.  |  161,  n.  i.  The  courts,  in  con- 
struing the  acfl,  limited  its  operation  to  a  seizure  of  firm  property,  and  did 
not  give  it  any  effedl  to  take  the  separate  estate  of  a  partner  in  execution. 
^  161,  n.  6.     It  provided  a  remedj'  for  suits  between  firms  with  a  common 

687 


Index. 

nteiiilKr.  The  adl  does  not  enable  a  partner  to  sue  his  firm  or  his  co- 
contraclors,  but  is  construed  to  require  an  independent  plaintiff,  who  is 
not  also  liable  on  the  contract  which  he  is  entitled  to  enforce,  i  i6i,  n.  2. 
There  is,  however,  no  difficulty  in  a  joint  contradl  being  enforced  by  one 
of  the  joint  contradlors  against  his  co-contra<5lors.  The  intention  to  ena- 
ble one  to  recover  his  claim,  in  spite  of  his  being  in  form  one  of  the  con- 
tractors who  agrees  to  pay  it,  furnishes  the  interpretation.  ^  161,  n.  4,  5. 
The  effecl  of  allowing  suits  between  firms  with  a  common  member  is  to 
limit  execution  to  the  firm  assets.  I  161,  n.  7.  Redress  is  not  confined  to 
legal  procedure,  but  may  be  equitable,  and  the  remedy  in  equity  is  not  su- 
perceded by  a  statutory  process.  The  obstacle,  however,  does  not  come 
from  procedure,  but  is  inherent.  The  common  member  must  be  made  either 
plaintiff  or  defendant,  and  neither  position  is  compatible  with  his  twofold 
membership,  which  requires  a  settlement  of  his  interest  in  both  firms. 
(!  163.  It  is  only  through  a  settlement  of  the  accounts  of  both  firms  that 
the  ultimate  balance  can  be  ascertained,  and  his  portion  of  it.  |  164.  If 
partners  could  set-off  against  each  other  the  debts  they  owed  the  firm,  as 
decided  by  I^IcCormick's  Appeal,  the  distinction  between  joint  and  sepa- 
rate estates  would  be  unsettled,  and  made  to  depend  upon  the  account. 
?  163.  The  Common  law  does  not  admit  capacities  in  an  individual,  and 
the  faculty  was  acquired  in  partnership  by  means  of  the  joint  estate.  ^,  164. 
The  common  member  seems  to  be  acquiring  distindl  capacities  by  means 
of  the  different  trades  he  undertakes.  ^  164,  n.  i.  Different  firms  com- 
posed of  entirely  the  same  members  are  always  treated  as  a  single  firm, 
no  matter  how  far  apart  they  transacfl  business.  ^  164,  n.  2.  Thus,  a  gen- 
eral lien  in  one  branch  covers  the  assets  in  the  other.  ?,  164,  n.  3.  A  par- 
tial identity  of  members  gives  less  title  to  recognition.  ^  164,  n.  4.  A 
trader  did  not  obtain  distinct  capacities  by  reason  of  his  different  business 
undertakings.  It  was  only  the  slave  who  had  a  separate  recognition  in 
each  business,  because  he  had  no  caput.    \  164,  n.  5,  6.  7. 

PROCESS.     V.  PROCEDURE. 

PROFESSIONAL  REPUTATION,  not  part  of  good-will.   I  209,  n.  i  a. 

PROFITS. 

Partnership  in  the  profits  and  not  in  the  stock,  v.  Partnership.  Shar- 
ing profits  indicates  a  partnership.  It  shows  that  the  title  belongs  to  the 
participants,  v.  Property.  By  virtue  of  his  ownership  he  takes  the  fruits 
of  his  property.  This  is  the  original  doctrine,  and,  though  misunderstood 
and  misapplied,  is  true  to-day.  ^52.  That  profits  result  from  ownership, 
and  not  from  partnership,  appears  in  this  :  The  title  to  profits  is  a  separate 
right,  which  arises  only  when  the  joint  title  ends.  The  several  owners 
then  become  entitled  to  the  profits.  Before  that  severance  the  partners 
are  owners  of  assets,  but  not  of  profits.  Profits  are  co-extensive  with 
trade,  and  as  partnership  is  an  agency  of  trade,  the  result  of  its  fundlion 

688 


Index. 

is  profits.  All  trade  is  undertaken  for  profit.  Sharing  profits  during  part- 
nership is  accounted  for  not  as  a  right,  but  as  an  indulgence.  There 
could  be  no  enforcement  of  it.  An  action  would  not  lie  by  a  partner 
against  his  co-partner,  and  a  bill  would  end  in  a  dissolution.  The  pro- 
prietorship affords  a  facility  in  proving  a  partnership,  because  it  shows 
that  one  interested,  or  acliug,  as  a  proprietor  is  a  principal  in  the  busi- 
ness. I  53.  It  might  be  impossible  to  prove  him  a  principal,  except 
through  the  property  identification.  The  services  of  others  are  not  capi- 
talized, and  they  are  not  made  partners  by  sharing  the  profits,  because  the 
acceptance  of  the  services  as  an  equivalent  for  a  material  contribution  de- 
pends upon  the  agreement  of  the  partners.  The  fa<5t,  however,  that  con- 
tribution may  be  in  services  will  charge  the  one  rendering  services  as  a 
partner  if  he  acls  as  a  partner,  and  inter  alia  shares  the  profits,  unless  he 
can  disprove  that  he  a<5led  as  a  partner,  and  show  that  his  condudt  was 
consistent  with  the  position  of  a  subordinate  employe.  The  profit-shar- 
ing is  explained  by  virtue  of  the  title  of  ownership,  v.  Property.  No  one 
but  a  proprietor  can  take  profits.  Hence  the  inference  of  partnership 
from  sharing  profits.  If,  however,  the  arrangement  lets  a  non-proprietor 
take  profits,  it  must  be  by  a  delegation  from  the  proprietor.  By  disre- 
garding the  proprietor's  appointment  by  which  the  appointee  took  profits, 
it  resulted  that  the  distinction  between  sharing  by  a  proprietor  and  by  a 
non-proprietor  was  overlooked,  and  both  profits  and  property  were  ex- 
cluded as  evidence  of  partnership.  ^  54.  Profits  are  not  independent  of 
firm  property.  They  are  the  increment  of  the  contribution,  and  form  part 
of  it.  No  one  could  claim  profits  who  could  not  claim  a  contribution. 
Profits  are  not,  like  the  contribution,  a  fund  on  which  creditors  rely  for 
paj'tnent.  Profits  do  not  exist  as  such  until  the  debts  are  paid.  The  word 
has  no  meaning,  except  between  partners.  This  was  first  pointed  out  by 
SuivPicius.  The  profits  could  not,  as  a  part  of  the  contribution  or  assets, 
be  said  to  belong  to  the  creditors,  so  that  taking  profits  would  deprive 
creditors  of  the  fund  to  which  they  were  entitled.  The  assets  would  be- 
long to  the  creditors,  and  a  withdrawal  would  be  a  fraud  on  them,  but 
the  profits  would  not  exist.  The  proprietors  would  be  charged,  because 
they  took  the  assets  away  from  the  creditors  ;  the  withdrawal  would  charge 
them,  but  they  would  not  be  charged  as  proprietors  because  they  took 
profits  included  in  the  assets.  That  reasoning  would  establish  an  anterior 
liability,  whereas  the  liability  for  a  withdrawal  is  subsequent,  and  pre- 
supposes a  prior  liability.  The  question  of  proprietorship  is  in  dispute, 
and  the  liability  for  a  withdrawal  begs  the  question  by  assuming  a  pro- 
prietorship. §55.  At.  the  Roman  law,  the  profits  and  the  contribution 
correlated  at  first  in  fadl,  and  then  in  theory.  At  the  Common  law,  they 
are  presumed  to  correspond  in  default  of  evidence,  'i  56.  Not  inconsistent 
with  the  theory  of  firm  having  only  the  use  of  the  contribution.s.  v.  Con- 
tribution. History  of  profit-sharing  as  evidence  of  partnership,  v.  Evi- 
dence. Amount  of  profits  stipulated  for  loan.  7'.  Evidence.  By  general 
law,  profits  are  equivalent  to  the  property.     ^  57,  n.  4.     Partnership  iu 

689 


Index. 

profits  and  not.  in  the  stock,  a  misnomer,  g  27.    Profits  made  by  use  of  trust 
funds.     Z'.  Trust  Inmds. 

PROMISE  TO  BECOME  PARTNER,     v.  HOLDING  OUT. 

PROOF  OF  PARTNERSHIP,     v.  EVIDENCE  OF  PARTNERSHIP. 

PROPERTY. 

At  the  Common  law  property  partook  of  the  nature  of  bailment.  The 
title  was  to  hold,  not  to  sell.  If  anything  else  than  tenure  was  claimed, 
it  must  be  proved  and  would  not  be  inferred.  Thus,  when  disposition 
was  established  as  an  incident  of  litle,  if  the  proprietor  authorized  a  sale, 
this  did  not  include  a  pledge.  The  authority  was  express  to  do  some, 
thing,  e.  g.,  sell,  which  was  not  originally  involved  in  the  idea  of  property, 
hence  the  authority  was  limited  to  its  terms.  There  was  a  difference  of 
opinion  upon  this  inference  of  authority,  arising  from  a  general  delega- 
tion, as  is  seen  in  Bracton's  inference  of  contradls  for  service  from  the 
power  to  manumit  and  enfeoff.  |  4. 

Property  affecfts  the  question  of  partnership,  because  it  is  the  medium 
through  which  the  partners  are  connedled,  and  because  it  forms  the  sub- 
stance of  their  transacftions.  ^51.  Property  is,  therefore,  the  distin- 
guishing trait  of  a  partner.  The  co-proprietor  in  trade  is  a  partner.  The 
profits  only  point  him  out,  because  the  proprietor  has  a  title  to  the  profits. 
V.  Profits  If  the  firm  business  does  not  require  ownership,  then  the  adls 
by  which  the  partners  exert  all  the  powers  they  have,  are  equivalent  to 
proprietorship.  If  one  adls  as  owner,  this  is  proprietorship  as  to  third 
persons.  This  effeA  does  not  follow  at  the  Civil  law,  because  no  one  but 
the  contracting  party  is  bound.  The  party  interested  must  seek  his  re- 
dress from  the  contra(5lor,  and  the  contracflor  must  look  to  the  interested 
party  for  contribution.  At  the  Civil  law,  there  is  no  undisclosed  principal 
or  dormant  partner  who  can  be  sued.  Profits  are  an  increment  of  the  prop- 
erty contributed,  and  sharing  is  an  indication  of  the  partner,  v.  Profits. 
It  is  the  property  which  gives  the  partners  mutual  agency.  They  buy 
and  sell  it.  The  agency  is  implied  from  the  fundlion  they  undertake. 
Agency  is  a  result  of  partnership,  not  a  cause  of  it.  Buying  and  selling 
property  together  would  not  prove  the  traders  co-principals  if  the  prop- 
erty element  was  excluded,  for  they  might  be  co-owners  of  the  property 
and  of  the  profits  without  considering  themselves  co-principals.  They 
would  be  independent  principals,  and  each  liable  for  himself,  but  not  for 
each  other.  This  is  the  dodlrine  of  Chaffaix  v.  Lafitte,  and  Eastman  v. 
Clark.  The  creditors  could  hold  them  jointly  only  by  proof  of  their  inten- 
tion, which  is  a  secret,  to  be  joint  principals  in  the  transadlion.  Sharing 
profits  as  proprietor,  or  as  non-proprietor,     v.  Evidence. 

The  title  required  for  firm  property  was  a  mutual  restricflion  of  owner- 
ship, short,  however,  of  total  association  of  title.  ?  97.  Joint  tenancy  an- 
swered to  bridge  over  the  gap  between  communal  holding  and  modern 

690 


Index. 

individual  title,  by  the  fi(5lion  of  a  single  title.  Trade  added  the  power  to 
dispose  of  the  joint  property,  as  the  Feudal  joint  tenancy  was  limited  to 
holding  the  property.  ^  98.  Joint  tenancy  was  adapted  to  commercial 
purposes.  Survivorship  continued,  but  it  was  limited  to  the  duration  of 
the  partnership.  The  separate  titles  of  the  partners,  though  recognized, 
were  postponed  until  the  expiration  of  the  partnership,  when  the  joint 
title  was  severed.  The  power  of  sale  arose  from  the  joint  estate,  not 
from  mutual  agency.  ^  99.  It  results  from  making  the  joint  estate  the 
source  of  the  partner's  powers  that  firm  creditors  have  a  legal  priority 
over  the  separate  creditors  of  a  partner.  The  right  is  not  founded  upon 
an  equity,  but  has  a  legal  basis.  The  joint  creditors  would  not  have  a 
preference  if  the  partners  were  tenants  in  common,  because  the  titles 
would  be  several,  although  the  possession  was  joint  and  the  possession 
would  be  according  to  the  titles.  ^  100.  This  would  benefit  the  separate 
creditors.  They  could  seize  and  set  apart  each  partner's  quota  of  firm 
stock,  in  spite  of  the  co-occupation.  The  firm  creditors  would  be  sepa- 
rate creditors  of  each  partner,  and  on  a  distribution  all  would  come  in 
with  the  separate  creditors.  The  only  difi"erence  between  joint  and  sepa- 
rate creditors  would  be  that  the  joint  creditors  would  compete  for  each 
separate  estate,  while  the  separate  creditors  would  be  limited  to  their  sin- 
gle debtor.  The  joint  creditors  would  exclude  the  separate  creditors,  if 
the  title  was  joint.  Neither  partner  could  charge  the  joint  estate,  except 
by  a  firm  transadlion,  and  the  creditors  in  firm  transacftious  would  hold 
the  estate  as  a  pledge.  The  joint  creditors  have  in  addition  an  equal  right 
with  the  separate  creditors  to  each  partner's  separate  estate.  Title  and 
claim  survive  upon  death  of  partner,  v.  Estate.  The  joint  estate  pre- 
vents any  debts,  unless  in  the  course  of  business,  and  enables  firm  credit- 
ors to  enforce  the  prohibition.  ^  106,  n.  i.  A  partner's  sale  of  his  share 
is  subje<5l  to  the  debts ;  if  to  a  co-partner,  and  intended  to  sever  the  joint 
title  and  convert  it  into  co-partner's  separate  estate,  the  sale  is  a  fraud 
upon  the  firm  creditors.  If  all  the  partners  join  in  selling,  the  creditors 
may  assert  the  joint  title,  or  make  the  partner  exert  his  right  for  their 
benefit.    §  106,  n.  i. 

PROPRIETOR.  V.  PROPERTY. 

PROTECTION,  MUTUAL,  v.  GAIN. 

PURCHASER  from  partner  of  land,  not  of  personalty,  takes  title,  unless 
he  has  notice  of  firm  title.   §  no. 

PURCHASERS,  v.  Joint  purchasers.  Purchaser  of  partner's  share  in- 
terested only  in  liquidation,  z/.  Execution.  §181.  z'.  Settlement.  |  206, 
n.  2.     V.  Advance. 

PURCHASES. 
If  each  partner  bought  on  separate  credit,  the  seller  could  hold  the  firm. 
The  firm  is  the  undisclosed  principal,  and  is  liable  for  the  price.     Pur- 
chases for  contribution,     v.  Contribution. 

69  I 


Index. 

PUNTSCIIART,  Dr.     Civil  law  indivisible  contradl.  igi,  n.  3. 
QUALIFICATION  as  I'artner  lor  Incorporator,     v.  Incorporation. 
MAISOy  SOCIAL.     V.  NAME. 

RATIFICATION. 

Act  must  be  on  behalf  of  principal,  hence,  incoming  partner  cannot 
ratify,  i  144,  n.  2  &.  7.  Binds  principal,  if  adl  done  in  his  name,  though 
he  received  no  benefit  and  without  a  new  consideration.  \  135,  n.  i.  Pre- 
vious but  not  subsequent  authority  would  charge  an  undisclosed  princi- 
pal, who  enforces  the  contract  through  the  agent.  The  ratified  contradl 
makes  the  principal  independent  of  agent,  and  not  subjedl  to  equities 
between  him  and  the  other  party  to  the  contradl.  The  intention  to  be  a 
principal  cannot  be  ratified;  nothing  but  a  new  contradl  will  bind  him. 
\  135.  Partner's  adl  in  excess  of  his  authority  binds  him,  but  not  his  co- 
partners, unless  they  adopt  it.  \  135,  n.  2.  If  on  behalf  of  all,  all  must 
ratify,  or  no  one  will  be  bound.  \  135,  n.  3.  The  enlargement  of  the  busi- 
ness, like  its  creation,  requires  the  constituent  authority  of  all.  \  135,  n.  4. 
Partner,  who  does  not  join  in  executing  specialty  for  the  firm,  may  be 
bound :  i,  By  express  authority  to  co-partner  to  execute  specialty  in  his 
name.  2,  By  his  presence  at  the  execution  without  dissent.  3,  By  sub- 
sequent ratification.  In  these  cases  he  is  bound  by  the  covenants.  In  the 
first  case  precedent  authority,  and  in  the  third  subsequent  ratification  may 
be  given  by  parol,  'i  135,  n.  5,  6.  4,  The  adl  may  be  authorized,  but  not 
by  seal.  The  principal  is  bound  by  the  contradl,  but  not  by  the  cove- 
nants without  a  previous  authority  by  deed.  \  135,  n.  7.  The  argument  for 
a  partner  to  bind  his  firm  by  specialty,  because  he  can  by  commercial 
paper,  is  misplaced.  Commercial  paper  is  governed  by  principles  in  con- 
flidl  with  partnership  principles,  'i  135.  Infant's  ratification  by  continu- 
ing business,     v.  Infant. 

RECEIVER. 

A  partner  will  not  be  superceded,  unless  for  cause,  by  a  receiver.  The 
firm  saves  the  expense,  and  has  the  partner's  experience.  An  owner 
has  the  right  to  prevent  waste  by  his  co-owner,  and  security  would  be  re- 
quired, e.  g.,  for  injuring  printing  office.  If  liquidation  cannot  be  effiedled 
by  either  partner,  the  business  will  not  be  sacrificed,  but  put  up  at  audlion 
among  the  partners.  ?  180.  As  the  vendee  of  a  partner  has  no  right  of  joint 
control,  but  only  a  right  to  enforce  a  settlement,  the  appointment  of  a 
receiver  is  a  matter  of  course  against  him.  ^181.  Laches  will  deprive  a 
partner  of  his  right  lo  demand  the  appointment  of  a  receiver.  \  182.  Will 
not  be  appointed  to  displace  liquidating  partner,  without  cause.  ?  190.  v. 
Liquidation.  A  receiver  is  not  appointed  for  a  mining  partnership  as 
readily  as  for  a  commercial  partnership.  \  15,  n.  2.    v.  Mining  Partnership. 

692 


Index. 

RECORD-SYSTEM  in  Pennsylvania  supercedes  marshalling  real  estate. 
(J  113.     V.  Land. 

REDFIELD,  Judge.     Partner's  equity  enures  to  firm  creditors,  and  sepa- 
rate creditor  no  right,  unless  surplus  for  him.   ^  106,  n.  8,  c. 

RELATION,  Partnership  by.     v.  Option.     Relation  between  partners  by 
consent,     v.  Choice  of  Partner. 

RELEASE 
By  partner  binds  his  co-partners  only  if  he  receives  payment,    i!  117,  n.  2. 
Creditor,  by  statute,  may  release  partner  and  retain  right  against  co-part- 
ner.  ^  90.     I'.  Procedure, 

REMEDIES,     v.  PROCEDURE. 

RENAUD. 
Achilles.  By  Law  Merchant,  contribution  the  limit  of  partner's  liability. 
§  3,  n.  I.  Contribution  a  debt,  ^  33,  and  limited  liability  in  special  partner- 
ship confined  to  partners  taking  no  part  in  the  management.  ^  37,  n.  c.  Set- 
off. ^  77,  n.  I,  b.  \  130,  n.  II.  Assignment  by  partner  to  co-partner,  'i  130, 
n.  I,  A ;  \  130,  n.  8,  b,  11,  12. 

REPRESENTATIONS 
Of  i'artnership.    v.  Holding  Out.     Partner's  receipt  for  merchandise  not 
delivered  binds  co-partner  if  third  person  relied  on  his  representation. 
§  139,  n.  2.     V.  Tort. 

REPRESENTATIVES.  Personal,     v.  EXECUTOR. 

REPUTATION,    z/.  Holding  Out.     Professional,  not  part  of  good-will.    v. 
Good-Will. 

RESTITUTION,     v.  TORT.     v.  TRUST  *FUNDS. 

RESTRICTION 
Of  partner's  power,  v.  Powers.  Notice  to  third  persons  revokes  co-part- 
ner's implied  authority.  V.  Powers.  Partner's  restriction  will  not  deprive 
co-partner  of  power  to  buy  stock,  unless  enforced  by  partner  who  returns 
goods.  ^  115  &  n.  3.  Restri6lion  to  firm  business  is  imposed  in  order  to 
prevent  the  unlimited  liability  from  charging  the  separate  estate.  ?ii6. 
V.  Powers,  Continuing  may  set  off  debt  of  retiring  partner.  \  48,  n.  3.  v. 
Set-Oflf. 

RETIRING  PARTNER. 
V.  Change  of  Partners.  Sale  of  his  share  entitles  continuing  partner  to 
liquidation.  \  186.  v.  Liquidation.  Retiring  partner  may  enforce  agree- 
ment to  pay  firm  debts.  \  147,  n.  2.  v.  Marshalling.  Liability  founds  his 
equity.  §  147,  n.  i.  v.  Marshalling.  Notice  by  retiring  partner  makes 
him  surety  in  New  York.     v.  Change  of  partners. 

69.1 


Index. 

RHODI":  ISLAND  corredled  Commou  law  procedure.   ^82;  <i  88.     f.  Pro- 
cedure. 

RIBBKNTROP.     Indivisible  contradl  of  Civil  law.   ^91  &  n.  3. 

ROGIvRS,  Prof.  Henry  Wade.     Firm  creditors  excluded  from  competition 
with  separate  creditors  for  balance  of  debt,   'i  109,  u.  8. 

ROMAN  TYPE 

Of  parlnersnip.  v.  Profits.  Roman  law  distindlion  between  co-owner- 
ship or  sale  and  partnership,  v.  Sale.  Civil  or  commercial  contract. 
:•.  Contracl.  Not  affeCted  by  teuure  and  partnership  in  holding,  or  in 
selling  according  to  contra<5l.  i/67,  n.  7.  Roman  partnership  a  bargain 
between  the  partners,  'i  i.  v.  Partnership.  Partner  acquired  capacity  by 
a  trade  only  if  not  siii  juris,  'i  164,  n.  5,  6,  7.  At  Roman  law,  profits  and 
contributions  correlated  at  first  in  fa6l,  and  then  in  theory,  'i  56.  Roman 
law  analogy  of  sale  used  to  account  for  firm  stock.  ?  107.  v.  Preference. 
Contrast  between  Roman  and  Common  law  sale.    §  67.     v.  Sale. 

ROUSSEAU. 

French  civil  partnership  not  confined  to  profits,  but  extends  to  any 
benefit  which  can  be  estimated  in  money,  f^  16,  n.  a  &.d.  Contribution,  an 
advance,  'if.  31,  n.  3.  At  Civil  law,  parties  to  contradl  alone  liable,  §  51,  n. 
b,  and  no  undisclosed  principal.  §51,  n.  c. 

SAIvE. 

A  sale  might  be  a  substitute  for  partnership.  A  shipment  was  made  for 
the  joint  account  of  owner,  carrier  and  consignee,  who  became  co-owners. 
The  division  was  a  sale,  and  advance  on  original  owner's  share  a  payment; 
recoverable  if  more  than  received  for  it.  |  67.  So,  sale  of  trees  for  one- 
half  profits  of  cultivating  them  during  life  of  trees.  §  51  n.  i.  The  raw 
product  could  be  sold  to  a  manufacturer  for  a  corresponding  share  of  the 
manufactured  produdl.  This  was  the  case  of  farmers  who  sold  milk  and 
received  cheese.  This  is  in  contrast  with  the  Roman  law.  The  partner- 
ship was  in  selling  alone  by  Roman  law,  and  the  partners  would  be  co- 
owners  of  the  price.  At  the  Common  law  they  would  be  co-owners  of 
the  property  and  not  be  made  partners  by  the  sale.  |  67.  Partner's  power 
to  sell.  V.  Powers.  A  sale  by  a  debtor  to  his  creditors.  ?  59.  Analogy 
of  sale  at  Civil  law  to  create  a  firm  stock.  §  191.  z'.  Marshalling.  Part- 
ner's right  of  disposition  over  his  share.  §171;  if  absolute,  a  dissolu- 
tion ;  if  qualified,  not.  '^,  171,  n.  2.  Alienation  not  accompanied  with  deliv- 
ery, but  carried  out  in  equity.  |  171,  n.  3;  g  172.  Partner  may  sell  his 
share  of  real  estate,  though  no  quota.  §  112,  u.  20.  Analogy  of  sale  at 
Roman  law  accounts  for  firm  stock.  1 107.  v.  Preference.  Partner's  sale 
of  his  share  to  defraud  creditors,  or  sale  by  all  partners,  enables  creditors 
to  assert  joint  title.   2  106,  n.  i. 

6q4 


Index. 

SCHMIDT,  Fred.  Gus.  Ad.     Partnership  in  middle  ages  a  family  relation. 
§2,  n.  I. 

SCOTCH  PROCESS.  ^96.     v.  PROCEDURE. 

SEAL.     Partner  caunot  bind  the  firm  by  a  seal,   'i  117.     v.  Powers.     But 
if  express  authority,  the  seal  will  be  disregarded.   ^  118.     v.  Powers. 

SELBORNE,  Lord.     Judgment  against  partner  unconscious  release  of  co- 
partners. l^^,  n.  3. 

SEPARATE  CREDITORS 

Postponed  to  joint  creditors  by  joint  estate,  v  Property,  v.  Estate.  Lien 
for  partner's  advance  don't  extend  to  advance  made  co-partner  and  cut 
off  separate  creditor's  preference.  '''/.  165,  n.  1.  v.  Advance.  Partner's  ac- 
ceptance of  draft  on  firm  does  not  enable  holder  to  prove  against  his 
separate  estate.  I  126,  n.  2.     v.  Commercial  Paper. 

SEPARATE  ESTATE,     v.  PROPERTY. 

SEPARATE  PURCHASERS,     v.  JOINT  PURCHASERS. 

SEPARA  TIONIS  JUS.  ^  164.     v.  ST  A  TUS. 

SERVICE 
Limits  extent  of  judgment.  ^  122,  n.  2.     Service  required  by  statute.  §76. 
V.  Procedure.     Services  capitalized  if  accepted  as  a  contribution.   \  54.    v. 
Profits.     Set-oflf  of  non-served  partner's  claim.   \  130.     v.  Set-Off. 

SHARING  Profits,     v.  PROFITS.     Sharing  Losses,     v.  EVIDENCE. 

SET-OFF. 

V.  Contrail.  In  Pennsylvania  any  liquidated  claim  may  be  set  oflF. 
Equity  disregards  procedure,  and  permits  a  set-off  whenever  the  defend- 
ant has  a  claim  against  the  plaintiff,  although  no  adlion  could  be  brought 
on  the  claim.  The  Common  law  ignored  the  interest  as  the  ground  of 
set-off,  and  adhering  to  the  technical  form,  did  not  permit  a  partner  to 
represent  a  firm  claim,  even  by  assignment.  \  130,  n.  i.  The  partner's 
liability  in  his  separate  estate  for  a  firm  claim,  entitles  him  to  set  off  a 
private  claim  against  the  plaintiff,  rather  than  pay  the  plaintiff's  joint 
claim,  and  then  sue  him  for  the  private  claim.  The  firm  has  no  right  to 
compel  the  partner  to  make  the  set-off,  for  that  would  be  to  enforce  an  ad- 
ditional contribution.  If  made,  it  is  an  advance.  No  assignment  by  the 
partner  is  requisite.  Contra  Civil  law.  ?  130,  n.  2.  The  right  does  not 
depend  upon  contribution,  but  contribution  follows  from  the  advance  on 
behalf  of  the  firm.   ^  130. 

I .  Partner  sued  for  a  firm  claim  may  set  off  a  firm  claim  without  co- 
partner's permission.  The  set-off  avoids  circuity  by  anticipating  the 
contribution  which  co-partner  would  be  compelled  to  make  if  partner 

695 


Index. 

paid  the  debt  out  of  his  separate  estate.  This  is  also  the  Civil  law.  At 
law,  separate  could  not  be  set  ofiF  against  joint  claim,  or  vice  versa,  but 
set-ofT  is  an  equitable  medium.  \  130,  4,  5,  7. 

2.  .\  partner  sued  alone,  or  with  co-partner  for  a  firm  claim,  can  set  oflF 
his  individual  claim.  He  owes  the  debt  none  the  less,  because  his  co- 
partners also  owe  it.   ''/.  130,  n.  6. 

3.  A  debtor  sued  by  a  firm  cannot  set  off  a  claim  which  he  has  against 
one  partner.  The  partners  own  jointly,  and  no  part  belongs  to  a  single 
partner.  Hence,  a  separate  debt  is  not  payable  out  of  firm  property. 
This  is  German  Code  and  Civil  law  pradlice.  \  130,  n.  8,  9. 

4.  The  partner  may  set  oflf  a  firm  claim  against  his  individual  debt,  if 
his  co-partners  consent.  The  co-partners  can  pay  a  partner's  debt  if  they 
like.  \  130,  n.  10.  Renaud's  opinion  that  partner  has  implied  authority 
to  use  firm  claim.  \  130,  n.  11. 

5.  Defendants  may  set  off  a  firm  claim  against  a  partner's  separate  suit. 
The  partner  is  individually  liable  for  the  firm  debt,  and  the  defendant 
may  enforce  the  liability  by  set-off.   ?.i3o,  n.  12.     Also  Civil  law. 

6.  A  surviving  partner  cannot  set  off  a  firm  claim  against  his  individ- 
ual debt.  Although  all  rights  survived,  yet  the  beneficial  interest  resulted 
to  the  deceased  partner's  representative.  The  surviving  partner  is  in 
reality  a  liquidating  partner,  and  the  application  would  be  a  misappro- 
priation, unless  made  with  the  consent  of  the  deceased  partner's  repre- 
sentative. The  death  of  partner  introduces  equality  of  distribution,  and 
prevents  any  subsequent  set-off  which  would  result  in  a  preference.  ?I30, 
13,  14,  15  &  16. 

7.  A  partner  sued  for  a  firm  debt  can  set  off  his  co-partner's  claim 
against  the  plaintiff,  if  the  co-partner  consents.  The  defendant  repre- 
sents the  co-partner's  interest  in  firm  property.  If  offered  by  co-partner 
and  refused,  partner  could  not  subsequently  claim  contribution.  If  part- 
ner has  paid  more  than  his  proportion,  it  is  important  for  him  to  com- 
pel co-partner  to  let  him  use  it.  ?  130.  The  indemnifying  partner  may  set 
off  the  indebtedness  of  the  outgoing  partner.   \  148,  n.  3. 

Set-off  between  partners  forms  item  of  account,  v.  Litigation.  Defend- 
ant may  set  off  deceased  partner's  debt  in  suit  by  surviving  partner.  \  96, 
n.  I.  V.  Contra6l.  Partners  cannot  set  off  against  each  other  what  they 
owe  the  firm,  because  creditors  are  paramount  and  may  colledt  both.  \  202. 
V.  Marshalling.  Firm  creditors  cannot  set  off  payment  of  individual  part- 
ner's debt  against  bona  fide  holder  of  firm  paper.  1 167,  n.  5,  a. 

SETTLEMENT. 

Interpreted  according  to  partnership  principles,  \  215.  Must  be  proved. 
§215,  n- 1.  Completed,  is  binding.  ?  215,  n.  3.  May  anticipate  account. 
§212.  Suit  for,  and  suit  after,  barred  by  limitation.  \  213.  v.  Account. 
Should  carry  interest.  \  165.  Purchaser  of  partner's  share  entitled  to. 
\  206,  n.  2.     V.  Advances. 


696 


Index, 
severance 

Of  title  enforced  by  coustrucftion,  to  give  effect  to  exemptiou  granted  by 
Constitution,  or  to  compensation  decreed  by  statute  for  negligence.  <!  104, 
n.  2,  3.     Severance  of  joint  contradl.     v.  Contracfl. 

SHARSWOOD,  C.  J. 

Corredled  C,  J.  Gibson's  error,  and  traced  partner's  equity  to  his  lia- 
bility, l  102,  n.  2  &a  ;  l  106,  n.  5.  Re-discovered  by  legal  instinA  the  na- 
ture of  partner's  contribution.  ^  34,  n.  i ;  \  102,  n.  2.  Credit  on  record-title 
in  Pennsylvania,   'i  113,  n.  5.     Notice  of  dissolution.   \  177,  u.  i. 

SIMPSON,  C.  J.     Joint  creditors  have  priority  on  firm  estate  and  equal 
right  with  separate  creditor  against  individual  estate.   \  108,  n.  5. 

SISTER  STATE  JUDGMENT,     v.  JUDGMENT. 

SLAVE,  carrying  on  different  trades.   I  loi.     v.  ST  A  TUS. 

SMITH,  J.     Guarantee  by  partner.   \  129,  n.  3. 

SMITH,  Jeremiah,  Esq.     Special  partnership  the  acknowledgement  of 
limited  liability.   \  26,  n.  5. 

SOCIAL  CLUB.     V.  GAIN. 

SOLICITORS,  INVESTING,   l  139,  n.  2.     v.  TORT. 

SOUTH  CAROLINA 

Prevents  judgment  against  one  partner  from  merging  claim  against  co- 
partners. I  82.  V.  Procedure.  Release  of  partner,  not  of  co-partner.  ^  90. 
V.  Procedure. 

SPECIAL  PARTNER. 

Not  joined  as  party  in  legal  proceedings.  He  may,  it  is  said,  join,  but 
judgment  would  bind  his  separate  estate.  \  76,  n.  14.  v.  Procedure.  A 
special  partner's  share  could  not  be  taken  in  execution,  it  was.  said,  be- 
cause the  sheriff  could  not  seize  anything  in  which  the  special  partner 
had  an  interest.  The  stock  belongs  to  the  general  partners,  who  have 
the  exclusive  right  to  its  possession  and  control.  The  special  partner 
might  have  a  chose  in  adlion  or  a  claim,  but  not  a  property  interest  in  the 
stock.  \  104,  n.  7.  This  ruling  shows  the  kind  of  treatment  to  which  the 
special  partner  is  always  exposed,  v.  Special  Partner.  Tort  of  general, 
charges  special  partner  who  has  failed  to  observe  statutory  requirements 
as  construed  by  the  courts.  \  142.  v.  Torts.  Beneficiaries  of  deceased  a 
partner.     Special  partnership  by  inheritance,     v.  Execution. 

SPECIAL  PARTNERSHIP. 
Special  partnership  is  a  kind  of  partnership.     It  expresses  the  princi- 
ple of  partnership  at  the  Civil  law,  and  is  a  form  of  the  relation.     But 

697 


Index. 

it  is  opposed  to  the  Common  law,  which  charges  a  dormant  partner  on 
account  of  his  property  interest,  as  well  as  an  adlive  partner,  with  liabil- 
ity. Special  partnership  couflidls  with  the  Common  law  theory,  and  if 
recognized,  supercedes  to  the  extent  it  reaches  the  dormant  partnership. 
^3.  Special  partner's  couLribution.  {!  37,  v.  Contribution-.  A  special 
partnership  should  be  encouraged,  because  the  managing  partners  are 
liable  to  the  extent  of  their  resources.  This  liability  restrains  them  from 
speculation  and  risk.  The  members  of  a  corporation  are  all  exempt  from 
unlimited  liability,  and  the  officers  incur  no  personal  Hability.  They 
speculate  with  the  property  of  others  without  individual  risk.  The  dis- 
couragement given  by  the  courts  to  special  partnership  did  not  curtail 
the  limitation  of  liability;  it  had  the  opposite  effedl,  and  extended  the 
immunity  by  legislation.  The  result  was  that  the  Legislature  made  no 
discrimination  and  exempted  all  incorporators,  instead  of  exempting  only 
those  who  took  no  part  in  the  management.  There  was  a  further  result. 
The  exemption  of  all  incorporators  made  the  joint  stock  company  seem  like 
a  corporation.  The  distindlion  between  a  private  and  a  public  enterprise 
was  obliterated,  and  a  franchise  was  granted  for  a  private  undertaking. 
The  State,  in  weariness,  abandoned  the  granting  of  charters,  and  allowed 
self-incorporation.  Thus,  the  State  has  deprived  itself  of  its  prerogative, 
and  cannot  grant  a  franchise  for  a  public  use  when  it  is  necessary.  The 
courts  show  favor  to  corporations,  even  if  illegal  and  disfavor  to  special 
partnerships.  If  a  corporation  is  sued,  the  plaintiff  must  prove  its  failure 
to  comply  with  the  statutory  requirements.  If  a  special  partner  is  sued, 
he  must  prove  that  he  has  complied  with  the  statutes.  The  scope  of  the 
special  partnership  statutes  is  simply  to  notify  third  persons,  who  is  the 
special  partner,  and  the  amount  of  his  contribution.  The  special  part- 
nership is  recognized  as  a  type  of  partnership.  A  foreign  special  part- 
nership is  interpreted  by  the  law  of  its  domicil,  and  foreign  process  regu- 
lates adlions  where  they  are  brought.  The  statutory  requirements  should 
be  construed  to  preserve,  not  destroy,  special  partnership.  Non-compli- 
ance with  the  terms,  unless  they  are  constituents  of  partnership,  should 
not  make  the  special  a  general  partner.  \  37. 

SPECIALTY.    Partner  cannot  bind  firm  by  deed.   §117.    z^.  Powers.    How 
ratified,     v.  Ratification. 

ST  A  TUS. 
The  sum  of  the  rights  and  duties  of  the  partners  in  the  relation,  is 
called  the  status  of  partnership.  The  status  may  be  created  by  contracSl, 
like  marriage  or  sale.  The  contraa  is  the  occasion  or  door,  and  the  con- 
summation or  conveyance  establishes  rights  in  rem.  Agency  is  not  status 
and  permanent,  but  is  revocable.  If  the  joint  estate  did  not  give  part- 
ners a  .r/fl/?/j,  they  could  not  withdraw  the  property  from  execution,  issued 
by  a  separate  creditor.  A  contradl  would  not  bind  third  persons.  The 
status  is  recognized  by  excluding  separate  creditors  until  the  firm  is 
wound  up.     Among  the  civilians,  Kuntze  suggests  the  joint  estate  as 

698 


Index. 

the  ground  for  the  joint  creditors'  preference.  ^loi,  n.  2.  Hurlemaxn's 
view  is  that  the  Roman  law  recognized  no  joint  estate  and  no  preference. 
A  privileged  creditor  would  be  compelled  to  make  out  his  priority.  The 
French  notion  of  a  corporation  he  exposes  as  a  makeshift,  not  applied, 
except  to  give  the  firm  creditors  a  privilege,  and  then  abandoned.  The 
basis  for  the  theory  at  the  Roman  law  was  the  trading  by  a  slave,  who 
did  not  charge  his  master,  and,  therefore,  could  charge  only  the  stock. 
This  is  inapplicable  to  freemen,  who  charge  their  person  by  all  contracfls 
and  obligations.  The  extent  of  the  segregation  was  only  to  limit  credit- 
ors of  slaves  carrying  on  different  trades  to  the  particular  trade  they  dealt 
in  with  them.  That  position  was  not  recognized  in  a  freeman  carrying 
on  diflferent  trades  through  an  institor.  There  was  no  such  classification 
of  creditors  or  Jus  separationis,  although  that  form  of  agency  was  fully 
developed  at  the  Roman  law.  ^loi,  u.  3. 

STATUTE  OF  FRAUDS. 

Third  persons  do  not  enforce  the  contradl  of  purchasers  of  land  on  joint 
account  by  suing  for  the  price.  They  do  not  proceed  on  the  contradl, 
but  upon  the  authority  delegated  to  the  purchaser  by  his  co-purchasers. 
The  purchaser's  bond  and  mortgage  would  not  merge  the  vendor's  claim 
for  the  purchase-money.  It  would  be  like  the  deed  to  him,  subjedl  to  the 
rights  of  the  co-partners.  The  Statute  of  Frauds  requires  a  writing,  and  an 
oral  partnership  would  be  prevented  by  the  statute.  The  obvious  appli- 
cation of  the  statute  is  to  a  contradl  between  vendor  and  vendee,  but  the 
Statute  also  applies  to  an  agreement  between  joint  purchasers.  The  vendor 
may  seek  by  oral  proof  to  enforce  a  written  contradl  of  sale  against  a  part- 
ner of  the  vendee,  or  the  vendee's  partner  may  seek  by  oral  proof  to  avail 
himself  of  a  written  contradl  to  enforce  a  conveyance  from  the  vendor.  The 
statute  prohibits  the  enforcement  in  both  cases,  if  the  contradl  between  the 
vendee  and  his  partner  is  executory.  If  the  vendee's  partner  had  paid  his 
contribution,  he  could  enforce  the  contradl  of  sale.  The  contribution  has 
made  him  a  proprietor,  and  as  such  entitles  him  as  an  undisclosed  princi- 
pal to  enforce  the  contradl.  If  a  partner  sues  the  vendee,  his  right  to 
recover  depends  upon  the  payment  of  his  contribution.  The  payment 
raises  a  resulting  trust  to  him.  The  universal  dodlrine  of  the  courts  is 
that  a  trust  results  to  a  partner  from  payment  of  the  consideration. 
Nothing  but  a  statute,  as,  for  example,  in  Michigan,  would  prevent  a 
trust  from  arising  from  a  payment  of  the  price.  A  partial  payment  of  the 
contribution  invests  him  with  this  right.  It  was  thought  at  one  period 
that  a  definite  quota  must  be  paid,  but  now  any  part  will  be  sufiicient  to 
enable  him  to  enforce  the  contradl  to  the  extent  of  his  interest.  A  partner 
may  be  charged  on  an  executed  oral  contradl  with  the  vendee.  He  is  a 
full  partner,  and  as  such  is  liable  for  everything  done  in  the  course  of  the 
business.  If  the  owner  of  land  orally  agrees  to  take  a  partner  into  busi- 
ness with  him,  the  statute  prevents  the  enforcement  of  the  contradl.  The 
possession  taken  by  the  partner  is  not  exclusive,  and  does  not  oust  the 

699 


Index. 

owiur,  who  shares  the  possession.  The  statute  was  a  substitute  for  the 
feutliU  investure  which  gave  notice  of  the  title.  All  the  more  if  the  pos- 
session could  be  explained  by  the  business,  which  did  not  involve  a  disposi- 
tion of  the  land  as  an  asset  of  the  firm,  but  was  used  for  the  site  of  business 
transactions.  If  an  agent,  to  buy  laud  for  himself  and  others,  buys  for  him- 
self, opinions  vary  on  the  point  whether  the  principals  can  compel  him  to 
convey  to  them  or  not.  By  most,  payment  of  the  consideration  is  regarded 
as  the  test,  but  by  some  the  breach  of  confidence  raises  a  trust  by  implica- 
tion. The  question  does  not  affedl  partnership.  The  vendee  is  himself  a 
principal,  and  his  agency  arises  only  after  the  formation  of  the  partner- 
ship. The  refusal  to  share  with  the  co-principal  is  purely  a  breach  of 
contradl.  A  contract  to  share  the  proceeds  of  real  estate  is  not  affected  by 
the  statute.  1  he  proceeds  made  by  a  sale  of  land,  or  the  produdl  of  its 
cultivation  does  not  involve  the  title.  ?  lo.  The  promise  of  the  purchaser 
of  firm  assets  to  pay  the  debts  is  not  within  the  Statute  of  Frauds,  'i  148, 
n.  9. 


STATUTES. 

Statute  requiring  joinder  of  parties  in  interest  prevents  dormant  part- 
nership, v.  Procedure.  Preventing  suit  against  anj'  but  parties  signing 
bills  and  notes  excludes  partners,  v.  Commercial  Paper.  O21,  u.  5,  7, 
8,  10,  II,  12,  14  (1873,    <5  122,  n.  4);    ?  161,  n.  I ;    i;  211,  n.  2 :    |  161, 

Alabama.     Code  of  1876,  sec.  2904.     ^530,  n.  3. 

California.      Codes  and  Statutes  of   1876,  sec.  388-9.    i.  76,  n.  I. 

Civil  Code,  sec.  1543.    ^90,  n.  3,  4. 
Colorado.     Statutes  of  1885,  sec.  5.   ?  80,  n.  2. 
Connedlicut.     Statutes  of  1875,  p.  400,  sec.  12.   i<  76,  n-  i. 
Dakota.     Code  of  1884,  sec.  951.   ^.85,  n.  i. 
English.     384  Wm.  IV.  c.  42.     i.  84,  n.  2. 

28  &  29  ViA.  c.  86.      ii  31,  n.  I  ;  ^  55,  n.  4,  a  ;   'i  64,  n.  3. 

31  &  32      "  c.  116,  s.  I.     i!  16,  n.  I. 

"      "  "  (1868).     'i  143,  n.  I. 

36  &  37      "   c.  66.     Judicature  Act  and  judicial  orders  under  it. 

[?77,  n-  2. 
Illinois.     Statutes  of  1887,  sec.  5.  i?  85,  n.  i. 
Iowa      Code  of  1884,  sec.  2553.  i;  76,  n.  i  ;  ?  80,  n.  2  ;  ii  82,  n.  i  ;  <i  94,  n.  2. 

Sec.  2550.   ?  80,  n,  2. 
Kansas.     Compiled  Laws  of  1885  (1075),  sec.  i,  <;  85,  n.  i. 

(1076),  "  2,  i  88.  n.  7. 
(1077),  "  3-  'i8H,  n.  7. 
(1078),  •'  4.  i;8o,  n.  2. 
(1079),   "      5,   ^90,  n.  4. 

(3626,  91-4)  i-4iJ  90,  u.  4. 
Kentucky.     General  Statutes  of  1881,  sec.  8.  ^89,  n.  4. 
Louisiana.     Civil  Code,  sec.  274.  §  79,  n.  2,  a  ;  2  79,  n.  2,  5. 


700 


Index. 

Ohio.     Revised  Statutes  of  1884,  sees.  3162-5.  ?  90,  n.  4. 

•'     5366,       §  84,  n.  2. 
Oregon.     Civil  Code,  sec.  59,  sub-div.  3.  §  91.  n.  2. 
Maine.     Revised  Statutes  of  1883,  p.  571,  sec.  3.  ^  88,  n.  7. 
Maryland.     Revised  Code  of  1876,  sec.  55.  ?  89,  n.  4. 


1878, 


51-  V 


n.  7. 


Michigan. 


Minnesota. 


Mississippi. 


n.  4. 


1878,  sec.  53.  I  88,  n.  7. 

"    54,  <i88,  n.  7. 
"     57.  <i82,  n.  I. 
"        "    60,  I  82,  n.  I. 
General  Statutes,  sec.  5569.  ^  10,  n.  5. 
Compiled  Laws  of  1857,  ch.  153.   ^  82,  n.  3. 
Annotated  Statutes  of  1882,  p.  1543,  sec.  5906.  ^  S 
"  "  "         sec.  7730-1.  (^82,  n.  3. 

"    7783-6.   <!90,  n.  4. 
Laws  of  1873,  c.  87.  ^  88,  n.  7. 
General  Statutes  of  1878,  sec.  19.  <>  89,  n.  4. 
"      37.   ^90,  n.  4. 
"     c.  66,  sec.  266.     ^88,  n.  7. 
Revised  Code  of  1880,  sec.  1134.    'i  88,  n.  7. 
"  "         "  "     1003.   ^  90,  u.  4. 

Missouri.     Revised  Statutes  of  1879,  sec.  658.   ^  85,  n.  i. 
Nebraska.     Compiled  Statutes  of  1885,  sees.  24-25-27.   ?  76,  n.  i. 
New  Jersey.     Revision  of  1709-1877,  sec.  3.  ^88,  n.  7. 

Supplement  to  Revision  of  1872-86,  sees.  1-4;  ^90,  n.  4, 
New  York.     Code  of  Procedure,  sec.  mi,     ^76,  n.  13. 

Revised  Statutes,  728,  sec.  51.     1 112,  n.  4,  a. 
Laws  of  1853,  ch-  281.      'i  76,  n.  15. 
North  Carolina.     Code  of  1883,  pp.  83-84  (4).     ^82,  n.  i. 
Pennsylvania.     Constitution  of  1874,  Art.  Ill,  sec.  7.     ^  37,  n.  3,  e. 
Adt  of  8  March,  1775,    i  Sm.  Laws  422-3. 
"     4  April,  1797,      3         "  297-8. 

"  13     "        .807.     <i87,  n.  3. 
"     6-    "        1830,  P.  L-  277.     ^82,  n.  I. 
"     6     "        1830,         "  iigs,  n.  3. 

"  24  February,  1834.     |  88,  n.  6. 
"  21  March,  1836,  P.  L.  243.     ^.  26,  n.  2. 
"  16  June,  1836,  sec.  3,  P.  L.  786.     §88,  n.  5,  6. 
"  14  April,  1838,  P.  L.  457.     1 161,  n.  i. 
"  II     '•■       1848,  sec.  4,  P.  L.  536.     'i  88,  n.  I  ;  <;  89,  n.  3. 
"     4  May,  1852,  P.  L.  574.     ^86,  n.  i. 
"  22  March,  186:,  "      186.     >ii6,  n.  i  ;  §88,  n.  4,  6. 
"  22     "  1862,  sees.  1-5,  P.  L.  167.     §90,  II.  4. 

"  27     "  1865,  P.  L.  38.     i!i6,  n.  i;  §95,  n.  4;  §122, 

[n.  12. 
"   15  April,  1869,    "       30.     §  121,  u.  5. 


'i  113,  n.  8,  k. 
l  113,  n.  7.  j. 


701 


Index. 

Pennsylvania.  Acfl  of  15  May,  1869.     1 87,  n.  3. 

"     6  April,  1870,  I  P.  L.  56.     264,  n.  3. 
"    9    "  "  "      40.     §121,  n.  7. 

"    8     "       1873,         "      65.     l\o(>,n.S,g,h,i. 
"  25  May,  1878,  "     153.      ^  16,  n.  I ;   'i  121,  ti.  li. 

"     9     "       1881,         "       70.     §121,  n.  8. 
"    3  June,  1885,         "       60.     ^143,  n.  I. 
"  23  May,  1887,  sec.  5,  P.  L.  158.     §  121,  n.  14. 
"  27  March,  "         38.     ^  121,  n.  12. 

Rhode  Island.     Public  Statutes  of  1882,  sec.  29.     ^.82,  n.  i. 

"     28.     ?88,  n.  7. 
"  "  "        "     1-6.  §90,  n.  4. 

South  Carolina.     General  Statutes  of  1882,  sec.  397.     ?  82,  n.  i. 
Laws  of  1888,  "     1-3.     I90,  n.  4. 

Tennessee.     Code  of  1884,  sec.  3486.     §88,  n.  7. 
United  States.     Revised  Statutes,  sec.  5074. 

Adl  of  March  2,  1867,  ch.  176.     ?  21. 
Vermont.     Revised  Laws  of  :88o,  sees.  936-7.     g  90,  n.  4. 
"      1882,     "     935.  §80,  n.  7. 

Virginia.     Code  of  1873,  sees.  14-15.     §90,  n.  4. 
Wisconsin.     Revised  Statutes  of  1878,  sec.  2884,  sub.  2.     §91,  n.  2. 
"  "  "         "   2S85.  ?88,  r..  7. 

"   3848.  ?89n.  4. 

STOCK.     A  necessity  in  practice -without  reference  to  theory,   ^igi.     V. 
Marshalling. 

STORY.     Opinion  of  Ulpiax's  pearl  case.   §  63,  n.  5. 

STRACCHA.     Insurance  not  partnership.  ^  16,  n.  3. 

STRONG,  J.     Partners  not  present  may  ratify  deed  of  co-partner.    ^  135, 

n.  5,  a. 

SUBJECT-MATTER. 

The  domain  of  partnership  is  not  confined  to  any  commodities,  it  ex- 
tends to  all.  ?  8.  V.  Land.  The  relation  of  landlord  and  tenant  excluded 
an  agricultural  partnership,  but  the  parties  are  not  prevented  from  farm- 
ing in  partnership;  if  they  prefer  to  farm  in  partnership  the  law  will 
carry  out  their  preference.  ?  12  &  n.  2.  Sharing  the  profit  and  loss  of  the 
agricultural  business,  however,  does  not  raise  the  inference  of  a  partner- 
ship. Nothing  would  seem  to  subvert  the  relation  of  landlord  and  tenant, 
except  a  distinct  agreement  to  farm  in  partnership.   ?  12. 

SUB-PARTNERSHIP.  ?  68.     v.  CHOICE  OF  A  PARTNER. 

SUBROGATION. 
V.  Holding  out.     Creditors  of  deceased  partner's  representative  entitled 
to  subrogation  to  extent  of  deceased's  contribution,     v.  Executor.    Firm 

702 


Index. 

creditors  subrogated  to  retiring  partner's  place,  if  they  renounce  joint 
estate.  ^200.  z'.  Marshalling.  By  subrogation  surviving  partner  and  coni- 
mou  member  may  escape  payment,  and  enforce  collection  out  of  deceased 
partner's  estate,  'i  203.  v.  Marshalling.  If  trustee-partner  puts  trust  funds 
into  firm,  and  they  are  used  to  pay  firm  debts,  cestiiy  que  trust  will  be  sub- 
rogated to  the  place  of  the  creditors  paid.  \  139,  n.  5. 

SULPICIUS.     Profits  not  a  fund  for  creditors.  \  55,  n.  2. 

SURVIVAL  of  title  and  claims  upon  partner's  death,     v.  Estate. 

SURVIVING   PARTNER 

When  entitled  to  compensation.  \  210,  n.  4,  a.  v.  Advance.  A  trustee 
for  firm  creditors.  \  192,  n.  i.  v.  Marshalling.  By  subrogation  escapes 
paying  and  enforces  payment  out  of  deceased  partner's  estate.  ?.  203.  v. 
Marshalling.  Not  assignee  of  deceased,  but  original  co-tenant.  |i2i. 
Survivorship  of  title  and  claims  incident  to  joint  estate  for  duration  of 
partnership.  ^  99,  n.  i;  \  103.  In  effe(fi:,  a  liquidating  partner,  and  cannot 
set  off  firm  claim  against  his  individual  debt,  'i  130,  n.  13,  14,  15,  16.  v. 
Set-off.  Deceased  partner's  debt  set  off  against  surviving  partner.  \  96, 
n.  I.     V.  Contradl. 

SWIFT,  Dean.     Travesty  of  legal  interpretation.   ^.37,  n.  3. 

TENANCY  IN  COMMON 

Of  firm  property,  v.  Property.  Judge  Gibson's  theory  of  partnership 
property  was  a  tenancy  in  common,  which  co-ordinates  all  creditors,  joint 
and  several,  not  by  classes,  but  as  individuals.  \  102.  Joint  title  severed 
by  execution,  v.  Execution.  In  New  York  separate  execution  severs 
title  on  the  theory  of  a  tenancy  in  common,  v.  Execution.  Tenancy  in 
common  would  break  up  the  joint  estate.  \  100.  For  a<5l  in  excess  of 
authority.   \  167,  n.  i.     v.  Tort. 

TENANT.  V.  LANDLORD  AND  TENANT. 

TENNESSEE  provides  for  suit  against  surviving  and  representative  of 
deceased  partners.   \  88. 

THIRD  PERSONS,  Partnership  as  to,  the  normal  partnership.  \  48. 

THOMPSON,  J.        Partner  by  construdlion,  not  liable  for  co-partner's 

tort.   I  142,  n.  I. 

THORNTON,  W.  W.     Notice  of  dissolution,   'i  175,  n.  2. 

TITLE. 

Title  to  contribution,  v.  Contribution.  To  profits,  v.  Profits.  To  firm 
property,  v.  Property.  Title  severed  by  Constitution  or  statute,  v.  Sev- 
erance.   Joint  title  resolved  into  several  titles  by  dissolution.  ?  179.    Title 

703 


Index. 

vested  iu  partner  may  be  shown  to  be  in  firm.  §  ii,  n.  i.  Origin  of  firm's 
title.  J  98,  S  99.  Title  not  devested  from  the  firm  unless  by  joint  adl  of 
partners,   'i.  167. 

TORT. 

If  tlie  acquisition  of  property  was  by  a  tort,  the  remedy  at  law  originally 
was  restitution,  as  it  is  now  in  Equity.  But  the  legal  process  resulted  in 
an  obligation  to  pay  an  equivalent  in  money.  This  transformed  the  right 
and  passed  the  title,  substituting  a  debt  for  the  property.  The  obligation 
to  pay  the  price  became  a  firm  liability,  which  charged  each  partner  and 
his  separate  estate.  The  tort,  however,  should  not  be  assimilated  to  a 
contracfl.  They  are  antipodes,  and  the  result  in  partnership  is  to  victimize 
the  innocent  partner  for  his  co-partner's  fraud,  which  is  personal,  g  48,  n.  2. 
The  firm  which  has  failed  to  file  a  certificate  may,  nevertheless,  recover 
for  a  tort.  v.  Procedure.  Remedy  for  tort  model  for  breach  of  coutradl. 
V.  Procedure.  A  partner  is  liable  for  the  tort  of  his  co-partner  committed 
in  the  course  of  the  business,  and  for  the  damages  caused  b}-  his  tort. 
Withholding  for  a  separate  debt  securities  pledged  with  the  firm,  charges 
co-partner  for  the  conversion.  §139,  n.  i.  Partner  liable  for  receipt  by 
co-partner  for  merchandise  not  delivered,  if  money  lent  on  the  faith  of 
the  representation.  ^  139,  n.  2.  A  partner's  contradl  for  options  in  grain 
does  not  charge  a  co-partner,  though  that  is  the  firm  business.  ^  139,  n.  3. 
A  partner  charges  his  co-partners  by  executing  a  firm  judgment,  if  held 
an  abuse  of  legal  process.  1 139,  n.  4.  If  trustee-partner  puts  funds  into 
the  business,  and  debts  are  paid  with  them,  the  cestuy  que  trust  will  be 
subrogated  to  the  place  of  the  creditors  who  are  paid.  \  139,  n.  5.  The  tort 
is  erroneously  assimilated  to  a  contracl.  g  139,  n.  6.  But  if  the  firm  is  only 
the  occasion,  not  the  agency,  for  its  commission,  the  co-partners  are  not 
liable.  A  solicitor  who  invests  without  submitting  the  security  to  his 
client  does  not  charge  his  co-partner,  as  the  business  of  solicitors  is  lim- 
ited to  submitting  proposed  investments  to  their  clients  for  acceptance  or 
rejection.  The  business  of  a  scrivener  must  be  added  to  that  of  solicitors 
to  control  investment.  Taking  advantage  of  his  position  to  induce  a 
customer  to  withdraw  an  investment  and  entrust  it  to  him,  will  not  charge 
his  co-partner  for  its  loss.  \  139,  n.  2.  The  discharge  in  bankruptcy  of  inno- 
cent partner  does  not  bar  recovery  for  tort  of  his  co-partner.  The  damages 
are  converted  into  a  debt,  which  charges  both  partners  as  individuals  and 
their  separate  estates.  \  149,  n.  3.  Co-tort-feasors  liable  jointly,  severally, 
and  successively,  whether  partners  or  not.  ^,140,  n.  3;  ?2o8,  n.5.  The  libel 
of  an  editor  will  charge  the  proprietor,  not  because  calumny  is  the  business 
of  a  newspaper,  but  because  the  editor  sele^s  the  materials .  ?  140,  n .  4 .  The 
hbel  must  be  identified  with  the  business.  A  partner's  vindidliveness, 
which  might  have  vented  itself  anywhere,  would  not  charge  his  co-partner 
?i4o,  n.4.  Tort  by  converting  trust  funds,  z/.  Trust  Funds.  A  special 
partner  who  becomes  liable  as  a  general  partner  bv  his  negle^  to  comply 
with  the  statute,  is  liable  for  the  tort  of  his  co-partners.     It  was  thought 

704 


Index. 

unjust  to  visit  him  with  liability,  because  it  was  made  out  ihrougb  two 
stages,  but  the  real  reason  must  have  been  thereluclance  to  enforce  the  liiii- 
cal  construdlion  given  to  the  acfl  establishing  a  special  partnership.  ^.142. 
A  partner's  conversion  of  firm  property  to  his  own  use,  entitles  his  co- 
partners to  reclaim  the  amount  abstracted  from  his  separate  estate,  and 
a  bill  lies  for  the  restitution.  gi66,  n.  2.  The  separate  estate  need  not  be 
increased,  for  the  appropriation  is  sufficient  to  charge  him.  <;i66,  n.3. 
Nothing  but  the  guilt  is  required,  'i  166,  n.  4.  The  receipt  of  property  is  a 
reason  to  charge  a  stranger.  §208,  n.  5.  If  the  firm  funds  are  used  for  a 
purpose  beyond  the  partnership,  the  partners  were  made  to  recover  sepa- 
rately. The  a6l  by  a  partner  in  excess  of  his  authority  created,  it  was 
held,  a  right  of  the  co-partner  to  recover  a  moiety  by  a  separate  adlion. 
§167,  u.  I.  A  partner's  use  of  firm  paper  for  his  individual  debt  was  held 
to  be  a  fraud,  not  on  the  firm,  but  on  his  co-partners,  who  must  sue  for 
their  quotas  of  the  loss.  There  was  a  dissent,  because  the  title  was  in  the 
firm,  which  should  sue.  ^  167,  n.  i.  So,  if  a  partner  endorsed  the  receipt 
of  his  debt  on  a  note  held  by  the  firm,  they  could  not  recover  without  ad- 
mitting the  credit.  ^  167,  u.  2.  Any  receipt  by  a  partner  had  the  efre6t  to 
bar  the  firm's  recovery,  because  the  partner  could  not  be  co-plaintiff. 
§167,  n.  2.  But  these  rulings  are  erroneous.  The  injury  was  against 
the  firm,  and  its  title  is  not  devested  without  an  act  performed  on  its  be- 
half. It  is  the  recipient  who  is  estopped  by  the  fraud,  because  he  gave 
no  value  for  the  property  to  the  firm.  §  167,  n.  3.  If  the  firm  debtor  has 
credited  the  debt  on  his  judgment  against  the  partner,  with  his  consent, 
the  joint  title  is  unafFe<5led  by  the  credit,  and  the  firm  may  recover,  i/167, 
n.  4,  a.  If  a  partner  receipts  for  a  firm  claim  in  payment  of  his  individual 
debt,  the  firm  can  recover  in  spite  of  his  receipt.  The  firm  title  is  not 
affedled  by  the  receipt,  'i  167,  n.  4,  b.  If  the  partner  transfers  firm  assets 
for  his  separate  debt,  firm  creditors  may  recover  them.  The  firm  title 
did  not  pass,  'i  167,  n.  7,  d.  If  a  partner's  debt  is  paid  with  firm  funds, 
the  joint  creditors  cannot  set  oflF  the  payment  against  a  note  in  the  hands 
of  a  bona  fide  purchaser.  I167,  n.  5,  a.  If  the  firm  property  is  taken  in 
execution  for  a  separate  debt  and  sold,  all  the  partners  can  sue  for  the 
trespass.  ^  167,  n.  5,  b.  If  a  firm  note  includes  a  separate  debt  the  payee 
can  recover  on  the  note,  but  only  the  firm  debt,  not  the  separate  debt, 
though  included  in  the  note.  ?  167,  n.  5,  c.  It  has  been  held  that  if  the 
separate  debt  of  all  the  partners  is  paid  with  firm  funds,  it  cannot  be  re- 
covered by  the  firm,  because  the  debt  was  due  from  each  of  the  partners, 
and  they  have  no  equity  to  recover  it.  ^167,  n.  5,  d.  And  if  a  partner 
pays  his  individual  debt  with  firm  funds,  that  his  co-partner  can  be 
estopped  from  reclaiming  the  payment  by  receiving  payment  of  his  debt 
out  of  the  firm  assets.  ?i67,  n.  5,  e.  If  the  firm  is  insolvent  when  its 
funds  are  used  to  pay  the  separate  creditor,  the  firm  creditors  may  re- 
cover, because  the  fraud  is  upon  them.  i>i67,  n.  7,  «  &  {5103,  n.  4,  Part- 
ner, under  liability  for  co-partner's  separate  debt,  pays  under  duress. 
^167,  n.  8,  a.     If  a  partner  gives  firm  paper  for  his  individual  debt,  the 

705 


Index. 

co-parintr  need  not  repudiate  the  trausadlion.  He  is  not  bound  by  the 
ijarlner's  uulawtul  ad,  which  is  invalid  without  being  repudiated.  >;i6S, 
n  1  ^^  2;  '/.169,  u.  I.  The  partners  may  consent  after  the  appropriation 
of  the  credit  or  asset  by  a  partner  to  his  individual  use,  and  the  trans- 
aclion  will  become  valid.  ^.i6g,  n.  3.  Partner  may  claim  credit  for  a  loss 
or  injury  caused  by  co-partner's  tort.    ^210.     v.  Advances. 

TRADE. 

Trade  is  made  up  of  the  two  operations  of  buying  and  selling,  fused  into 
a  single  act  by  the  intention.  Partnership  came  into  the  Common  law  as 
an  organ  of  trade,  and  it  was  the  trade-necessity  that  gave  a  partner  the 
right  to  sell  or  pledge  his  co-partner's  share.  The  Common  law  knew 
only  joint  ownership,  or  joint  possession,  and  neither  owner  nor  possessor 
could  alien  or  mortgage  his  co-tenant's  share,  for  only  the  title  or  posses- 
sion was  in  common.  Partnership  has  extended  beyond  trade ;  it  has  out- 
grown trade,  and  now  embraces  manufacfluring,  which  is  not  a  trade,  but 
an  industry,  and  extends  to  any  'business'  which  parties  join  in  transacft- 
ing.  The  original  constituents  of  buying  and  selling  need  not  co-exist  in 
the  business  of  partnership.  Neither  buying  nor  selling  need  be  an  ele- 
ment of  the  partnership  business.  There  might  be  a  partnership  simply 
in  the  ereclion  of  a  building,  without  any  intention  of  selling  the  structure. 
•/.  11.  The  efFecl  of  extending  partnership  so  as  to  include  a  business  which 
is  not  trade,  is  to  modify  the  principles  of  trade  which  regulate  partner- 
ship. ?  13.  The  adlual  requirements  of  the  business  undertaken,  judged 
by  its  type,  or  kind,  furnish  the  limit  of  a  partner's  power  in  a  non-com- 
mercial partnership.  This  was  the  method  by  which  a  trade-partnership 
was  developed  from  the  principles  of  trade  applied  to  joint  traders.  A 
partner  in  a  sheep  ranch  could  not  sell  the  sheep  or  the  ranch.  Sheep- 
raising  being  the  objedl  of  the  partnership,  no  power  is  implied,  except 
such  as  is  necessary  for  that  purpose.  ?  14.  In  a  partnership  to  conduA 
a  theatre,  one  partner  could  not  bind  his  co-partner  by  a  promissory  note 
given  in  connedlion  with  the  business.  Commercial  paper  is  not  neces- 
sary for  the  management  of  a  theatre.  If  lawyers  are  in  partnership, 
neither  can  issue  commercial  paper.  Profits  co-extensive  with  trade.  ?  53. 
V.  Profits.  If  trustee-partner  puts  trust  funds  into  firm,  and  they  are  used 
to  pay  debts,  cesiuy  que  trust  will  be  subrogated  to  place  of  creditors  paid. 
\  139.  n.  5. 

TRADE-MARK.     v.  GOOD-WILI.. 

TROPLONG. 

Insurance  not  partnership.  ?  16,  n.  3.  Cites  Straccha.  §  16,  n.  c.  Na- 
ture of  partner's  contribution.  1 33,  n.  i.  Cites  Cassaregis  for  sharing 
profits  and  losses  without  partnership.  >(,  51,  n.  a.  Parties  to  contradl  alone 
liable  at  Civil  law.  ?5i,n.  (J.  No  undisclosed  principal  at  Civil  law.  §51, 
n.  c. 

706 


Indkx. 
trust  funds. 

If  a  partner  uses  trust  fuuds  in  the  business,  the  cestuy  que  trust  may 
eledl  to  take  the  profits  earned  by  his  money  instead  ol'  interest.  \\i. 
This  right  cannot  be  founded  on  the  trustee's  agency.  A  legal  invest- 
ment is  ordered  and  a  speculation  is  prohibited  by  law.  The  violation 
of  law  in  both  aspects  is  a  breach  of  trust.  If  the  co-partners  are  aware 
of  the  trustee-partner's  breach  of  trust,  they  become  trustees  ex  male- 
ficio,  and  liable  with  him  for  the  profits  made  by  the  use  of  the  trust 
funds.  An  eccentric  notion  obtains,  which  limits  the  profits  to  the  trus- 
tee-partner's share  derived  from  the  use  of  the  trust  fund.  Charging  him 
for  his  co-partner's  share  would,  it  was  said,  inflicft  a  penalty,  and  not 
simply  make  him  account  for  what  he  has  received.  The  theory  is 
not  tenable  on  partnership  principles.  To  separate  firm  stock  and  ap- 
portion aliquot  parts  among  the  partners  would  work  a  pro  tanio  disso- 
lution. The  trustee-partner  is  made  both  a  stranger  and  a  member  of  the 
firm.  The  profits,  as  accretions,  become  firm  assets,  and  can  be  taken 
only  from  the  trustee-partner,  who  has  no  separate  title  to  any  part  of 
them.  The  theory  is  also  inconsistent  with  the  partnership  principle  that 
the  profits  are  derived  from  the  aggregate  contributions,  and  not  from 
any  part  of  them.  The  trustee-partner's  contribution  is  equalized  by  cor- 
responding contributions  by  his  co-partners,  and  his  share  comes  from 
the  whole  capital  stock.  Hamilton  has  demonstrated  this  by  figures. 
Take  three  partners  with  equal  contributions  and  profits.  Trustee  takes 
1-3 :  If  1-3  of  each  contribution,  he  would  get  the  1-3  out  of  his  co-partners' 
contributions  by  reason  of  his  contribution,  so  that  he  should  account 
foi  the  2-3  on  the  same  principle  he  does  for  the  1-3.  A  dedudlion  or 
allowance  is  made  for  compensation  to  the  firm  for  its  management,  be- 
fore the  trustee-partner  is  charged  for  his  share  of  the  profits.  Although 
partners  are  not  compensated,  except  through  the  profits,  yet  before  they 
are  charged  for  the  profits  the  courts  allow  them  compensation  for  ser- 
vices. The  compensation  is  often  guess-work.  In  Pennsylvania  a  rough 
estimate  is  made,  and  one-third  of  the  profits  is  allowed  for  management. 
The  difficulty  of  ascertaining  the  profits  which  are  made  by  means  of  the 
trust  fuuds,  is  no  reason  for  not  investigating  the  account.  The  court 
would  abnegate  its  function,  if  it  denied  the  right,  and  would  put  a  pre- 
mium upon  the  breach  of  trust.  ^43.  The  contribution  does  not  become 
a  fixed  fa6tor  in  the  making  of  profits.  It  is  a  facftor  which  varies  with 
the  kind  of  business,  and  must  be  calculated  according  to  the  business. 

The  theory  of  the  Common  law  actions  for  taking  property  was  resti- 
tution, but  in  time  the  process  changed  by  accepting  an  equivalent  in 
money  for  the  property.  Compensation  became  the  standard  of  recovery. 
Following  trust  funds  is  a  substitute  for  the  early  legal  remedies.  The 
funds  can  be  traced  only  to  the  property  increased  by  the  funds,  e.  g.,  the 
firm  assets.  But  the  misstep  of  applying  the  maxim  that  the  cestuy  gur 
trust  mav  waive  the  tort  .niid  sue  in  assumpsit,  repeated  the  Common  law 

707 


Index. 

siihslilution  (if  a  contradl  for  a  tort.  The  conlract  binds  the  partners  as 
imlividuals,  as  well  as  partners,  and  thus  enlarged  the  liability  by  charg- 
ing the  innocent  co-partner  for  the  embezzlement  of  his  partner,  as  he 
had  been  charged  for  the  damage  of  the  partner's  torts.  The  result  is  not 
iuiportanl,  because  firm  creditors  can  proceed  against  the  separate  estate, 
and  thus  inilirectly  enable  the  cestiiy  que  trust  to  share  it,  by  getting  more 
out  of  the  joint  assets.  ^141.  Trust  imposed  on  incoming  partner  by  re- 
ceipt of  assets,  v.  Change  of  Partners.  Firm  as  purchaser  for  value  of 
trust  funds.   ^<4o  &.  n.  i.     v.  Lindley. 

lliERRI.^lA  FIDES,     v.  GOOD  FAITH. 

ULPIAN.  Pearl  case.  ^.  63,  n.  3.  Analogy  of  sale,  argument  for  firm  cred- 
itor's privilege.    2  108,  n.  4,  price  being  unpaid.  I  164. 

I'/.  TR^l  I  IRES.  Contracts  of  a  partnership  can  be  ratified,  but  not 
of  a  corporation.  A61  is  excess  of  authority  as  pi'o  tanlo  dissolution. 
V.  Tort. 

UNDISCLOSED  PRINCIPAL. 
Attacked  as  the  Common  law  obstacle  to  the  limited  liability  of  the 
Law  Merchant,  but  the  precedent  was  too  firmly  established  to  be  up- 
rooleti.  {)  26.  Owner  of  pearls  in  Ulpian's  case.  2  63.  No  undisclosed 
principal  at  the  Civil  law.  ^57.  Previous,  not  subsequent,  authority 
requisite  to  charge  undisclosed  principal.    ^135. 

UNLIMITED  LIABILITY,  a  principle  of  the  Common  law.  ?  44. 

USURIOUS  LOAN 
Inconsistent  with  partnership.  ?,66;i!67.  z/.  Evidence.  Partner's  advance  at 
any  rate  of  interest,  being  in  part  at  the  risk  of  the  business,  is  not  usurious. 
i<i65,n.  2.  t'.  Advance.  Usury  excludes  partnership.  ?,66.  Interest  measured 
by  profits,  not  usurious.  ^65.  Risk  of  liability  to  creditors,  not  excuse 
for  excess.  ^66. 

VAVASSEUR,  A. 
In  dealing  with  land,  presumption  against  partnership.    §  131.     Parties 
to  contracl  alone  liable,    i.  51,  n.  b.      Insurance  might  be  carried  on  in 
partnership.   ?  16,  n.  5.     Nature  of  partner's  contribution.   |  33,  n.  i. 

VERMONT  permits  surviving  and  representative  of  deceased  partner  to 
be  sued  together.  ?  88.  i'.  Procedure.  Release  of  partner,  not  of  co- 
partner.  ^90.     V.  Procedure. 

VIRGINIA.  Release  of  partner  does  not  release  co-partner.  ^90.  z/.  Pro- 
cedure. 

WAIVER. 
The  conditions  made  as  preliminaries  of  a  partnership,  are  waived  by 
carrying  on  the  business.   ^.17,  n.  3.     Partner's  waiver  of  co-partner's  con- 

70S 


Index. 

tribution  would  not  afifedl  third  persons.   ^.4.     v.  Contribution.     Waiver 
of  tort  and  election  of  coutra<5l.   §47. 

WALWORTH,  CH. 
Partner's  equity  founded  not  on  property,  but  on  liability.    ^  106,  n.  7. 
Deceased   partner's   representatives  assert   bis   privileges.    \  106,  n.  6. 

WAR,  Outbreak  of.  does  not  prevent  commencement  of  partnership.  ^17, 
n.  3.     7'.  Commencement.      Suspends  partnership.    ^173,  n.  3. 

WEIBEL,  Jos.  Leonz.     Civil  law  indivisible  contradl.   ^91,  n.  3. 

WESTBURY,  Lord.     Withdrawal  by  partners,  unless  solvent,  a  fraud  on 
creditors.    \  107,  u.  5. 

WETTER,  P.  Van.     Civil  law  indivisible  contraA.   \^\,  n.  5. 

WIFE,  partner,  employing  husbands     v.  Evidence. 

WISCONSIN  severs  joint  cause  of  aclion,  and  provides  remedy  against 
any  obligor.  \  88.     v.  Procedure. 

WITHDRAW^\L 

Of  profits  as  a  ground  to  charge  one  with  the  liability  of  a  partner,  t. 
Profits.  Allotment  by  executor  to  beneficiary  a  withdrawal,  v.  Bxecu- 
tor.  Partner  cannot  relinquish  his  equity,  v.  Equity.  By  partner,  while 
firm  solvent,  v.  Marshalling.  If  withdrawal  allowed  for  necessary  ex- 
penses, the  measure  is  the  amount  necessary  to  eke  out  maintenance,  and 
the  failure  to  withdraw  for  any  year  is  an  admission  that  it  was  not  needed. 
\  208,  n.  6.  Partner  having  paid  creditors,  no  lien  on  co-partner's  land, 
conveyed  in  fraud  of  creditors  in  New  Jersey,  unless  he  has  acquired  a 
lien  by  judgment.  §208,  n.  7.  If  partner  withdraws  all  his  capital,  co- 
partner is  entitled  to  the  interest  and  to  the  profits.  \  208,  n.  8.  The  with- 
drawal by  a  partner,  without  his  co-partner's  knowledge,  will  stand,  if  not 
made  in  expedlation  of  insolvency.  ?i92,  n.  3.  Withdrawal  of  contribu- 
tion. ?28  V.  Contribution.  Allotment  of  share  in  deceased  partner's 
estate  to  beneficiary,  a  withdrawal  by  executor.  \  74,  n.  8.  v.  Executor. 
Taking  land  for  firm  debt  negatives  a  withdrawal.  2 109.  n-  6.  v.  Land. 
Deceased  partner's  estate  could  not  be  withdrawn  on  account  of  liability  at 
law.  \  204.  V.  Marshalling.  Withdrawal  of  assets  not  ground  to  charge 
profit-sharer  as  partner.  §  55.     v.  Profits. 

WOODWARD,  J. 
Joint  obligation  of  Common  law  not  a  business  contracfl.     i!  79,  n.  1 
Set-ofF.  ^  130.  n.  i.     Partner  binds  himself  individually  by  executing  deed 
for  firm.   \  135,  n.  2. 

—FIMS— 
709 


I 


I 


I 


/ 


/ 


-^ 


^ 


^TilJONVSOV^^^        '%daAlNn-3WV^ 


v< 


zim 


^<?Aava8i 


:^ 


'Or 

c 


'^^ 


OFCAIIFO/?^ 


uaii-^^ 


,;lOSANCElfj> 


NflJWV 


^EUNIVt,/ 


>5i' ^-^. 


<ril30NV5;Ol 


:i 


AWEUNIVLi  7A 


a 


XElfXA 


>- 


\WEUNIVF 


<ri]rj;f/^i 


^t-llBRARY^ 


%ojnvo-jc 


>i,OFCAllF0Ji 


4^: 


AA    000  849  691 


AlllBRARYQ/r,       A>^UIBRARYar 


'^'%jnvjjo>'      '%0j 


(^r 


:^^  ^. 


w^ 


^^ 


S;0FCAIIF(  .OFCALlFO/i 

o      9= 


^<?Aavaan^^'^      ^^AyvaaiH^"^ 


l^ 


^^^ 


3-JO^^ 


^^lUVAVLtL^j;,^ 


<rii30NV-soi^^      "^/saaAiNn-^iAv 


^WEUMIVER^/A 


^mkmiis^ 


^ 


■^Aa3AINn-3WV 


'^<!/0JnVDJO^ 


3 
-^.l/OdllVDJO' 


^OFCALIFOff^       ^OFCAIIFO/?^ 


,1  ]WV 


I CO 


^^^H!BRARYO/^        ^UIBRARYd?/: 


^(!/0JnV3J0^       ^<i/0JllV3JO'^ 


ALIFO/?^      ^OFCALIFO/?^  ^\WEUNIVER%       ^vWSANCElfx 


%■     ^ 


^TilJQNVS 


swlOSANCEl^ 
o 


551 


<rii30\vsoi^      "^/^aMiNnjuv 


.\WEUNIVER%       ^v^OSANCElf 


^  .=-^.^ 


^. 


(mi  i'^ 


^0^ 


